Unisex Disability Insurance Rates About to Become Very Rare | White Coat Investor

[Editor’s Note: Today’s guest post is from Matt Wiggins of Pattern Insurance. By way of disclosure, Pattern is a long-time, trusted partner of WCI and one of our Recommended Insurance Agents. Disability insurance is different from life insurance, where men are more likely to die at a younger age than women. Women are actually more likely than men to become disabled. Thus, gender-specific policies cost more money for women. For the last decade, I have been telling men to buy gender-specific disability policies and telling women to buy gender-neutral policies. Unfortunately, over the last few years these gender-neutral policies have become more and more rare to the point where, for the most part, only one company (Principal) is offering them. Even that is going away at the end of 2020. So if you, as a woman physician, have been delaying a review of your disability insurance, or haven’t bought this critical policy at all, there is no time like the present.] 

Principal Disability Insurance Unisex Rate to Be Discontinued December 31, 2020!

The physician disability insurance market was recently shaken up with some major news. Principal Financial will be retiring the unisex (gender-neutral) rate, one of the disability insurance industries’ most widespread discounts for women. This news is not completely shocking, as unisex rates have largely disappeared over the years. Principal is one of the last to finally pull the plug.

 

What Is a Unisex Rate?

If you are a female physician, your disability insurance rates can be much higher than your male counterparts. This is mainly due to the insurance companies reviewing their claims history and adjusting their prices accordingly.

Statistically, there are simply more disabilities for women than men, which makes their premiums much higher. A unisex disability policy brings the female rate down to a gender-neutral rate, which is much closer to the male rate.

In fact, the Principal unisex rate is part of a group multi-life discount, and the combined effect can save women 30%-50% off of the normal female rates!

Here is a quick example:

 

 

Why Are Unisex Disability Insurance Policies Going Away?

Since policy rates for males and females are different, insurance companies needed a way to bridge the difference in prices.

To combat this price gap, insurance companies offered the unisex or gender neutral discount. This helped to provide a more competitive option primarily for women that reduced their rates by 30%-50%, as you can see in the image below.

 

 

Fifteen years ago, several of the Big Six had unisex rates available nationwide and at many physician employers and training institutions.

Over time, as female policies increased and male policies decreased, companies began pulling the discounts back. Currently, Principal has the most widespread unisex discount remaining for women, and it’s set to go away.

 

When Will This Take Effect?

Principal announced that they will be ending the unisex rate discount on January 1st, 2021. This announcement came without much notice and obviously doesn’t give anyone much time to act. Their guidelines say that to lock in the unisex rates, they have to receive your application by December 31st, 2020.

What makes this even more important is that the rate you lock in now will be locked in for as long as you own the policy and will be the basis for any future increases to your coverage. In other words, if you lock in a unisex rate now, it won’t change over time, and any increases to your coverage in the future will also get the unisex rates.

After this date, only a few, scattered options for this type of discount will remain, and most women will find only higher-priced options available.

 

What Does It Take to Qualify for Unisex with Principal?

Women are the biggest benefactors of this discount because men are able to receive gender distinct rates which are slightly cheaper than the unisex rate. Female physicians need to check off these requirements to see if they are eligible for the Principal unisex rate before it goes away:

Attendings or a Signed Contract

You must be an attending physician or have a signed attending contract if you are still in Residency or Fellowship and graduate by June 30th. Younger Residents will not be able to benefit from unisex rates.

W-2 Employees

You need to be a W-2 employee or have a signed attending contract where you will be a W-2 employee. Physicians that are solely independent contractors would not qualify in most situations.

Have the Right Agent

Unisex multi-life rates are only available based on attending employer discount codes set up by each independent agent. Not all agents will be able to get you a unisex multi-life discount.  

 

How to Lock in Your Unisex Rate

If you are a female attending physician and want to find out if you have a unisex multi-life discount available, you have to act quickly and follow these steps:

#1 Educate Yourself on Disability Insurance

Take a few minutes to educate yourself on the basics of disability insurance, which you can do by checking out our previous blog post on WCI – The Top 10 Disability Insurance Questions.

#2 Find a Disability Insurance Agent You Can Trust

Find a reputable, independent agent who will gather all of your options and help you to evaluate and compare. Since agents have these discounts at different employers and institutions, it would be best to find an agent with the most Principal discounts already set up to have the best chance of getting the unisex rates in time. Here is a good list to start with.

#3 Get Started on an Application

Apply before December 31st, 2020. If you have a Principal unisex multi-life discount available, complete an application on or before the last day of 2020. An application does not obligate you to purchase the policy; it simply locks in your rate while the insurance company gathers info to make you an offer.

I understand that the timing of this seems sudden and that the financial stakes are pretty high. For those who are still feeling uncertain about this discount or disability insurance in general, remember you can learn about your options and apply to lock in your rates without obligating yourself to purchase anything. If you do decide to finalize a policy, you can always take a smaller, more affordable amount of coverage now and increase it later should you decide it’s necessary. 

As a physician, your income is the single largest financial asset you’ll ever own, so protecting it with the right coverage and at the cheapest rate is one of the savviest financial moves a doctor can make.

[Editor’s Note: It’s never good to say “never” or “always” and there are still some rare instances where gender-neutral policies could still be available to you after 2020. Basically, there are a few agents who are grandfathered in to selling a Mass Mutual gender-neutral policy and there are some Guaranteed Standard Issue (GSI) policies that are still gender-neutral, but those tend to cost more, anyway. For the most part, this is it for the unisex disability game that my readers and their agents have been playing for the last decade. Now is the time. Matt or one of our other recommended disability insurance agents can help you, but not until you reach out to them!]

Are you a female physician taking advantage of unisex pricing? How much has a unisex policy saved you? Comment below!