In the beginning of medical school, we were told that information will come like “water from a firehose." That was true, and it is also true that the learning curve for residency is even steeper and more like getting information from Niagara Falls. In addition to getting an education, medical school and residency are also an important time to start thinking about long term plans, including financial planning. Learning about all the business terms and ideas that you missed out in college while you were studying for biology can seem confusing and complex. Initially, I found it all pretty overwhelming and, frankly, intimidating. The good news is that just as you will survive and conquer medical school and residency, you are also VERY capable of sorting through the different financial aspects of adulthood (unless your parents are still paying for everything, then maybe they can do this for you and you can go back to YouTube videos now).
One essential topic to familiarize yourself with is insurance. Hopefully you already have home or renter’s insurance and car insurance, but many do not have life or disability insurance. I recommend learning about all of these, but my focus here will be on disability insurance (DI). It may be a little depressing to think about, but what if you were in a horrible car accident and couldn’t work anymore? What if you train in a procedure-heavy field and you cut off an important finger while cooking dinner? What if you are later diagnosed with cancer or develop some other debilitating disease? Do you have a spouse or children that depend on your income? Although you will hopefully lead a long and healthy life and be able to work until you are 100 years old, it is best to be prepared if something does happen. This is where disability insurance comes in.
My advice is to get the hang of patient care, then start looking at insurance! Disability insurance is much more affordable and you can get better coverage if you obtain it while you are young, and hopefully healthy. This is especially important for female physicians because the cost of DI can increase significantly after 30 years of age and/or if you have a baby, particularly if there are complications with the pregnancy or delivery.
A big lesson I learned while going through the process is to shop around. I almost signed with a company that handled my life insurance policies because the sales representative I worked with told me that his company was the best for physician disability insurance. Regardless if he intentionally lied or not, that information was incredibly false. I luckily started working through a third party with no financial interest in specific insurance companies and ended up saving about $80 per month and getting a much better coverage plan. There are numerous companies you can work through, and my advice is to talk to colleagues who have had good experiences and use the service of a third party financial advisor to get quotes and policy information for disability insurance.
Also, look carefully at the different types of policies. Many, if not most, physicians will want coverage that has a specialty specific definition (especially important for those of you doing surgery or procedural specialties), has the option for Cost of Living Adjustment (COLA), non-cancelable, and fixed rates. You can also gather other physicians in your practice or hospital in a group to bargain for a uni-sex rate if it is not otherwise available. If you are a woman, this can save you quite a bit if you consider that the monthly premium for a female physician can be twice that of a similarly aged male physician in the same specialty.
Hope this is helpful. The most important take away from this is to start learning about disability insurance soon! Do not wait until you have more “attending money”, you can save a significant amount of money if you acquire DI at a younger age and are without any major health problems.