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By Lawrence Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF, Founder of Physician Financial Services, a 2024 Platinum WCI Medical School Scholarship Sponsor

Not all that much has changed over the past few years in the disability insurance industry. But, as the old saying goes, the more things change, the more they stay the same, and what’s old is suddenly new again. Insurance companies have expanded their Guaranteed Standard Issue (GSI) offerings and introduced innovative programs to allow potential insureds to obtain individual disability insurance coverage—even when they may not otherwise qualify.

Guaranteed Standard Issue (GSI) Is All the Rage

A Guaranteed Standard Issue (GSI) plan is an individual disability insurance policy that does not require medical underwriting. Surprisingly, it is the same individual disability insurance policy you would purchase from the insurance company offering it on a fully underwritten basis (which requires answering medical questions, checking prescription drugs, and reviewing your medical records).

Some parameters are pre-selected for the offering, such as a 24-month limitation for claims resulting from mental/nervous and substance abuse disorders. There is also typically a $10,000-$15,000 monthly maximum benefit between the base policy and the Future Increase Option (FIO) or Benefit Increase Rider (BIR).

Carriers Offering Guaranteed Standard Issue Coverage

Guardian, The Standard, and Ameritas are the three insurance companies leading the charge in making GSI coverage available to medical residents and fellows. Offerings from MassMutual and UNUM may be found in a small number of hospitals.

“Endorsed” and “Non-Endorsed” Plans

There are typically two types of GSI plans—“Endorsed” and “Non-Endorsed.” Endorsed plans are typically sponsored by an insurance company, insurance agent, academic institution, or Graduate Medical Education (GME). The GME is fully aware of the offering, and it agrees to promote it to the residents/fellows through email, educational seminars, and placement in the benefits booklet available to residents/fellows.

Non-endorsed programs are a result of an offer being made by the insurance company and an agent or group of agents for residents/fellows at a specific institution. In these cases, the insurance company is not an official vendor and is not associated or affiliated with the institution. It’s not authorized, sponsored, or endorsed by the institution. As a result of this, even if you inquire with the institution or GME, they may be unaware of the GSI offering.

With Great Power Comes Great Responsibility

One of the biggest issues I have seen with GSI plan availability is the rules associated with them and when one becomes ineligible.

Generally, if you apply for medically underwritten coverage and get declined, receive a modified policy offer (a policy with exclusion riders, limited benefit periods, removal of riders, etc.), or withdraw a pending application, you may become ineligible. Therefore, unless your medical history is unremarkable or you are sure of what is in your medical records, you should strongly consider purchasing the GSI plan available at your institution.

According to the Milliman 2021 Annual Survey of the US Individual Disability Income Insurance Market, 50% of individual disability insurance policies are either modified (34%) or declined (16%).

Some conditions that typically lead to a modified offer or a decline might include the following:

• Have been diagnosed with diabetes or pre-diabetes
• A history of cancer
• A history of self-prescribing
• A history of musculoskeletal issues, such as back or neck pain
• Recently had surgery or had surgery where hardware was placed
• Have seen a chiropractor for treatment or have been to physical therapy recently
• Are currently pregnant or have a history of infertility or complications of pregnancy
• Have been diagnosed with anxiety/depression or ADD/ADHD or have seen a therapist
• Have been diagnosed with psoriasis or psoriatic arthritis
• Have a history of being diagnosed with a sleep disorder

Since GSI plans are exclusive to a certain agent or group of agents, potential clients are encouraged by “non-endorsed” agents to apply for coverage on a medically underwritten basis and, because of adverse action, they then find themselves ineligible for the GSI program. I receive phone calls like this on an almost daily basis and must be the bearer of bad news.

Pre-Existing Condition(s) Limitations

Some GSI plans include a 3/12 Pre-Existing Condition(s) Limitation.

This means there is no coverage for a disability beginning in the 12 months after the policy issue date if it is caused by a pre-existing condition (a condition for which the insured sought, or for which a prudent person would have sought, medical treatment during the three months prior to the issue date). After you have owned the policy for 12 months, even pre-existing conditions will be covered.

