Unless you’re independently wealthy, you probably need some form of insurance.
The job of an insurance policy is to protect you from financial catastrophe if something unexpected were to happen. There are different types of insurance to protect you against different types of potential financial catastrophe.
But what types of insurance should you consider purchasing?
This article will not only outline the 3 types of insurance I have for myself and strongly recommend all physical therapists and occupational therapists consider purchasing, but it will also explain
- What Each Type Of Insurance Is
- Why You May Need That Type Of Insurance
- When To Purchase That Type Of Insurance
- How To Purchase That Type Of Insurance
Ready to learn about the 3 important types of insurance I recommend physical therapists and occupational therapists consider purchasing?
Let’s get started.
1. Malpractice Insurance
What It Is
Malpractice insurance, also referred to as “professional liability insurance” or “errors and omissions insurance,” is a type of insurance that helps protect you if a claim of negligence is brought against you as a professional.
Why You Need It
Imagine being sued and having to pay out $100,000 or more.
Ask yourself:
“Could I afford to pay someone $100,000 or more?
Unfortunately, $100,000 is not a made-up number. The CNA/HPSO Physical Therapy Professional Liability Exposure Claim Report: 4th Edition found that 34% of closed claims brought against physical therapists between January 1, 2015 and December 1, 2019 were for $100,000 or more. To top it off, this was an increase of 8.1% from CNA/HPSO’s previous claim report.
Can you imagine having to pay someone $100,000 or more?
Unless you have that kind of money laying around, it makes sense to have malpractice insurance.
Now, I know what you’re thinking:
1. “I’m a good physical therapist/occupational therapist so I don’t need malpractice insurance”
or
2. “My employer already provides me with malpractice insurance so I don’t need to purchase my own policy”
Let’s address these two common misconceptions next.
Misconception #1: “I’m A Good Physical Therapist/Occupational Therapist So I Don’t Need Malpractice Insurance”
A common misconception is that you don’t need malpractice insurance because you’re a good physical therapist or occupational therapist so you shouldn’t expect to get sued.
Trust me, I understand how you feel. You worked hard in high school to get into a good college. Then you worked hard in college to get into a good physical therapy or occupational therapy graduate school program. Then you had to prove how much you learned by passing both your state and national board exams. After that, maybe you even completed a residency and became a board-certified specialist like I did. And to top it all off, you never stopped learning because you continue to take continuing education courses to keep your license active.
So how in the world could a patient sue you for being incompetent?
Despite everything you’ve done to hone your skills, the unfortunate reality is that you can still be sued.
Misconception #2: “My Employer Already Provides Me With Malpractice Insurance So I Don’t Need To Purchase My Own Policy”
Another common misconception is that you don’t need to purchase your own malpractice insurance policy because you work as an employee and your employer already provides you with malpractice insurance.
While it’s nice for your employer to provide you with malpractice insurance, there are still a few important reasons as to why you should still purchase your own policy.
First, if a claim is brought against you, the attorney provided to you is through the malpractice insurance policy that your employer provided you with.
Since the policy is from your employer, your employer is their client – not you. If what is best for you and what is best for your employer don’t quite align, you may find yourself in an undesirable situation.
Second, your employer’s malpractice insurance policy is only in effect when you’re doing work for your employer. That means the employer’s policy won’t protect you if you work a physical therapy side hustle or occupational therapy side hustle.
Even if you don’t have a side hustle, there are circumstances where it is still a good idea to have your own policy. For example, if a friend of a friend asks you for some physical therapy advice and then ends up getting injured and decides to sue you, your employer’s policy will not protect you, but your own private policy will.
When To Purchase It
The sooner the better so that you are protected while treating patients.
Even if you are a student it can make sense to have your own policy to protect yourself while handling patients during your clinical rotations.
How To Purchase It
Comparing and contrasting the different malpractice insurance policies each major company offers is massive undertaking.
That’s why I’ve shared the intensive research I did when considering which company to purchase my own policy from:
Recommended Readings
– Do Physical Therapists And Occupational Therapists Need Their Own Professional Liability Insurance?
– Choosing The Best PT/OT Malpractice Insurance For You
2. Disability Insurance
What It Is
There are two types of disability insurance:
- Short-Term Disability Insurance
- Long-Term Disability Insurance
Both of these types of disability insurance will provide you with money if you become disabled to the point that your ability to work and generate income is affected.
The major difference between these two types of disability insurance is timeline during which they will provide you with money.
Short-Term Disability Insurance
Short-term disability insurance starts providing you with money 1 week after your disability begins, but it will only continue to provide you with money for 3-6 months depending on your policy.
The amount of money the short-term disability insurance policy provides you with is typically 50-80% of your annual gross income.
Long-Term Disability Insurance
Long-term disability insurance starts providing you with money after 90 days have passed from the day you became disabled, but it continues to provide you with that money until you reach the age that your policy ends. This age is often 65 years old since that is a common retirement age.
The amount of money the long-term disability insurance policy provides you with is typically 60% of your annual gross income.
Why You Need It
Short-Term Disability Insurance
A common reason to have short-term disability insurance is to replace your income during maternity leave.
However, since short-term disability insurance only covers you for a short time, I recommend having a robust emergency fund saved up instead of spending money on a short-term disability policy.
This worked well for my wife and I when she went on maternity leave.
Long-Term Disability Insurance
Long-term disability insurance, on the other hand, is crucial for anyone who relies on their income for more than a short period of time.
