The Silent Epidemic Robbing Medical Residents of Disability Protection

Across residency and fellowship programs nationwide, a silent epidemic is quietly stripping young physicians of their most important safety net: Guaranteed Standard Issue (GSI) disability insurance.

Every year, residents and fellows unknowingly make one wrong move that renders them ineligible for a policy designed to protect their future income without medical hurdles. Not because of their health, but because of bad advice from the wrong agent.

This article will show you how to avoid becoming another statistic - so you can secure the disability protection your career and financial future depend on.

What is a Guaranteed Standard Issue (GSI) Plan?

A Guaranteed Standard Issue (GSI) plan is an individual disability insurance policy that does not require medical underwriting.1

This means that there are few, if any, medical questions, there are no prescription drug checks, and medical records are reviewed. As such, there are no ratings (additional sub-standard premium charges), exclusion riders,2 or modifications.

The cost of a GSI policy, when structured similarly to a fully underwritten policy, is the same or less. Therefore, even for perfectly healthy insured individuals, there is almost no reason not to take advantage of a GSI offer.

It allows residents and fellows to purchase up to $15,000 monthly benefit between the base policy and the increase option.

This protects the first $350,000 of annual income, assuming the physician will not be provided with any group Long-Term Disability (LTD) insurance from their future employer. If this is not the case, it will protect a larger annual income. For most medical specialties, this will be adequate to protect their earning potential over their careers.

Do You Feel Lucky?

In Blackjack, the house edge is less than 1%. But in disability insurance, more than half of applicants are declined or given modified coverage. Why gamble with your future when a Guaranteed Standard Issue plan eliminates that risk entirely?

According to the Milliman 2024 Annual Survey of the US Individual Disability Income Insurance Market, 53% of individual disability insurance policies are either modified (34%) or declined (19%).

Given these odds, why would a resident or fellow risk becoming ineligible for a GSI plan by applying to a company other than the one offering the GSI plan, if one is available at their institution?

Although used in a different context, this is the equivalent to William Bernstein, M.D., PhD's famous quote, "when you've won the game, stop playing"?

Two Questions

Before you apply for disability insurance, stop and ask your agent these two simple - but critical questions:

1. Do you have access to a Guaranteed Standard Issue (GSI) plan or an exclusive discount at my institution?

If the answer is “yes”, you are on the right track.

2. If not, are you aware of a GSI plan or an exclusive discount that is available to me and can you connect me with the agent who does have access?

If the answer is “no” to both questions, this is a potential red flag.

No Hippocratic Oath

As physicians, you take an oath to do no harm. Sadly, not every insurance agent follows the same principle.

Generally, if you apply for disability insurance on a medically underwritten basis and are declined, postponed, offered a modified policy or you withdraw a pending application, you become ineligible for the special GSI offer.

Since GSI plans are exclusive to a particular agent or group of agents, potential clients are encouraged by "non-endorsed" agents to apply for coverage on a medically underwritten basis, and because of adverse action, they find themselves ineligible for the GSI program.

Unlike medicine, the insurance industry doesn’t have the same type of universal oath that will always ensure clients come first. Some agents hold professional designations, like the CFP® mark, which carries a fiduciary duty through the CFP board, but many do not, and residents and fellows often can’t tell the difference until it’s too late.

That’s why asking the right questions matters. Without them, you could place your financial future in the hands of someone that may not have your interest in mind.

Adding Insult to Injury?

Guardian allows residents and fellows who applied with them on a medically or fully underwritten basis to qualify for their Special GSI program - even if they were offered a modified policy or declined. This is shocking, especially since Guardian is now aware of the increased risk.

Some agents convince residents to apply for fully underwritten policies with Guardian - even if they know it will result in the policy being modified or declined - solely because they cannot access the special GSI offer. This practice wastes valuable time and leaves residents and fellows exposed, all so the agent can potentially earn a commission instead of simply referring them to the "Endorsed" Agent to obtain the policy.

A Real World Example

Recently, a General Surgery resident reached out to secure her GSI plan. She confided that she had already applied to Guardian on a medically underwritten basis. She was not declined but her policy was approved with four exclusion riders due to her medical history.

I can’t imagine her prior agent asked even basic medical questions before submitting her application. This is exactly the kind of preventable harm that’s fueling this epidemic. It’s not about bad luck, it’s about agents putting their own interests ahead of their clients’.

Conclusion

Your ability to earn an income is the foundation of everything - your debt repayment, your wealth building, your lifestyle, and your family’s security. Losing that ability to illness or injury can be devastating. And yet, far too many residents lose their chance at guaranteed protection because of misinformation, negligence, or greed. This epidemic is entirely preventable.

Ask the right questions. Work with the right advisor. Secure your GSI policy before it’s too late. Your financial future may depend on it.

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Lawrence B. Keller, CLU®, ChFC®, CFP® is the founder of Physician Financial Services, a firm specializing in disability insurance and term life insurance for physicians. He can be reached at (516) 677-6211 or by email to Lkeller@physicianfinancialservices.com with comments or questions.

These are the personal views of the author and may not represent the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries or affiliates thereof. All scenarios and names mentioned herein are purely fictional and have been created solely for training purposes. Any resemblance to existing situations, persons or fictional characters is coincidental. The information presented should not be used as the basis for any specific investment advice.

Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA. BLICOA is a wholly owned stock subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state. Optional riders are available for an additional premium. Some policy benefits and features are not available to all occupations. FIO rider, Conditions and limitations apply. Medical information is not required when applying to exercise an increase option. Taken into consideration are financial information as well as all disability insurance in force, for which you’ve applied or are eligible to receive. COLA rider, This benefit is not necessarily protection against increases in the cost of living.

1 For Eligible Applicants

2 Non-citizen applications may still receive a travel exclusion based on our normal underwriting guidelines.

Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9th Floor, New York, NY 10017-6603, 212-541-8800. Securities products and advisory services are offered through PAS, 1-516-677-6200. Financial Representative, The Guardian Life Insurance Company of America, New York, NY (Guardian). PAS is an indirect wholly owned subsidiary of Guardian. Physician Financial Services is not an affiliate or subsidiary of PAS or Guardian. AR Insurance License #1057229, CA Insurance License #0C37340.

PAS is a member FINRA, SIPC

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