Unisex Rates

Unisex rates are still available in certain institutions in certain states (California, Montana, North Dakota, New York, South Carolina, South Dakota, and Wyoming) where Ameritas has a Guaranteed Standard Issue (GSI) plan available for residents and fellows.

As of September 1, 2024, Standard only makes unisex rates available under their Guaranteed Standard Issue plan in three institutions. Otherwise, as of this date, its GSI plans now have gender-distinct premium rates.

Taking advantage of unisex rates when available can provide significant savings for female physicians purchasing disability insurance coverage. To request a quote or to inquire if a GSI plan is available at your institution, go to https://www.whitecoatinvestor.com/partner/physician-financial-services/.

More information here:

How to Buy Disability Insurance

Understanding Guardian’s Enhanced True Own Occupation Definition

Many physicians do not understand Guardian’s Enhanced Medical Specialty definition of total disability. In fact, I receive many calls and emails from those in certain medical specialties—such as pathology, pain management, and gastroenterology—asking if it even applies to them.

The first thing to remember is that enhanced true own occupation protection for medical doctors (MDs) and doctors of osteopathy (DOs) starts with a true own occupation definition of total disability. That means if the policyholder is deemed totally disabled, they would receive their full disability benefits even if they are gainfully employed in another occupation or capacity.

And while totally disabled in your own occupation, there may be instances where you can even work in your own business or practice and still collect a full benefit if:

More than 50% of your income is earned from performing surgical procedures, you will be considered totally disabled even if you are gainfully employed in your practice or another occupation so long as, solely due to injury or sickness, you are not able to perform surgical procedures.

OR

More than 50% of your income is earned from performing hands-on patient care, you will be considered totally disabled even if you are gainfully employed in your practice or another occupation so long as, solely due to injury or sickness, you are not able to perform hands-on patient care.

For example, if you are an orthopedic surgeon and you see patients in the clinic, read X-rays, interpret data, promote referrals, and perform surgery and post-op follow-up, you would be deemed to be a surgeon by all the carriers if your primary office duties are incidental to the fact that you are a surgeon.

However, let’s say you were in a hybrid specialty like ophthalmology, urology, OB/GYN, or otolaryngology, where you saw patients for both medical management and surgery. Now, it becomes more complicated as you are acting as both a clinician and a surgeon. Here is where Guardian’s Enhanced Medical Specialty Definition may work well.

In these situations, if more than 50% of your income is earned from performing surgical procedures at the time of disability, you may be considered totally (and not partially) disabled if you can no longer perform those procedures.

The same might be true of a surgical critical care physician who can no longer perform surgery due to an accident or sickness and now works full-time as a critical care physician. If more than 50% of your income is earned from performing surgical procedures, the insured may be considered totally (and not partially) disabled if they can no longer perform those procedures.

This might work for those who are working as a physician but also have medical “side gigs,” which might include blogging. Let’s say you were practicing as an emergency medicine physician and blogging, and more than 50% of your income was derived from emergency medicine (performing “hands on” patient care). You could no longer practice medicine but subsequently blogged on a full-time basis. Even if you earned more income as a blogger than you did as an emergency medicine physician, Guardian would still deem you totally disabled.

All other carriers would have paid partial benefits unless the loss of income in any given month was more than 75% or 80% of your pre-disability income. The same is true for those who might lecture for pharmaceutical companies, be the director of a medical spa, consult, and/or do medical/legal work.

Guardian’s Offer to American Society of Plastic Surgeons (ASPS) Member Surgeons

This is a twist on GSI coverage, and members of the American Society of Plastic Surgeons aged 45 or younger are eligible for an Accept/Reject Disability Insurance Program from Guardian.

The Accept/Reject Program allows ASPS members to secure an individual disability insurance policy with a substantial monthly benefit of up to $15,000.

Applying for the Accept/Reject Program is straightforward. The medical underwriting of your application will be handled on a simple Accept/Reject basis.

If Guardian would normally decline an application according to their usual medical underwriting guidelines, then it will decline that application under this program. However, if they do not decline an application, Guardian will issue it without further modification as part of this program. Policies issued under this program will not: receive substandard ratings, have medical exclusion riders, have limited benefit periods, have riders removed, have benefits reduced, or receive other modified offers.

