If there’s one thing that most doctors understand, it’s the unpredictability of life: no one knows when they will get sick, when they’ll be injured in an accident, or when they will pass away. That’s why it’s so important to buy life insurance early on, especially if you have loved ones who are dependent on your current or future income.
Buying life insurance as a physician isn’t that much different from those in other occupations. However, there are a few key things to keep in mind along the way.
Why Doctors Need Life Insurance
The bottom line is that if you have a spouse, children, or other loved ones who would be impacted by the sudden loss of your income, life insurance is a necessity. Whether they count on your paycheck for everyday household expenses, or would struggle to make the mortgage payment and cover college tuition without you, you should consider buying a policy.
When you’re a doctor, though, the trajectory of your net worth is also important to consider.
The average medical school student graduates with more than $201,000 in student loan debt, according to recent data from the Association of American Medical Colleges. Because of this, many doctors will spend much of their initial career paying off that debt, rather than saving for the future, paying off a home mortgage, or even setting aside funds for their kids’ education.
As a physician, you may find yourself needing more life insurance coverage, for a longer period of time, compared with some of your peers.
There’s another side to this coin, though: medical professionals enjoy most of the highest average salaries in the US, so you may not necessarily need life insurance coverage forever.
What Type of Life Insurance Doctors Need
As mentioned, doctors are some of the highest-paid professionals in the country, so the average physician won’t need life insurance coverage forever. Assuming that you’re able to build up enough in savings and other assets — such as paying off your home or establishing a healthy investment portfolio — you may reach a point when your family will be financially secure no matter what.
At this point, you are considered to be “self insured,” and the need for life insurance no longer exists. Because of this, buying a permanent life insurance policy might not make the most sense for everyone.
You may find that term life insurance is a better choice, both for your budget and your specific financial situation. It’s important to compare the difference between term and whole life coverage, the cost of each, and determine how long you realistically need coverage before buying a policy.
Not sure what type of coverage is right for you? Leap Life agents are available by phone to answer any questions you may have about the different policy options, as well as offer personalized quotes when you’re ready to buy.
What About Employer-Sponsored Coverage?
Many employers offer workplace-sponsored life insurance policies, in the form of group coverage. These policies are often provided at a discounted rate and may be an excellent opportunity for additional coverage.
It’s very important, though, to remember that workplace life insurance policies aren’t usually portable. This means that if you were to get laid off or fired, leave to start your own practice, or even retire, you would generally lose your coverage.
Additionally, your rates are not locked in with workplace coverage, the way that they are with individual policies. Instead, your rates are subject to increase each year as you get older, as well as when the overall group dynamics change. For example, if the average employee age or other risk factors increase, everyone’s base premiums will also increase.
For most doctors (or really, anyone), employer-sponsored life insurance should be used as supplemental coverage on top of an individual policy.
Important Riders to Consider
Because physicians are typically high-earners, death isn’t the only financially devastating thing that could happen to their loved ones. An injury or illness (such as cancer, pregnancy-related conditions, or even a car accident) could prevent you from working full- or even part-time, impacting your income and leaving your family in a bind.
If you have the opportunity to purchase life insurance coverage with a disability rider, this might be worth considering. Disability coverage — either as part of a life insurance policy or as standalone coverage — can help replace some of your income if you are affected by a short- or long-term disability.
Generally, term life insurance policies offer living benefits riders, which can unlock a portion of your policy’s death benefit if it’s needed to cover care and medical expenses. Permanent policies, on the other hand, often offer true disability riders, which can provide an additional benefit (on top of your policy’s death benefit) if you’re permanently disabled.
Additionally, if you were to become disabled, a waiver of premium rider on your policy keeps you protected without needing to pay additional premiums. Instead, your coverage will continue as scheduled but your future premium payments will be waived.
Regardless of your profession, buying life insurance coverage is an important step in protecting your loved ones, if you have a spouse, children, or other family members who rely on you financially. If you’re a doctor, however, there are some specific considerations to keep in mind when buying a policy, such as your financial situation, whether or not you need higher coverage limits, and how certain riders can better protect your loved ones.
LeapLife makes it easy to get matched with A (or higher) rated insurance companies that can protect those you love most. Coverage is available for up to $5 million and with terms as long as 40 years.