The Pharmacist’s One-Stop Guide to Insurance: Professional Liability, Disability, and Life Coverage
Would you feel secure not having health insurance? What about driving a car without being insured? I wouldn’t want that, and I’m sure you wouldn’t feel good about it either.
There are many types of insurance out there for all of life’s eventualities, but let’s focus on yours: Becoming a pharmacist typically takes 4 years for a bachelor’s degree to start, then another 3 to 4 years for a pharmacy degree, and potentially another 1 to 2 years of post-graduate training as well — that’s up to a decade of education and training.
With all the years that went into becoming a pharmacist, surely you’ll want to protect the career you’ve worked so hard to create. Here we will discuss the ins and outs of professional liability, disability, and life insurance for pharmacists and why it is important to be covered.
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Professional liability insurance
With the expanding roles of pharmacists comes greater liability. So let’s first go over professional liability or malpractice insurance, because without this, you may put yourself at risk of losing your profession and your assets.
As a licensed healthcare professional, pharmacists can face lawsuits due to negligence in a patient’s care. Professional liability insurance provides protection if a claim or lawsuit is filed against a pharmacist due to an error while performing pharmacist duties. A claim study found that 75% of all lawsuits filed against pharmacists were for the wrong drug or wrong dose.
It is not worth the risk of being uninsured for the low premium you might otherwise pay for peace of mind.
Employer-sponsored vs. individual professional liability
You can either get liability insurance through your employer or have insurance through independent insurers, or even both. Note that employer-sponsored liability insurances tend to favor protection of the company and may not provide enough coverage for the employee.
Many independent insurers, such as the Healthcare Providers Service Organization and Proliability by Mercer (an American Society of Health-System Pharmacists partner), offer the recommended coverage for an annual premium of as low as $110. It is recommended for all practicing pharmacists to carry individual professional liability insurance, especially if you fall into at least one of the categories below:
You are self-employed or perform contract or consulting work, such as medication therapy management.
Your role involves dispensing medications, such as in a retail pharmacy, as the likelihood of medication error is highest in these settings.
You volunteer or precept pharmacy students at health fairs.
You work in academia, which may require additional protection of your educational materials.
Disability insurance
The many years of pharmacy education pay off with a nice pharmacist’s salary that runs into the six figures, but that can also come with the heavy burden of student loan debt, which averages $170,000 upon graduation. Now that salary has to cover payments for loans, along with housing, food, transportation, and other necessities.
The Social Security Administration estimates that more than 25% of today’s 20-year-olds will become disabled before retiring. Let’s say you are suddenly unable to work due to an unforeseen disability; how would you pay off your debts, cover your living expenses, and support your dependents, all while trying to achieve your financial goals? If you do not have supplemental income streams and have a long career ahead of you, disability insurance is highly encouraged.
Disability insurance provides income protection in the event that you are unable to work due to a disability, medical condition, or accident. There are short- and long-term disability insurance options. Short-term disability coverage helps to replace income lost in the event of a temporary disability. However, long-term disability insurance covers long-term or lifelong illnesses, and is recommended if you are just starting out in your career. Benefits are typically tax-free, so the coverage amount is approximately the take-home pay after taxes.
The table below compares short- and long-term coverage insurance.
| Short-term disability insurance | Long-term disability insurance | |
|---|---|---|
| Benefit period | 3 to 6 months | 2, 5, 10 years or up to retirement age |
| Elimination period | 1 to 14 days | 3 to 6 months |
| Coverage amount | Up to 80% of gross monthly income | Up to 60% of gross monthly income |
| Average cost | 1% to 3% of annual salary | 1% to 3% of annual salary |
The premium is based on age, health, occupation, and the factors shown in the table above. A higher premium correlates with a shorter elimination period (the time period between when you become injured and begin to receive your benefit), higher coverage, and longer benefit period. There are also riders or add-ons that can affect the premium.
An average monthly premium for disability insurance can range from $100 to $400 depending on the variables shown. For example, a monthly premium for a healthy 30-year-old female pharmacist, with coverage up to retirement age and a waiting period of 90 days with add-ons of own occupation coverage and a no-cancel guarantee, ranges from $200 to $300, based on Policy Genius quotes. By decreasing coverage to 10 years, increasing the waiting period to 180 days, and removing all the riders, it would decrease the premium to $100 to $130. So as you can see, the monthly premium will vary depending on many factors.
Life insurance
Finally, life insurance is insurance in the event of your death, where your beneficiaries receive financial support. This helps cover funeral expenses, outstanding debts, mortgages, and income support for dependents.
There are two types of life insurance: term and whole life. Whole life or universal insurance is a policy that lasts your entire life, but you also pay premiums until your death; therefore the premium is vastly more expensive. The selling point for many insurance advisers is that you can invest a set amount of your paid premium into the financial markets to generate some return. However, there are many fees rolled into the premium, including investment fees that add up. So whole life insurance is typically not recommended.
Term life insurance only lasts a set number of years, during which your beneficiaries will receive a cash payout if you die within that time frame. If you outlive the term, the policy ends. This is why it is cheaper than whole life insurance.
The premium is based on the death benefit amount, term length, age, gender, health, and family history. The term and benefit amount you decide to get will depend on your debts and projected future expenses, with the rule of thumb being approximately 10 times your income. Additional policies can be added or removed later if necessary.
Term life insurance is sufficient if you are saving over the years, as you will typically not need coverage after your debts are paid off, and any children are independent.
Below are price quote comparisons for whole life versus term life insurance for individuals without pre-existing conditions. Life insurance premiums increase by 8% to 10% per year for individuals with pre-existing conditions. As seen in the table below, based on Policy Genius quotes, whole life insurance costs significantly more than term life. You may also need a medical exam before you can get the most accurate premium quote.
|
|
| |
|---|---|---|
| 30-year-old | ||
| $500,000 policy | |
$220 (30 years) |
| $1 million policy | |
$520 (30 years) |
| 45-year-old | ||
| |
|
$725 (30 years) |
| |
|
$1,370 (30 years) |
*without pre-existing conditions
Employer-sponsored insurance
Many employers offer an array of benefits that include different types of insurance. However, it is not advised to rely solely on employer-provided insurance, because if you leave your current company, your new employer may not offer the same coverage.
Some insurance premiums also increase with age and pre-existing medical conditions, which means that by the time you decide to get your own individual insurance, the premium will likely cost more. What’s more, employer-provided insurance may not provide enough coverage and can have hidden exclusions and limitations, so it is important to fully understand the details of the coverage.
Protect yourself
Just like how I would not feel safe driving without car insurance, I would not want my financial assets and income to go unprotected after many years of hard work. For all types of insurance, shop around for the best quotes and speak to an insurance expert or broker to learn which coverage is best for you.
