As an attorney, you have invested a lot of time, money, and effort to pursue your legal career. You have a high earning potential and a rewarding profession that requires specialized skills and knowledge.
But what if you become disabled and unable to work as a lawyer? How would you cope with the loss of income and the impact on your lifestyle?
Disability insurance is a type of insurance that pays you a monthly benefit if you become disabled and unable to work in your own occupation.
It can help you cover your living expenses, pay off your debts, and maintain your standard of living.
Disability insurance is especially important for attorneys, who face a number of risks that can affect their ability to practice law.
Why Do Attorneys Need Disability Insurance?
According to the Social Security Administration, about 25% of 20-year-olds will become disabled at some point before reaching age 67.
Disability can result from various causes, such as accidents, injuries, illnesses, or mental health conditions.
Some of the common causes of disability for attorneys include:
- Back pain
- Carpal tunnel syndrome
- Cancer
- Heart disease
- Stroke
- Depression
- Anxiety
- Burnout
Disability can have serious financial consequences for attorneys, who typically have high incomes and high expenses. For example, the median annual salary for lawyers in 2023 was $127,990, while the average law school debt was $164,742.
Without disability insurance, an attorney who becomes disabled could face the following challenges:
- Unable to pay for basic living expenses, such as mortgage, rent, utilities, food, etc.
- Unable to pay off student loans, credit cards, or other debts
- Unable to save for retirement, college education, or other goals
- Unable to afford medical bills, treatments, or therapies
- Unable to continue working in the legal profession or any other occupation
Disability insurance can provide a safety net for attorneys who become disabled and unable to work. It can replace a portion of your income, usually 60% to 70%, and help you maintain your financial security and independence.
Disability insurance can also protect your future earning potential, which can be significantly higher than your current income.
How to Choose the Best Disability Insurance for Attorneys?
Not all disability insurance policies are created equal.
Some policies may have more benefits and features than others, and some may have more exclusions and limitations.
As an attorney, you need to choose a disability insurance policy that meets your specific needs and preferences.
Here are some of the key factors to consider when choosing a disability insurance policy for attorneys:
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Definition of disability
This is the most important factor to consider, as it determines when and how you can qualify for benefits.
The best definition of disability for attorneys is “own occupation”, which means that you are considered disabled if you are unable to perform the material and substantial duties of your own occupation as a lawyer, regardless of whether you can work in another occupation.
Avoid policies that use “any occupation” or “modified own occupation” definitions, as they may limit or deny your benefits if you can work in another occupation.
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Benefit amount
This is the amount of monthly benefit that you will receive if you become disabled.
The benefit amount is usually based on a percentage of your pre-disability income, typically 60% to 70%. You should choose a benefit amount that can cover your essential expenses and maintain your lifestyle.
You should also consider your future income growth and inflation, and look for policies that offer benefit increases or cost-of-living adjustments.
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Benefit period
This is the length of time that you will receive benefits if you become disabled.
The benefit period can range from a few months to a lifetime, depending on the policy.
You should choose a benefit period that matches your expected working years and retirement age.
Generally, the longer the benefit period, the higher the premium.
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Elimination period
This is the waiting period that you have to satisfy before you can start receiving benefits.
The elimination period can range from a few days to a few years, depending on the policy.
You should choose an elimination period that matches your emergency fund and savings.
Generally, the longer the elimination period, the lower the premium.
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Riders
These are optional features that you can add to your policy to enhance your coverage and benefits.
Some of the common riders for attorneys include:
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- Residual disability rider: This rider pays you a partial benefit if you suffer a loss of income due to a disability, even if you are not totally disabled or unable to work. This rider can help you transition back to work or adjust to a reduced workload.
- Future increase option rider: This rider allows you to increase your benefit amount in the future without having to provide medical evidence of insurability. This rider can help you keep up with your income growth and inflation.
