C.Y.A. (Cover Your Abilities)


Are you sufficiently protecting your talents, skills and capabilities?

Look beyond your patients care and you’ll see the impact of an illness or injury on a family, both emotionally and financially. You have the choice to make the decision to protect yourself and or your loved ones from the devastating impact of an accident or illness.

We take our talents and abilities for granted just like breathing air. Well, whether we like it or not, sustaining an accident or illness is always a very real possibility that could affect our ability to live, work and play.

Most people do not insure what is probably their most valuable asset – their ability to work and earn income.

A physicians earning potential creates the need to plan for wealth accumulation, protect a lifestyle dependent upon a certain level of income and possibly make considerations of ownership within a practice. All are financial obligations that make the protection of income a crucial consideration.

Long-term disability insurance coverage is important for many occupations, but for physicians, it’s particularly critical. Even a relatively minor accident or illness can interfere with your ability to practice medicine or perform surgeries. Many doctors are finding a serious gap between the traditional disability insurance benefit offerings and the income replacement needs of their true income.

Is There A Gap In Your Income Protection Coverage?

Financial experts recommend monthly DI benefits of at least 65% of income as being the minimum amount for adequate financial protection. But as incomes increase, traditional Group and Individual DI carriers lower the percentage available. With incomes growing larger than what traditional Group and Individual DI carriers will issue, highly compensated individuals turn to High Limit DI coverage to protect their incomes and their financial security.

larger than what traditional Group and Individual DI carriers will issue, highly compensated individuals turn to High Limit DI coverage to protect their incomes and their financial security.

The first step is to measure the gap between your current income and the benefits your disability policy provides. A basic individual disability policy typically covers 60 to 65 percent of your current monthly income when you start practicing, but these policies also place a cap on monthly benefits – usually, the most you can obtain is between $5,000 and $15,000 per month. As your income grows, your disability benefit plan may not be able to continue to ensure all of your after-tax income. Thus, you will have a gap in protection and increased risk exposure.

A Real Life Example

To illustrate the value for High Limit DI, let’s look at a real case story. Dr. Smith was a successful physician in Wisconsin. Dr. Smith and his financial planner completed a comprehensive financial review and they discovered a disability insurance deficit in Dr. S’s insurance portfolio of $49,000 per month! Dr. Smith should have $70,400 per month and his current coverage was only $21,400 per month.
With so much at stake, Dr. Smith decided to purchase a High Limit Disability Policy. Sometime into the policy period, Dr. Smith, unfortunately, suffered a laceration and nerve damage to his dominant arm and is now unable to perform surgery. Each month Dr. Smith receives benefits from three disability insurance policies.

• $15,000 from his Group LTD policy
• $6,400 from his Individual DI policy
• $49,000 from his High Limit DI policy

In addition to the monthly benefits, Dr. Smith purchased the career-ending benefit which provides $5,000,000 in the event of a career-ending disability. After a 60-month benefit period, Dr. Smith will receive a $5,000,000 lump sum if his disability is permanent.

Starting with just 3 lives, a medical practice may be able to secure a benefit plan with the following features;

• Receive substantially higher benefits than traditional individual disability plans.
• Obtain benefits on a guaranteed-issue basis  without medical examinations.
• Secure the full benefit amount for the definition of  disability within your occupation/specialty.
• Simple administration with one-page enrollment  forms.

Life gets busy and it’s easy to overlook the importance of disability income insurance, imagine if you lost your ability, strength or dexterity to perform everyday tasks?

Long-term disability insurance can be one of the single most important decisions you can make, or not. The consequences of your decision may have a profound effect on your life. Long-term disability insurance, often referred to as income protection, works hard when you can’t.

If you are properly insured, you and your family can continue living comfortably in the face of a temporary or permanent disability.

About The Author

John F. Nichols MSM, CLU
Disability Resource Group

John F. Nichols, MSM, CLU is a nationally recognized disability benefits consultant, the creator of disability products and administration systems and an expert witness in disability proceedings. Nichols serves as president of Disability Resource Group, Inc., a national insurance agency that he founded in 1999.

John Nichols joined the National Association of Insurance & Financial Advisors in 1985 and was elected NAIFA Secretary in 2011. He is the 124th National President for the year 2013-2014. Previously, he has served as an Executive board member and Board Trustee from 2007- 2011. In 2007, NAIFA Chicago Region recognized John with their Leadership in Life Award.

He is a frequent speaker at an array of national meetings, including MDRT Main Platform 2012, a session speaker in 2004 and 2010, NAIFA National, and over 500 state and local NAIFA programs. He is in the top 20 of lifetime contributors for NAIFA’s IFAPAC.

He obtained his CLU designation in 2003 and graduated with his Masters in Science Management with an emphasis in Leadership in 2011 from The American College. John is a member of the President’s Circle contributor level at the American College.

As a life and qualifying MDRT member, John has two Court of the Table and eight Top of the Table qualifications. Additionally, he is an Excalibur knight level contributor and Legion of Honor member to the MDRT Foundation

In 1993, John had a near-death experience from a water skiing accident that left him paralyzed from the neck down to his toes. Through six years of rehabilitation, he reached a level of recovery that less than 1 percent of all spinal cord injury patients attain. John, who in 2010 and 2012 was LIFE’s industry spokesperson for Disability Insurance Awareness Month, has chronicled his story in his first book for the financial advisor world, Income Protection, The Conversation. His second book released in 2014 entitled, Passion, Purpose, Protection, The Ability of Disability Insurance is to help the consumer understand the value of protecting their ability to earn an income.

In 2012, John received the Richard M. Daley and Maggie Daley “Golden Shoe” Award for being the #1 Bank of America Chicago Marathon fundraisers for non-for-profits.

John spends time in Chicago, IL and Lyons, CO and loves to travel, hike and train for marathons.