Pilot’s Guide to Financial Turbulence: Planning for Medical Disabilities

While many pilots focus on life insurance, the reality is that you’re statistically more likely to become disabled during your career than to pass away prematurely. Disability can lead to a sudden loss of income and potentially higher expenses due to medical issues, making a sound plan essential.

Unique Risks for Pilots

Pilots face rigorous medical exams annually or semi-annually. If they can’t pass these exams due to medical conditions or medication restrictions, they may be grounded immediately. While there are some non-flying positions available, like training, safety, or administrative roles, they’re often limited and not guaranteed.

Short-Term vs. Long-Term Disability

Short-term disability generally covers a few months (up to two years for some major airlines), while long-term disability can last until age 65. For pilots, benefits vary significantly by airline and whether the position is unionized. Major airlines tend to offer better coverage than regionals, but many plans only replace about 50% of income.

Union and Non-Union Differences

Non-union carriers often offer less robust disability coverage. Even among unionized airlines, coverage terms differ, some place more of the cost burden on pilots, while others offer more company-paid coverage. Tax treatment also varies: employer-paid benefits are taxable, while self-paid premiums often yield tax-free benefits.

Understanding “Own Occupation” Coverage

For pilots, “own occupation” disability insurance is critical. This means benefits are paid if you can’t perform your specific job (flying), regardless of whether you could do other work. “Any occupation” coverage is less protective, as benefits might be denied if you can work in another field.

Supplementing Your Benefits

If your airline benefits don’t provide sufficient coverage, you can purchase supplemental policies, such as through ALPA or Harvey Watt. However, these policies can be expensive, especially if purchased later in your career. The key is to balance affordability with adequate protection, based on your savings, spending habits, and family situation.

Planning for the Worst-Case Scenario

Work with a financial advisor who understands aviation benefits. Review your current policies, identify gaps, and run scenarios:

• Could you live on half your income?

• Would you still be saving enough for retirement?

• Do you need to adjust debt, mortgage, or lifestyle to be more resilient?

Action Steps for Pilots

1. Review your current disability benefits through your airline and union.

2. Understand the definitions– own occupation vs. any occupation.

3. Identify coverage gaps and explore supplemental insurance if necessary.

4. Coordinate with an aviation-focused financial advisor to integrate disability planning into your retirement strategy.

5. Use open enrollment wisely– don’t default to the cheapest option without checking coverage levels.

A well-structured disability plan ensures that, if the unexpected happens, you can maintain your lifestyle, continue saving for retirement, and protect your family’s future.

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