Term Life Insurance for Physicians

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Physicians have been long time targets to be solicited and coerced into buying Whole Life or Universal Life products that build cash value. Don’t get roped into this.  While there are some circumstances that it does make sense to buy a Permanent Life insurance, in most cases it doesn’t.  Keep your insurance separate from your investments.  Chances are you’ll do much better investing your money in a true investment product rather than packaging it with life insurance. Term life insurance for physicians is simple and affordable.

How much Term Life Insurance do Physicians need?

Most physicians are hopefully buying this for the first time.  Meaning… make sure you buy enough to protect you from the beginning instead of adding more later.  The younger you are the cheaper it is…not to mention your health should be better. Your parents and sibling’s health should be better- Yes that’s right! Your family’s health will make a difference in your life insurance rates.   Financial health (bankruptcies) and other factors like your driving record and participation in dangerous activities play a part too.

Consider “Laddering” your life insurance.  This is a unique way for physicians way to protect themselves from being under insured, but not overpaying for the coverage is by purchasing Laddered Term Life insurance.  You would have either several different amounts for shorter and shorter periods of time base on your needs.  As a quick example, you need $1 Million for 25 years because you have young children, another $1 Million to cover your mortgage for the next 15 years and just $500,000 to hold you over until your retirement income kicks in.

Don’t short change yourself. Most of you who are reading this are probably residents, new attending or fellows, so your income will likely grow significantly over the next 10 years. Not to worry. If you are in your 20’s through your late 30’s, you can purchase up to an average of 25 times your annual income.

Residents and interns can purchase about 1 million based on a $50,000 per year salary.   If you already have a job lined up, and can prove it with a copy of your contract,  most life insurers will issue the coverage based on your future earnings.  Fellows or attending physicians shouldn’t have any problem purchasing more than enough coverage in their first year.  If a new Attending earns $150,000 in their first year they will easily qualify to purchase $3 M to $4 M.

1 Million isn’t enough!

An example of how little $1 Million is today…

A friend of mine was fortunate to have have triplets just over 18 years ago.  They didn’t attend private school. Instead, they went to the public school which had just as good or better programs than the private schools.  They live in an upscale city where their property taxes were about $40,000 per year that largely goes toward the school system.  Now the kids are off to college. One to a private university just below ivy league status, and the other two in large state schools.  Just bachelors degrees, not even masters will cost them about $800,000.

Purchase a minimum of $2 Million.  If you are wise enough to be reading this while you’re still a resident or intern, then purchase what you can and add to it as soon as you have a contract.  You’ll already be buying the lowest cost life insurance dollar for dollar by buying term, so make the most of the opportunity and maximize your protection.  You may be surprised to know that most $2 Million policies will cost less than your car insurance.

I want to clarify what I just meant by “$2 Million policies”.  If you are a new physician, I can think of only a few rare instances where the doctor only needed to be covered for 10 years.  Term policies are sold by number of years not just amounts.  You will likely need 20 to 30 years of coverage and I based the car insurance comparison on a 30 year policy.

Depending on the amount you want, most physicians purchase either 25 or 30 year policies.  It’s a rare instance and typically when the physician is a little older, maybe in their 40’s that a 10 or 15 year term would be appropriate.

Most physicians end up purchasing a total of two to three million. If you are in a specialty that you know your income will soar in the next five to ten years, then purchase more than the typical $2 M.  It is usually a very small difference to purchase an extra million when you’re 30 years old compared to adding another policy 10 years later.

Choosing the company right company

If you’re in absolutely perfect health, your immediate family is living, and you have no other risk factors like being a private pilot or military, then go with the lowest priced A.M. Best “A” rated company.  Don’t use one of the mail order companies that you can’t get advise from a licensed independent agent.  It may be that the insurance company chooses you.  In other words, if there are medical issues to get around or you travel to dangerous countries, or you have had too many moving violations, we would investigate which companies would offer you the best rate.

Paying your premiums

Unless you are still earning around $50,000 per year, then pay your premiums on an annual basis.  The majority of insurance companies charge you more if you pay monthly, quarterly or on a semiannual basis. We’ll be able to tell you how much more it costs to break it up into payments.

One more reason to pay one time a year are credit card points.  Ask the agent if your company will take a credit card.  If they do, you won’t be able to pay monthly, but you can pay a single premium with a card and earn your points.

Occasionally you’ll find a company the charges you the same premium no matter how often you pay.  We’ll be able to compare your total cost at the end of each year to see if makes a difference.

Saving $20 a month or $240 a year may not sound like much, but if you figure the savings over thirty years, it can be two to three thousand. For those of you who need to pay it more times than once a year, just call your agent once your income increases and change it to annual when you can afford to.





About Best Quote Insurance
About Best Quote Insurance

We work with individuals across the nation to secure the best life insurance rates.

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