Good disability insurance can be pricey. Young physicians should expect to spend 2%-5% of their gross income on individual long-term disability insurance—about $2400 to $6000 per year—for coverage.

Physicians' premiums are actually lower per unit of coverage than those of most lower-earning insureds, because experience shows that these other groups are more likely to file claims. In general, only architects, some engineers, and corporate executives have lower rates than physicians.

As part of the premium-setting process, disability insurers often divide physicians into two groups, based on the claims history of their specialties.

The more expensive level includes anesthesiologists, because they are more likely to be disabled by drug addiction, and emergency physicians, who are more likely to be disabled by burnout.

The higher premium level also includes surgeons and other invasive specialists, because they are more likely than other specialties to be sidelined by a disability. Even a slight hand tremor can end a surgeon's career.

In contrast, diagnostic radiologists have lower rates because, owing to the nature of the work, they can often do their work despite a physical disability. The less expensive group also includes primary care physicians and such specialties as gastroenterology.

Your level of benefits will also help decide your premium. Only you can decide the right level of monthly benefits you need, on the basis of your expenses, lifestyle, and amount of savings. Setting benefits too low would be a great hardship if you became disabled, but setting them high—as near as possible to your current income level—would require prohibitively high premiums.

There are many coverage variables that go into your premium, but in general, if you set your benefit at $10,000 a month, you can expect to pay between $200 and $500 per month in premiums. ^[1]

The length of the waiting period before benefits begin also affects your premium. This period, called the "elimination period," functions as a kind of deductible, because policyholders have to pay their expenses out-of-pocket before coverage kicks in.

From the insurers' point of view, the longer the elimination period, the less likely you are to still have a disability that needs covering. Therefore, shorter elimination periods require substantially higher premiums. A 60-day elimination period, for example, can cost three to four times as much as a 90-day elimination period.

Viewing the cost difference, it makes sense to choose a 90-day period and then plan to use your own funds to cover that period. This is when a well-stocked emergency fund becomes essential. If you don't have enough savings, a short-term disability policy can also help pay these initial expenses, because it kicks in earlier than long-term disability insurance.

Women pay on average about 60% more than men for a standard individual policy. ^[2] Insurers say that this is because women are much more likely to make disability coverage claims, often for such conditions as autoimmune disorders, depression, and complications due to pregnancy.

However, women are not subject to these higher rates when they have group policies. Even if they have an individual policy, they can pay less by qualifying for multilife discounts with unisex rates, which are available from some insurers.

In general, to apply for a multilife discount, you have to be part of a unit of three or more people at your work. Each person would then be able to buy an individual policy at a premium that is 30%-45% lower than the usual rate for women. ^[3]

Even if you are in a solo practice, you can establish a multilife discount by using your staff as insurance clients. You would purchase coverage for two or more staff members as well as yourself. Because staff members have much less income to cover, their premiums would be much lower than your own. The discount you would get on your own coverage would be far greater than the extra cost you incur for buying their insurance.

Individual long-term disability insurance puts a cap of $15,000-$20,000. For the insurer's point of view, the cap provides an incentive for you to go back to work. However, by taking out two or more separate individual policies, you can raise your overall benefit to a maximum of $30,000.

Adding a group or association policy to your individual policy also helps you raise your benefit. Group policies are typically capped at 60%-70%, but by combining the two types of policy, your benefits can get as high as 75%-80% of your current income. However, total benefits would not exceed $35,000 a month. Again, insurers want to keep providing an incentive for you to go back to work.

This mix-and-match strategy doesn't always work. For example, benefits from many group policies are reduced if you get Social Security disability benefits or worker's compensation benefits. However, this carve-out generally doesn't take place with an individual policy.

Pare back benefits. Your needs change as your life progresses. For example, you may not have to pay college tuition for your children anymore, so you may want to reduce your monthly benefit or remove the cost-of-living adjustment, which lowers your premium. You could also save a substantial amount of money by extending the waiting period before benefits start to more than the usual 90 days.

Drop your policy before retirement. As you near retirement, your chances of getting a disability are much less than over your whole career, but you are still paying the same premium. Therefore, you might decide to drop your policy altogether. At this point in your career, you might have enough savings to cover you if you became disabled in the few short years before retirement.

Although there are ways to save money with disability insurance, make sure you do not eliminate important protections. Here are some tips.

Get a noncancelable and guaranteed renewable policy. This means that as long as you continue to pay the premiums on time, the policy can't be cancelled, premiums cannot be increased, and coverage terms cannot be changed until the policy expiration date.

Choose an adequate length of coverage. An individual long-term policy can pay out benefits for 2, 5, or 10 years, or right through retirement at age 65, 67, or 70 years. A 5-year limit would provide benefits for a longer period than the average length of a disability, which is a little under 3 years, but a 5-year limit would not be enough should you have a permanent or long-term disability.