Navigating Disability Insurance as a Medical Resident: Riders You Need (and Some You Might Skip)
I’m writing this because my residents keep asking which disability insurance riders to take and which to skip. Fair warning: I’m NOT a financial advisor—this is just free advice from my experience, NOT official recommendations. Do your own research and take it with a grain of salt.
Hey residents! As an attending who’s been where you are—scraping by on a five-digit income during residency and now earning a solid six-digit salary—I can tell you disability insurance is a must. Your income’s about to jump from five to six digits, and your financial responsibilities will grow with it. Most residency programs offer group disability insurance, but it’s not enough for our field. Worse, employers can cancel it anytime, and when you leave, it’s gone—leaving you exposed. That’s a risk you don’t want.
When you buy your own policy, agents will push riders—some are worth it, some aren’t. Riders customize your policy to grow with you, even if your health takes a hit (think shoulder strain from long OR days). Here’s my take on what you need, what you can skip, and how it works as you climb from five to six digits, with a table and numbers to clarify.
Why Riders Matter
A five-digit income means a small policy might cover basics now, but at six digits, you’ll need more—think bigger bills and goals. A $5,000 monthly benefit won’t cut it later if your health falters (like that wrist twinge from procedures). Riders fix that. Let’s break them down.
The Must-Haves
Residual/Partial Disability Rider
What it does: Pays if you’re partially disabled and your income drops—like a hand injury stopping you from operating but not from teaching.
Why you need it: Most disabilities aren’t total. If your six-digit income halves, this covers the gap (e.g., 50% of your benefit). Without it, you’re unpaid unless fully out.
Attending advice: It's essential at five digits—losing any income hurts. At six digits, it’s a lifeline. Get this rider.
Future Increase Option (FIO) Rider
What it does: Boosts coverage as income grows, no medical underwriting. Start with $5,000 monthly [typical agent quote] and jump to $10,000+ at six digits.
Why you need it: On five digits, you’re limited to a small policy [starts at $5K]. At six digits, you’ll need more—and a residency injury could block a new policy. FIO secures your future.
How it works with numbers: Buy a $5,000 benefit with an FIO up to $10,000 more. When your income hits six digits, bump it to $15,000—just show tax returns, no health check. Premiums rise, but it’s seamless.
Attending advice: Most of you should grab this. Small cost now, big flexibility later. I wish I’d maxed it in residency.
COLA (Cost of Living Adjustment) Rider
What it does: Raises your benefit post-disability to match inflation (e.g., 3% yearly).
Why you need it: At 30-ish, a $5,000 benefit today could shrink in value over decades. COLA might grow it to $8,000+.
Attending advice: A must early on—disability could last years. I got it young; now with savings, it’s less vital. Add it now.
The Maybes
Benefit Purchase Rider (BPR)
What it does: Increases coverage on a set schedule (every 1-3 years), but you must take at least 50% of the offer or lose it.
Why you might hesitate: Less flexible than FIO—no upfront cost, but you’re stuck to their timeline. Skip it, and it’s gone.
How it works with numbers: Start with $5,000 and a BPR. At six digits in 3 years, they offer $5,000 more. Take at least $2,500 (50%) to hit $7,500, or the rider vanishes. Premiums adjust.
Attending advice: Some policies have both FIO and BPR; others, one or the other. If it’s a choice, pick FIO—BPR’s too stiff for your income leap.
Catastrophic Disability Rider
What it does: Adds cash (e.g., $5,000) if you can’t eat or dress yourself (think brain injury).
Why you might skip: Rare cases. A $10,000 base policy beats a $5,000 one with this add-on. Plus, group policies often cover catastrophic scenarios, making it redundant.
Attending advice: I chose a bigger policy over this. At six digits, a strong base benefit trumps a niche rider.
Retirement Rider
What it does: Saves extra (e.g., 10% of pre-disability income) for retirement if disabled.
Why you might pass: If your base benefit covers costs, you can save yourself. It’s costly too.
Attending advice: Only if you max out coverage (~60% of income) and want more for retirement. Not there yet at five digits; at six, a bigger benefit might suffice.
Graded vs. Level Premiums: Your Payment Options
How you pay matters. Here’s the scoop on graded vs. level premiums:
Graded Premiums: Start low, rise yearly with age—like a creeping car payment. Cheap at five digits, but by your 40s-50s, they can double or triple.
Level Premiums: Fixed from day one. Higher early, but steady forever.
Break-Even: Graded saves money until around age 45 or so, then level pulls ahead. Look at the policy that the agent gives you to make sense.
Who They’re For: Graded fits FIRE (Financial Independence, Retire Early) folks—pay less before 45, then ditch it once independent. I picked level—I don’t know my future, and even planning part-time in my 40s-50s, I wanted predictable costs.
Attending advice: Level stung at five digits but shines now at six—no premium hikes to dread. If you’ll practice past 45 (even part-time), go level. For FIRE, graded might work—calculate it.
Your Game Plan
As a resident on five digits aiming for six:
Base Policy: Start with $5,000 monthly.
Must-Haves: Add Residual/Partial (real-world protection), FIO (income scaling), COLA (inflation shield).
Skip: Pass on BPR (FIO’s better, unless you get both), Catastrophic (boost base later), Retirement (not maxed yet).
At six digits: Use FIO to hit $10,000+—covers your new life, no health hurdles. If maxed, peek at Catastrophic or Retirement.
Final Thoughts
Disability insurance was my safety net—the right riders made it solid. You’ve got loans, burnout, and a big income jump ahead. Prioritize Residual, FIO, and COLA to grow from five to six digits. The rest? Useful if your situation calls for it.
What’s your move? Do you have questions about riders or premiums? Hit me up—I’ve been there and want you to get this right!
Also, I got 2 podcasts linked below for those of you who like listening rather than reading that go a bit on GSI/Guaranteed Standard Issue.