Joel Schofer's Career Planning Blog

Guest Post – Protecting Your Income: Before, During and After Your Service

Posted on February 3, 2026 Updated on January 29, 2026

One of the most significant steps on your path to your post-military future is the separation physical / VA disability evaluation process. It seems straightforward enough, document any service-related physical / mental conditions to determine your VA disability compensation.

However, there is a trap in this process that can severely impact your ability to protect your higher future income in the event that any uncovered conditions (or new ones) prevent you from working in your chosen medical specialty.

The “Hidden” Underwriting Trap

While physicians are trained to think in terms of “clinical medicine” and “VA ratings,” there is a third concept that many are unaware of: Individual Disability Insurance Underwriting.

Unlike clinical medicine, where a “mild” diagnosis is just something to monitor, disability insurance underwriters view any diagnosis in terms of financial risk that could lead to a disability claim in the future. As a result, if you choose to wait until you start the separation physical to apply for an individual disability insurance policy, you will face these problems:

• The 10% Rule: At least one major physician-specific disability insurance company has a strict policy: they will deny coverage entirely to anyone who has received more than a 10% VA rating for any single condition.
• The “Paper Trail” Problem: The very same diagnostic tests that you undergo to document a condition for the VA, are now considered “pre-existing conditions” by the insurance company. If you were to apply for a disability insurance policy, an underwriter would see “multi-joint arthritis” and add exclusion riders on your spine, knees, and hips, or simply deny coverage completely.

The Solution: Secure A Comprehensive Individual Disability Policy Early

If you are a military physician or dentist, you need to plan far ahead for income protection.

The most prudent approach is to lock in your insurability while your record is still “clean.” The longer you wait to secure a policy, the more likely you will have issues obtaining one.

When you apply for an individual policy before your separation physical, make sure it is Non-Cancelable and Guaranteed Renewable and includes a Benefit Increase Rider (BIR) or Future Insurability Option (FIO). This is critical because doing so will:

1. Lock in Your Current Health Status: You undergo medical underwriting once. Once the policy is in force, your health is “frozen” in the eyes of the insurance company.
2. The Military-to-Civilian Jump: The recommended policy allows you to exercise a benefit increase within 90 days of a 30% or more income increase (like when you start working as a civilian).
3. No More Medical Underwriting: You can increase your monthly benefit to $30,000 per month (depending on income and other coverage in force) without any medical review. This means that even if your separation physical documents arthritis, the insurance company cannot use that information to deny your increase or add exclusions.

The Correct Order of Operations

1. Secure Individual Disability Insurance FIRST: Lock in a “Specialty Specific Own Occupation” policy with a Benefit Increase Rider (BIR) or Future Insurability Option (FIO) rider early in your career when your medical record is likely to be “clean.”
2. Verify the Policy is “Non-Cancelable and Guaranteed Renewable”: This ensures that the insurance company can’t change your rates or add exclusions later.
3. Start the Separation Process: Once your policy is active you can safely start the separation process and document any medical conditions for the record.

Important Note For Emphasis: Work with us to establish an individual disability insurance policy far ahead of starting the separation process, since even a pending physical or overseas deployment can cause issues.

Life Insurance Considerations Upon Retirement

Another consideration for any military physician upon retirement should be the continuation of term life insurance. While you are on active duty you can establish $500,000 of SGLI (Servicemembers’ Group Life Insurance) for $26 per month regardless of age or health. The rate remains constant until retirement at which time you must apply to convert to a VGLI (Veterans’ Group Life Insurance Plan) policy and undergo medical underwriting unless you apply within 240 days of leaving military service. The rate will also increase significantly compared to your SGLI rates, as shown below.

VGLI Monthly Rates by Age for $500,000 in Coverage:

• Age 50-54: $145/mo.
• Age 55-60: $250/mo.
• Age 60-64: $425/mo.
• Age 65-69: $690/mo.
• Age 70-74: $1,075/mo.
• Age 75-79: $1,935/mo.
• Age 80+: $2,200/mo.

A similar individual term life insurance policy would also be subject to medical approval, but the premium is guaranteed for a longer period. For example, at age 50 the monthly premium would be $146 and guaranteed for 30 years for a term policy issued at preferred nonsmoker rates. The VGLI plan rates are subject to change in the future and typically increase every five years. Both policies are convertible to a level premium permanent policy with no medical requirements prior to age 70. The only exclusion for each plan is suicide in the first two policy years.

As a general rule, a physician with a mortgage, wife, two children etc. should maintain approximately 7-8 times their annual income in face amount of life insurance to provide for:

• Family income
• Mortgage
• College education
• Last expenses

Taking into consideration military retirement benefits, this multiple can be reduced to 4-5 times of your annual income. But considering most retiring physicians will be earning more than $300,000 per year, there is still an approximate $1,000,000 shortfall that should be taken care of. A good rule of thumb is to maintain coverage until your youngest child is 25 years old. As with disability protection, early planning makes an enormous impact on future expenditure. Contact us today to consult with us regarding your personal situation.

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