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Student loan debt: Making the disability umbrella bigger

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Who knows what will happen to product terms or prices, but Ebola may be sales rocket fuel for anyone trying to persuade young doctors to max out on disability insurance.

Dr. Marcus Spencer, a 33-year-old medical doctor, has suddenly become one of the most famous people in the United States, for a few days, by becoming the first person in New York City to have a confirmed case of Ebola.

Spencer may be in isolation for weeks. Some of the doctors and nurses who care for him may end up facing restrictions on activities of their own, either because they themselves come down with Ebola or because of safety precautions.

It’s not clear how Spencer’s usual employer, the charity that employed him as a volunteer in Guinea, or the hospital that’s treating them will handle any Ebola-related quarantine or isolation time, but the situation has forced hundreds of thousands of health care providers around the country to think about how they would pay their bills — including sky-high student loan bills — if they were off of work for the standard three-week Ebola exposure quarantine period, the six-week period recommended by some, or even longer.

Even if Ebola fades as a concern, or insurers exclude coverage for Ebola pandemics or other types of severe pandemics from their policies, doctors may emerge from the next few weeks with a better understanding of the value of protecting income against all sorts of hazards, ranging from ordinary flu or garden-variety broken legs.

One barrier doctors and other medical professionals may face is that insurers try to control losses and discourage malingering by limiting the maximum ratio of monthly disability benefits available to monthly income. In some cases, highly paid doctors may come up against limits on the maximum amount of benefits an insurer will pay to any claimant through a standard disability policy. Doctors in that situation who want more protection may have to seek out brokers who specialize in helping set up jumbo disability insurance arrangements.

Another approach is for doctors to use policy add-ons that increase the amount of coverage an insurer will pay without raising frightening questions about the potential for malingering. One way some insurers get the job done is to insure the income doctors use to pay their student loans, on the theory that few purchasers will view money going to student loan issuers as an incentive to file a disability claim.

Lawrence Hazzard, vice president of product strategy for disability income at the Guardian Life Insurance Company of America, talked about student loan payment ability protection insurance in a recent e-mail interview, before the New York Ebola case put the idea of physician income interruption in the spotlight.

He said young professionals have become much more concerned about the need to protect their ability to pay back student loans in the past five years.

“The amount of student loan debt these young professionals are carrying has been the number one financial concern they share with us in focus groups,” Hazzard said. 

Dentists come out of school with an average of $240,000 in student loan debt at graduation, and doctors have an average of $160,000 in student loan debt, Hazzard said.

Hazzard noted that an individual disability policy should actually cost a professional less than 3 percent of their annual income. 


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