In a recent announcement, Principal Financial shared they would be retiring the unisex or 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 was finally one of the last to pull the plug. So, how do you know if this affects you and if so, how much of a difference will it make and when?
WHAT IS A UNISEX RATE?
If you are a female physician, disability insurance rates can be much higher than for 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 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!
Since percentages are sometimes hard to picture and you may not know what disability insurance premiums look like, here is a quick example:
WHY IS IT 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 or gender neutral discounts 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?
There are a few requirements you need to check off to see if you are eligible for the Principal unisex rate before it goes away. Here are a few of the requirements:
Women will be the biggest benefactors of this discount because men will be able to get gender distinct rates which are slightly cheaper than the unisex rate.
2. ATTENDINGS OR 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.
3. 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.
4. W2 EMPLOYEES
You need to be a W2 employee or have a signed attending contract where you will be a W2 employee. Physicians that are solely independent contractors would not qualify in most situations.
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
Take a few minutes to educate yourself on the basics of disability insurance, which you can do by checking out our Beginners Guide to Disability For Physicians at www.patternlife.com/zebras by visiting our resources section.
2. FIND SOMEONE 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.
3. GET STARTED
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. Get started with by reviewing quotes with Pattern here: www.patternlife.com/zebras
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.
If you are ready to secure your unisex discount, fill out a disability insurance quote request today!