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Category Archives: Insurance and Risk Management

Do You Have Full Home and Auto Coverage? (Trick Question.)

Did you know you can carry the highest coverage levels on your home or auto insurance policy and still not have “full” coverage if you’re hit with a major lawsuit? Physicians can be especially vulnerable to legal fallout from accidents that might not pose the same financial risk to people in other professions.

Most people who get into car collisions typically exchange insurance details and let the two carriers sort it out. But when injured people find out a driver is a doctor, they may be more likely to file a claim because they’re aware that doctors make a good living. That puts you at risk for losing personal assets which may include your:

  • Savings
  • Home, cars and valuables
  • Current earnings
  • Future earnings (yes, these can be garnished)

Umbrella coverage is a surprisingly affordable add-on to your current home and auto policies that helps you safeguard your financial health in the event of a lawsuit. This “insurance for your insurance” kicks in when your other policies reach their financial limits.

With an umbrella, you can be prepared for unfortunate situations that won’t be fully covered by your home or auto policies. Real-life examples include:

  • You hit a driver in her 30s who sues you for emotional distress, as well as lost wages. If her injuries deprive her of earning $50,000 a year, you might have to pay $2M+ in lost wages and $1-$5M in “potential loss.”
  • You host a paintball party in your backyard for your kids and their friends. Even though you advise them of proper safety precautions, one participant removes her headgear while leaving the game and is struck in the eye with a paintball. Between the cost of a lawsuit and medical bills, you could pay upwards of $475k.
  • You own a rental property, and a tenant claims she became ill from black mold found in her apartment. Because she suffered permanent lung damage, she lost her track scholarship to a four-year college. She sues you for over $750,000.

In these unfortunate situations, an umbrella policy can make all the difference in helping you maintain your financial wellbeing. Most policies start at a payout of $1M and go up to $10M. And the good news is, you don’t have to wait until you make your first million to buy an umbrella. You can get one as early as residency and increase your policy limits as you go.

Interested in your options for top-rated umbrella policies … and bundling your home and auto insurance in one place? 

For Disability Coverage, Should You Go Your Own Way?

For a physician, purchasing an individual long-term disability policy to replace or supplement group disability through your employer can be fundamental to the financial planning process and a basic asset protection tool; in brief, the policy protects one’s ability to earn an income.

As you transition from school to residency or fellowship, you may see that your employer offers a group disability policy. Although you may have access to long-term disability coverage at a nominal cost or even no-cost, the differences between group and individual coverage can be vast and the policy offered should be reviewed by your advisor before enrolling in the coverage. You may want to consider an individual policy, and here’s why:

  • Definition of own occupation: Oftentimes, an employer-sponsored policy will protect an insured in their specialty for 24 months, after which the definition is even broader—basically, if you can work, you are not considered disabled. With an individual policy, an insured can obtain a definition of disability, what I call “True” own occupation coverage; meaning, if the insured cannot work in his/her specialty but can work in another capacity, say teaching at a medical school, the disability benefit will continue.
  • Portability: Some employers do offer long-term disability coverage that can be converted to an individual policy when an employee leaves the employer. This is not always the case and, even if the coverage is portable, it is typically subpar to the long-term coverage an insured can obtain individually. Individual policies are owned by the insured and cover the individual at any employer.
  • Taxability: If the employer pays for the coverage, the benefits received are taxable to the insured. If the insured pays for the coverage with after-tax dollars, the benefits are not taxable.

Despite some of the benefits of individual coverage, group disability offered through an employer may be necessary for those physicians unable to obtain individual coverage due to pre-existing health conditions. And depending on the employer type, the coverage may provide the physician’s needs at a lower price. Be sure to review with your advisor to get all the relevant information before making a decision.

Not sure if an individual disability policy is right for you?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

Before You Take That Job, Review the Benefits

Employee benefits are an integral component of a physician’s overall financial plan, and your financial advisor should review these benefit offerings with you to determine which of those options best meet your needs.

When discussing with your advisor, covering every aspect of your potential benefit package is the goal, but here are a few highlights to pay attention to:

  • Retirement plans: Most employers offer a retirement plan to their employees. Your financial advisor should discuss the plan offerings to ensure you are maximizing matching dollars and your total contribution. For many physicians, their retirement plan will be one of their largest assets to fund retirement. Additionally, many employers offer a Roth option for employee deferrals in addition to the typical pre-tax or Traditional employee deferral. Your advisor should discuss the tax implications of each option and how it fits into your overall investment strategy.
  • Long-term disability: If your employer provides disability benefits, it is important for you to understand the coverage offered and how it integrates with any existing individual disability insurance you own or are considering purchasing. Most employer long-term disability plans have a definition of disability that only protects physicians in their specialty for a limited time. If you are required to pay a portion of the cost of coverage, you can often opt out of coverage to increase the amount of individual coverage you can purchase, which may be the best option for many physicians. For others, the long-term disability benefits could fill a gap in their financial plan and your advisor should help you maximize this offering as necessary.
  • Medical coverage: Many employers now offer a high-deductible option in the medical coverage choices. Depending on your family situation, a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) option may be optimal. However, it is important to understand the benefits of choosing a plan with current tax savings even though there may be higher out-of-pocket expenses.