Non-citizen members may still receive a travel exclusion based on normal underwriting guidelines.

Additionally, members of the association who do not meet the specific criteria for the Accept/Reject Program, such as being over 45 or having previous declines or modified offers from other carriers, can still apply for fully underwritten Guardian coverage with a 10% association discount.

Guardian could potentially offer higher levels of coverage to ASPS member surgeons outside of the Accept/Reject Program, which also includes a 10% association discount.

For more information, go to https://www.whitecoatinvestor.com/partner/physician-financial-services/.

Guardian’s Stand-Alone Benefit Purchase Rider (BPR) Program

The Stand-Alone BPR program provides an option to applicants who are fully insured by a Group Long-Term Disability (LTD) plan or another carrier’s individual policy to go through medical underwriting now and then obtain additional Guardian coverage by exercising increases without additional medical underwriting as their income increases.

This program utilizes a $100 monthly benefit and the Benefit Purchase Rider (BPR) to provide an option for future increases with Guardian.

All normal medical and occupational underwriting requirements apply:

• The applicant qualifies for less than $500 per month of additional individual disability insurance coverage.
• The applicant cannot have any existing individual disability insurance coverage with Guardian.
• Applicants who already have an individual disability insurance policy without a BPR rider can have the rider added to their existing policy with full underwriting instead of using this program.
• Applicants with an income pre-tax replacement ratio above 75% will not be eligible for this program.

For example, I met with a physician earning $400,000 annually. His employer provided him with group LTD coverage of 66 2/3% of his salary with a maximum monthly benefit of $25,000.

The premiums paid on his behalf were added to his taxable income, so should he become disabled, any benefits received would be received by him on an income tax-free basis. As a result, he did not qualify for individual disability insurance from any of the traditional carriers. Using the above program, I provided him with a monthly benefit of $100 that could be increased up to $30,000 per month, regardless of his health, if he changed jobs, or if his income subsequently increased enough to warrant additional individual coverage.

More information here:

People Aren’t Buying Disability Insurance, But They Should

Parting Thoughts

The disability insurance industry continues to evolve. COVID-19 took an industry that was slow to change and propelled it into the future. In many cases, disability insurance for medical residents and fellows has become easier and faster to obtain due to Guaranteed Standard Issue (GSI) plans and variations of them. Additionally, physicians and other professionals have become keenly aware of how important it can be to protect their ability to earn an income.

These are the personal views of the author and may not represent the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries or affiliates thereof. Material discussed is meant for general informational purposes only and is not to be construed as a recommendation or advice. Please note that individual situations can vary therefore, the information should be relied upon only when coordinated with individual professional advice.

Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA. BLICOA is a wholly owned stock subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state. Optional riders are available for an additional premium. Some policy benefits and features are not available to all occupations.

Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9th Floor, New York, NY 10017-6603, 212-541-8800. Securities products and advisory services are offered through PAS. Financial Representative, The Guardian Life Insurance Company of America, New York, NY (Guardian). PAS is a wholly owned subsidiary of Guardian. Physician Financial Services is not an affiliate or subsidiary of PAS or Guardian. AR Insurance License #1057229, CA Insurance License #0C37340. PAS is a member FINRA, SIPC

2024-178929 Exp 7/26

What do you think? What other questions do you have about the current state of the disability insurance industry? Comment below!

[Editor’s Note: Many thanks to Lawrence Keller, the founder of Physician Financial Services, one of our Platinum Level (contributing $8,000+) Sponsors for the WCI Medical School Scholarship, for helping physicians secure the best DI policies. He’s a long-time advertiser, and he is on our list of Recommended Insurance Agents. Larry has also worked with hundreds of WCI readers to get term life and disability insurance coverage in place. He can be reached at (516) 677-6211 or by email to [email protected] with comments or questions. This is the third of our three scholarship-sponsored posts for 2024. Thank you for supporting those who support this site and especially the scholarship. All proceeds go to the scholarship winners.]