Why Every Resident Should Lock in Insurance Before Finishing Training

Key Takeaways

• Physicians are 3x more likely to become disabled than to die before age 65, according to the Council for Disability Awareness
• Locking in disability insurance during residency can save 20-40% compared to buying the same policy as an attending
• Residency is physically and mentally demanding, and health issues that develop during training can make you uninsurable later
• "Own-occupation" disability insurance is critical for physicians because it protects your ability to practice your specific specialty
• A 30-year-old resident can get a strong own-occupation policy for $100 to $150/month. The same policy at 35 after fellowship costs $200 to $300/month.

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The Conversation Nobody Has During Residency

When you're a resident making $60,000 to $70,000 a year, working 80-hour weeks, and staring down $300K in student loans, the last thing you want to hear about is insurance.

I get it. It feels like one more expense you can't afford. One more boring financial task on a list of things that are all more urgent than this.

But here's what I tell every resident I work with: this is the single most time-sensitive financial decision you'll make in training. Not your student loan strategy. Not your investment plan. Insurance. Because every year you wait, it gets more expensive, and the chance that something makes you uninsurable goes up.

Why Physicians Need Disability Insurance More Than Almost Anyone

Here's a stat that stops people in their tracks. According to the Council for Disability Awareness, a 30-year-old has a 1 in 4 chance of becoming disabled for 90 days or more before reaching age 65. For physicians specifically, the risk is even higher because of the physical and cognitive demands of practicing medicine.

And when I say "disabled" for a physician, I don't just mean unable to work at all. I mean unable to practice your specific specialty. A surgeon who develops a hand tremor isn't disabled in the traditional sense. They can still work, just not as a surgeon. Without the right insurance, that distinction means everything.

The Bureau of Labor Statistics reports that healthcare practitioners have injury and illness rates of 2.5 per 100 full-time workers annually. Over a 30-year career, those odds compound significantly.

Your future earning potential as a physician is your biggest asset. A cardiologist earning $400K per year over a 30-year career will earn $12 million. That's the asset you're protecting. A $150/month insurance premium to protect a $12 million asset? That math speaks for itself.

What "Own-Occupation" Means and Why It Matters

Not all disability insurance is the same, and this is where a lot of physicians get the wrong policy.

Standard disability insurance pays out if you can't work at all. "Own-occupation" disability insurance pays out if you can't work in your specific medical specialty, even if you could theoretically do something else.

So if you're an orthopedic surgeon and you injure your back, a standard policy might deny your claim because you could still work as a consultant or in a non-surgical role. An own-occupation policy pays your benefit because you can't do orthopedic surgery anymore.

The American Medical Association has long recommended that physicians carry own-occupation coverage specifically because of how specialized medical practice is. The difference in premium between standard and own-occupation is usually 15-25%, but the difference in coverage is enormous.

Why Residency Is the Best Time to Buy

Three reasons. All of them are about timing.

Price. Disability insurance premiums are based primarily on your age and health at the time of purchase. A healthy 28-year-old resident will pay significantly less than a 35-year-old fellow or early attending. Most insurance carriers offer resident-specific discounts of 20-40% that aren't available after training. Companies like Guardian, MassMutual, and Principal all have physician-specific policies with training discounts.

Health. Residency is brutal on your body and mind. The ACGME reports that burnout affects up to 50% of residents, and rates of depression during training are 28%, according to a 2023 meta-analysis published in JAMA. Sleep deprivation, stress, and irregular schedules take a toll.

If you develop any health condition during residency, whether it's anxiety, a back problem, high blood pressure, anything, an insurance company can exclude that condition from your policy or deny coverage entirely. The healthier you are when you apply, the better your policy will be.

Future increase options. Most good physician disability policies include a "future increase option" or "benefit update rider." This lets you increase your coverage amount as your income grows, without additional medical underwriting. But you can only add this rider when you first buy the policy. If you wait until you're an attending to buy, and you've developed any health issues in the meantime, you might not qualify for this rider.

Life Insurance During Residency

Disability insurance is the priority, but life insurance is also worth addressing during training, especially if you have a spouse, kids, or anyone who depends on your income.

A 30-year-old non-smoking resident can get a 20-year, $1 million term life insurance policy for roughly $30 to $50 per month. That same policy at 40 costs $70 to $120 per month, assuming no health changes.

If you're single with no dependents, life insurance is less urgent. But if you're married, or planning to be, locking in a term policy now is one of the cheapest financial moves you can make.

The key word is "term." You do not need whole life insurance as a resident. Despite what some insurance salespeople will tell you, whole life policies are expensive, complex, and almost never the right first insurance purchase for a physician in training. Buy term, invest the difference, and revisit permanent insurance later when your financial picture is more established.

How Much Coverage Do You Need?

For disability insurance, the general rule is 60% of your expected attending salary. Insurance companies won't insure you for 100% of your income (because then there's no incentive to return to work), and 60% is the standard cap.

If you expect to earn $300K as an attending, you'd want about $15,000/month in disability coverage. During residency, carriers will typically let you buy coverage based on your expected future income, not your current resident salary. This is one of the unique advantages of buying during training.

For life insurance, the standard guideline is 10-15 times your expected income, plus enough to cover outstanding debts (like student loans) and future obligations (like your kids' education).

The Cost of Waiting: Real Numbers

Let's compare a resident who buys at 28 versus an attending who buys at 35.

At 28 (during residency):

• Own-occupation disability: ~$130/month
• $1M 20-year term life: ~$35/month
• Total: $165/month

At 35 (early attending):

• Own-occupation disability: ~$250/month (no resident discount, higher age)
• $1M 20-year term life: ~$65/month
• Total: $315/month

Over 30 years of coverage, the resident who locked in early saves roughly $54,000 in premiums. And that's assuming both are perfectly healthy at the time of purchase. If the 35-year-old has any health conditions from 7 years of medical training, the gap gets even bigger, or they might not qualify at all.

What to Do This Month

If you're a resident or fellow reading this, here's your action plan.

Get quotes from at least 2-3 carriers that specialize in physician disability insurance. Guardian, MassMutual, Principal, and The Standard are the main ones.

Make sure the policy is true own-occupation, not "own-occupation" for a limited period and then "any occupation" after that. Read the fine print.

Add a future increase option rider so you can grow your coverage with your income.

Buy a 20 or 30-year term life insurance policy if you have or plan to have dependents.

Budget $150 to $200/month total for both policies. Yes, that's meaningful on a resident's salary. But it's protecting millions in future earnings. There aren't many investments with that kind of return.

Summary

Disability and life insurance are the most time-sensitive financial decisions for physicians in training. Buying during residency locks in lower rates, takes advantage of training discounts, and protects against future health changes that could make coverage more expensive or unavailable. Own-occupation disability insurance is essential for physicians, and the cost of waiting 5 to 7 years can add up to $50K+ in additional premiums over a career. Get quotes this month, not next year.