Reviewing benefits for a new job is important, but don’t limit the benefit review to a new job only. Open enrollment is an important time in the ongoing financial planning process, and your financial advisor should take an active role in helping you determine which employee benefits to adjust as your individual or family circumstances change over time.

Are you in need of a benefit review with a financial advisor?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

Three Reasons to Consider an HSA

Health Savings Accounts (HSAs) have become increasingly popular in workplace benefit plans in recent years. At the core, an HSA allows you to put money away in an account tax free to use for medical expenses, included prescriptions, office visits and procedures. But an HSA is a lot more than just a medical expense account.

In 2019, an individual with a qualified high deductible health plan can deposit $3,500 into their HSA; an individual with family coverage can deposit up to $7,000. In 2020, however, these amounts will increase slightly to $3,550 individual/$7,100 family, according to the IRS. With the new caps, there’s no better time to contribute to your HSA. Here’s what we mean:

  • Payroll deductions mean contributions are usually pre-tax. If the funds are pre-tax, they’re not included in your gross income and are exempt from federal income taxes; even still, the contributions in some states aren’t subject to state taxes either. If you make contributions with after-tax dollars, you can deduct them on your income taxes.
  • Withdrawals for qualified expenses are tax-free. When you take contributions out for qualified medical expenses, that money isn’t subject to federal (or state, in some cases) taxes. Any earnings or interest in the account also grows tax-free.
  • You get to keep the money year after year, and even if you switch employers or plans. The funds in your HSA are yours to keep, whether you quit your job, move to a different healthcare benefit plan or if you don’t use it that year.

There are a few drawbacks to HSAs, however. Most HSAs are part of a high-deductible health plan, which can result in higher out-of-pocket costs to the patient for care. You’re also subject to taxes and penalties if you use the funds for nonmedical expenses before age 65.

An HSA can be an attractive option for many people. It’s best to talk through the advantages and disadvantages with your financial advisor to see if an HSA is the right call for your situation.

Is an HSA the right solution for you? We can help you decide.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.

A Disability Doesn’t Have to End Your Career

Disability insurance exists to protect our income, should we suffer a debilitating injury or illness. But for doctors, standard disability insurance usually fails to meet our needs. Disability insurance is a good tool to have for any professional, but doctors have a few particular needs.

Firstly, we invest significant time and money into our education and training prior to starting in practice. We expect this investment to result in an above-average income, especially considering the 10+ year delay in saving for retirement, a home or paying down student loan debt. We need that income to reach our financial goals.

Second, many specialties require the use of your hands—typically for surgeries, which often require fine motor skills. In many other professions, accommodations can be made to allow someone to continue working. For doctors, it’s impractical or even impossible to continue performing surgeries or other procedures if you become disabled.

Your employer may offer group disability, but this tends to be inferior to individual policies you can find in the marketplace. These policies can include things like timeframes on your coverage, after which it can be difficult to meet the definition of a disability unless you’re incapacitated or even near death.

Be sure to work with a financial professional who represents your interests, rather than that of a particular company or singular policy. Review various options available to you and learn about some of the additional features, such as riders that continue to make retirement plan contributions or pay student loans.

When you’re shopping, you may want to consider some of these traits in your search:

  • “True” Own Occupation Coverage will protect you in your specialty even if you’re able to work in a different capacity, such as teaching in a medical school.
  • Residual disability riders are supplemental tools that start to pay benefits in the event of a gradually debilitating illness and continue to pay benefits after you’re able to return to work as you build your practice back up to pre-disability earnings.
  • Non-Cancellable and Guaranteed Renewable typically refer to guaranteed coverage so long as you make your premium payments. You also won’t lose coverage after experiencing a disability and returning to work.
  • Future Purchase Option riders allow you to purchase additional coverage without providing proof of good health, taking into account only the financial requirements of the increased coverage instead.

Whatever your policy choice, shop around and involve your financial professional. Choosing the wrong disability coverage could be disastrous for the substantial investment you’ve made in your career.

Is your disability coverage protecting you, or is it time for a change?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.

Insurance services offered through Larson Financial Group, LLC, an insurance agency.