Ask yourself:
“If I became disabled today and I was unable to work and generate an income like I do right now, would I be able to get by?”
If you can’t come up with a realistic, good answer then you should probably have long-term disability insurance like I do.
Now, I know what you’re thinking:
1. “The chances of me experiencing a disability are so low, I don’t need long-term disability insurance”
or
2. “My employer already provides me with long-term insurance so I don’t need to purchase my own policy”
Let’s address these two common misconceptions next.
Misconception #1: “The Chances Of Me Experiencing A Disability Are So Low, I Don’t Need Long-Term Disability Insurance”
If you don’t think you need long-term disability insurance because you won’t become disabled, consider that more than 25% of today’s 20-year-olds can expect to experience a disability before reaching age 67. That means that even if you are young and healthy now, there is still more than a 1 in 4 chance that you will experience a disability at some point before you retire.
And these odds are probably even higher for physical therapists and occupational therapists given how physically taxing our jobs are and how musculoskeletal disorders are the most common cause of long-term disability claims.
We already know all about musculoskeletal disorders so we should really be the first to understand the importance of protecting ourselves by having long-term disability insurance.
Misconception #2: “My Employer Already Provides Me With Long-Term Insurance So I Don’t Need To Purchase My Own Policy”
If your employer already provides you with long-term disability insurance, know that this comes with several downsides.
First, employer policies are typically group policies that don’t include the definition of true own-occupation. In other words, if you become disabled then your employer can find a different job for you to do that the insurance company deems “reasonable” for you.
Second, the money paid out from the employer’s long-term disability insurance policy will be taxed. Money paid out from your own private policy, on the other hand, is not taxed since you already paid for that policy with after-tax dollars.
Finally, you can’t take your employer’s policy with you if you decide to change jobs.
Do yourself a favor and don’t rely on your employer’s policy – purchase your own private policy.
When To Purchase It
The best time to purchase a long-term disability insurance policy is right when you graduate from your physical therapy or occupational therapy graduate school program and begin working.
First of all, the younger and healthier you are, the cheaper it will be to purchase a long-term disability insurance policy.
Also, the earlier you are in your career, the more potential income-earning years you have ahead of you. In other words, you have more to lose if you become disabled.
How To Purchase It
The topic of how to purchase a private long-term disability insurance policy has already been covered in-depth for both physical therapists and occupational therapists in the following:
– How Physical Therapists Should Purchase Long-Term Disability Insurance
– How Occupational Therapists Should Purchase Long-Term Disability Insurance
It is crucial that you read over the above articles so that you can go about purchasing the correct type of policy with the features that best suit you.
And, most importantly, work with an independent insurance agent.
I worked with Pattern to purchase my policy. They are a company of independent insurance agents specializing in assisting healthcare providers in purchasing long-term disability insurance. They made the whole process of purchasing my long-term disability insurance policy run smoothly and they made sure I purchased the policy best-suited for me.
You can get started with Pattern by clicking here to fill out a simple online form:
Recommended Readings
– How Physical Therapists Should Purchase Long-Term Disability Insurance
– How Occupational Therapists Should Purchase Long-Term Disability Insurance
3. Life Insurance
What It Is
Life insurance provides your beneficiaries (typically your loved ones) with money if you pass away.
There are 4 major types of life insurance:
You can read about each of these types by clicking on them above.
However, the large majority of physical therapists and occupational therapists are best suited with purchasing term life insurance as I have done. That’s why I recommend you at least read about term life insurance.
Why You Need It
You should have life insurance if others (i.e. children, spouse, other loved ones) depend on your income.
Ask yourself:
“If I were to pass away today, would anyone I care about be financially unstable because they are no longer being supported by my income?”
If your answer is “yes” then you probably need life insurance.
On the other hand, if you don’t have anyone that depends on your income, you don’t need to purchase life insurance right now.
When To Purchase It
If you currently don’t have anyone that depends on your income, it makes sense to purchase life insurance when/if that changes.
For instance, if you get married and your spouse does not generate his or her own income, it makes sense for you to purchase life insurance to provide financial security for your spouse.
Or if you and your spouse have a baby, it makes sense to purchase life insurance to provide financial security for your baby. I decided to purchase my life insurance policy when my wife and I had our baby.
Do keep in mind that life insurance is cheaper to purchase when you are younger and healthier. So, if you are ready to purchase a life insurance, don’t wait.
How To Purchase It
One of the great things about term life insurance is it’s cheap, so you will want to purchase your policy for the best price possible.
That’s why I recommend using PolicyGenius to purchase your life insurance policy:
PolicyGenius is a very popular, free-to-use online independent insurance marketplace that can provide you with unbiased insurance quotes from many different life insurance companies to help you get the best possible price on a policy. They boast a 4.8 out of 5 stars rating on Trustpilot and they have 24/7 customer support to answer questions you may have along the way.
Additional Recommended Readings
– Should Physical Therapists And Occupational Therapists Purchase Life Insurance?
– 7 Steps For Physical Therapists/Occupational Therapists Purchasing Term Life Insurance
– An Intro To Term Life Insurance
– An Intro To Whole Life Insurance
– An Intro To Universal Life Insurance
– An Intro To Variable And Variable Universal Life Insurance
Final Thoughts. . .
I hope this reading helped you identify the types of insurance you should consider purchasing, when to purchase them, and how to go about purchasing them.
If you have any questions or information you’d like to add, drop a comment below!
