University of New Mexico Graduate Medical Education Disability Insurance Presentation

1. University of New MexicoGraduate Medical Education Disability Insurance Presentation Geri Everett, CLU Health Sciences Assurance Consulting, Inc. 505-796-4441 geri@hsac.com

2. MD In the Black • Purpose of Long Term Disability is to Financially support you in the event you are unable to work in your current occupation

3. Types of Disabilities • Reasons: range from Cancer to a hand injury caused by a rock climbing injury

4. Five Questions to Consider • 1. Should I buy disability in Residency ? • 2. What are the different types of LTD ? • 3. What provisions should I consider ? • 4. Where can I buy Long Term Disability ? • 5. How much will LTD cost ?

5. Disability Insurance protects your most valuable asset – Your Ability to Earn Income Family and General Practitioners estimate and mean wage for 2015 was $187,330 (May 2015 US Dept. of Labor Bureau of Labor and Statistics) *Assumes 3% annual increases Source: http://www.bls.gov/oes/current/oes291062.htm

6. Match your Budget • Disability premiums are based on your: • Age • Gender • Specialty • Health • Benefits period • Options that you select

7. Group Disability provided by Employer • Individual disability is purchased on your own • Individual is more expensive

8. What Benefits Should I Consider ? • Noncancelable • Guaranteed Renewable • Residual/Partial • Cost of Living • Future Increase Option/ Benefit Update

9. Make an informed Decision • Work with an agent that Represents Multiple companies

10. How Much will Long Term Disability Cost ? • 1-3% of Gross Annual Income

11. Do You have any other Assets to replace your Income ? • Rental properties • Dividends • Retirement Income • Royalties

12. What Benefits do I look for in a LTD policy ? • Most Important part of the policy is the definition of disability • OWN occupation, specialty specific • The fewer limitations the better • Non-cancelable policy can’t be terminated by the company and premiums can’t be increased

13. Other important Options to Consider • Residual/Partial pays if you are not totally disabled • Future Increase Option allows you to buy more insurance at a later date with no new medical questions • Inflation protection or Cost of Living • Monthly Benefit would be increased after a claim and is tied to the CPI

14. Pre-existing Conditions • At the time of application you will be asked health questions • If you have a pre-existing health history • It can be excluded or not covered by the disability policy

15. Resident Debt Class of 2015 Source: aamc.org/FIRST Medical Student Education: Debt, Costs, and Loan Repayment Fact Card October 2015

16. The Risk of disability:It can happen to you? • Just over 1 in 4 of today's 20 year-olds will become disabled before they retire (Social Security Administration, Fact Sheet March 18, 2011) • More than 1in 5workers will be disabled for 5 years or more during their working careers (Commissioner's Disability Insurance Tables A and C, assuming equal weights by gender and occupation class) • Disability is the leading cause of personal bankruptcies. It causes nearly 50% of all mortgage foreclosures, compared to 2% caused by death (Health Affairs, The Policy Journal of Health Sphere, 2 February 2005)

17. University of NMGME Sponsored Disability Insurance – Ends June 30th • Fellowship/ Group Disability Insurance Benefits? • Does Program offer Disability Insurance? • Group or Individual • If Group: Conversion to individual after completion • True “Own Occupation” Definition You will have a one-time enrollment period of 30 days from the policy end date to convert your coverage.

18. GME Resident Group Long Term Disability Insurance Plan • 60% of Salary to a maximum benefit of $5,000 • University paid benefits • Pays benefits after 90 days of disability • Benefits are taxable income • Benefits offset with Social Security and Worker Compensation

19. Salary Pre-tax After-tax PGY1 $4,190 $2,514 $2,137 PGY2 $4,352 $2,611 $2,219 PGY3 $4,531 $2,719 $2,311 PGY4 $4,711 $2,827 $2,403 PGY5 $4,879 $2,938 $2,498 PGY6 $5,086 $3,052 $2,598 PGY7 $5,266 $3,159 $2,685 PGY8 $5,464 $3,278 $2,787 **Assumes 15% tax bracket AAMC Survey of Resident/Fellow 2015-16 Stipends Source: https://www.aamc.org/download/312786/data/2015stipendsurveyreportfinal.pdf

20. Group Disability Plans

21. Individual Disability Income Policy

22. Insurability • 20-25% of you are NOT insurable!! Are you? • Most Young Professionals Don’t Realize That Many “Minor” Medical Conditions Can Prevent Them from Obtaining an Individual Disability Income Policy

23. Common “Issues” that causes challenges • Diabetes. • Back or Neck Treatment by Doctors or Chiropractors. • Doctors Appointments for Stress, Anxiety, or Depression. • Active Military Duty.

24. Disability Insurance Definitions • Non-Cancelable • Guaranteed Renewable • Own Occupation • Future Insurance Option • Cost of Living Adjustment (COLA) • Limitations for Mental and Nervous & Substance Abuse • Residual or Partial Disability

25. Disability Insurance Options • Determine your insurability – apply for an individual disability insurance policy. • Convert your GME Group Disability Plan during Residency and then to an Individual non-cancelable own-occupation plan upon completion of residency. • Wait to determine your disability insurance needs.

26. Questions?

27. Life Insurance • What is Life Insurance and should I purchase some ? • Life insurance protects those you leave behind from the loss of your future income in the event of death

28. Do I have people that Depend on my Income ? • Important Factors: • Family Help • Spousal Income • Child care if spouse has to work • Education savings for children • Future housing costs • Most Residents need 1-2 million

29. Term insurance • You pay the premium and if you die your family gets the death benefit paid to them • You buy a policy for a set number of years • No Cash value

30. Permanent Life Insurance • Types of Products include: • Whole life, universal life and variable life • Family receives benefits when you die • Typically there is no expiration date • Investment component • Premium paid into policy builds a cash value

31. Which Should I Choose ? • Term low cost, lot of coverage for a small premium • If you die at a young age, family gets replacement of your future income • Permanent cash value investment component offers tax free access to cash value • Offers estate protection

32. How Much Should I Purchase ? • Depends on your Family’s financial plan • Is your family financially independent ? • Finishing residency at age 30, 30 year term is a good start • Multiple policies

33. Calculating Death Benefit • Existing Debts • Monthly Expenses • College Tuition • Funeral Costs • Total • Subtract • Assets • Spousal Income • Rule 10-20 Times your annual income

34. Cost of Term Insurance • One Million, 30 year level term • Female age 30, $520- $575/year • Male age 30, $670- $ 700/year

35. UNM GME Life Insurance • $75,000 Term life and Accidental Death and Dismemberment • Terminates when you complete your residency

36. Questions? • Thank you