- Non-cancelable and guaranteed renewable rider: This rider guarantees that your policy cannot be canceled, modified, or increased in premium by the insurance company, as long as you pay your premiums on time. This rider can protect you from unexpected changes in your policy or premium.
- Catastrophic disability rider: This rider pays you an additional benefit if you suffer a severe disability that results in the loss of two or more activities of daily living, such as bathing, dressing, eating, etc. This rider can help you cover the extra costs of long-term care or home health care.
How Much Does Disability Insurance Cost for Attorneys?
The cost of disability insurance for attorneys depends on several factors, such as:
- Age: The older you are, the higher the premium.
- Gender: Women tend to pay more than men, as they have a higher risk of disability.
- Health: The healthier you are, the lower the premium.
- Occupation: The riskier your occupation, the higher the premium.
- Income: The higher your income, the higher the premium.
- Policy features: The more benefits and features you choose, the higher the premium.
Disability insurance generally costs about 1% to 3% of your annual income. For example, if you earn $100,000 a year, you can expect to pay between $1,000 to $3,000 a year for disability insurance.
However, the actual cost may vary depending on your individual situation and the policy you choose.
ALSO READ: How Much Does a Disability Lawyer Cost?
How to Get Disability Insurance for Attorneys?
If you are interested in getting disability insurance for attorneys, you have several options to choose from, such as:
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Employer-sponsored group disability insurance
This is a type of disability insurance that is provided by your employer as part of your employee benefits package.
Group disability insurance is usually cheaper and easier to get than individual disability insurance, as you don’t have to undergo medical underwriting or pay the premium yourself.
However, group disability insurance may have some drawbacks, such as:
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- Limited coverage: Group disability insurance may have a lower benefit amount, a shorter benefit period, a longer elimination period, or a less favorable definition of disability than individual disability insurance. It may also have more exclusions and limitations, such as pre-existing condition clauses or offsets for other income sources.
- Lack of portability: Group disability insurance is tied to your employment, which means that you may lose your coverage if you change or lose your job. You may be able to convert your group policy to an individual policy, but you may have to pay a higher premium or undergo medical underwriting.
- Taxability: Group disability insurance benefits are usually taxable, as they are paid by your employer. This means that you may receive a lower net benefit than you expect.
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Individual disability insurance
This is a type of disability insurance that you purchase on your own from an insurance company or an agent.
Individual disability insurance is usually more expensive and harder to get than group disability insurance, as you have to undergo medical underwriting and pay the premium yourself.
However, individual disability insurance may have some advantages, such as:
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- Customizable coverage: Individual disability insurance allows you to choose the benefit amount, benefit period, elimination period, definition of disability, and riders that suit your needs and preferences. You can also adjust your coverage as your income and circumstances change.
- Portability: Individual disability insurance is not tied to your employment, which means that you can keep your coverage regardless of your job status. You can also take your policy with you if you move to another state or country.
- Taxability: Individual disability insurance benefits are usually tax-free, as they are paid by you. This means that you may receive a higher net benefit than you expect.
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Association disability insurance
This is a type of disability insurance that is offered by a professional association or organization that you belong to, such as the American Bar Association or the National Association of Attorneys General.
Association disability insurance is similar to group disability insurance, as it is cheaper and easier to get than individual disability insurance, but it may have limited coverage and lack of portability.
However, association disability insurance may have some benefits, such as:
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- Discounts: Association disability insurance may offer discounts or lower rates to its members, as it pools the risk of a large group of people with similar occupations and incomes.
- Loyalty: Association disability insurance may offer loyalty or longevity bonuses to its members, such as increasing the benefit amount or reducing the premium over time.
Conclusion
Disability insurance is a vital tool for attorneys who want to protect their legal career and income from the unexpected.
Disability insurance can provide you with a monthly benefit if you become disabled and unable to work in your own occupation as a lawyer.
It can help you cover your living expenses, pay off your debts, and maintain your standard of living.