As a physician, you see the good, bad, and ugly of health and wellness. You’ve seen the results of people after a lifetime of bad habits, and you’ve seen those who take care of themselves and still end up with terminal diseases.
Whether you’re reflecting on your mortality or simply dealing with the next checkmark on your list of financial stability, life insurance is on the table. How do you know whether you need this coverage, and, if you do, what kind of policy to get?
In this blog, we’ve shared the top questions asked by doctors about life insurance, giving you the answers you need to make informed decisions.
Is Life Insurance a Must?
Although many financial advisors suggest life insurance as a necessary part of your portfolio, it isn’t actually for everyone. However, you should consider life insurance if any of the following apply to you:
- Your salary is one of the primary sources of income in your family. Other people depend on you for the bills to be paid, and without your wages, there would be a hardship in your family.
- You are planning to get married and have children within the next few years.
- You’re planning on incurring or you already have debts that will fall to your loved ones if you die. This list may include car loans, mortgages, student loans, and business or personal loans with co-signers.
- Your savings account won’t cover your funerary expenses and other obligations, leaving the debt for friends and family to undertake.
- You have dependents who still have major milestones like college and weddings in their future.
A “yes” answer to any of the above situations means life insurance is an important part of your financial picture.
What Kind of Life Insurance Should I Get?
If you work for someone else, there’s a good chance you already have a term insurance policy, which is helpful but not comprehensive. Workplace life insurance is better than nothing. However, it doesn’t stay with you if you leave your job, and it only lasts 10-30 years.
When you’re older, it’s more challenging to obtain life insurance, particularly if you develop a serious medical condition. The older you get, the more expensive monthly premiums become, too.
The best policy is one that is an asset, not an expense, leading you to whole life or permanent insurance coverage. Over time, your premiums accrue cash value, which you can use in a pinch later if necessary. Term insurance doesn’t have this extra perk. Permanent insurance also helps your holistic approach to asset protection, as discussed in this article by OJM Group.
Ultimately, the insurance you should get is the one you can afford for the life of the policy, and consider reviewing the policy in a few years to ensure it still matches your financial and health needs.
What Death Benefit Should I Take Out?
This answer is different for everyone. It encompasses everything from your current financial situation, including your income and debts, to your goals for the future and hopes for your loved ones once you’re gone.
Your financial advisor is a wise place to start as you calculate the ideal target. Some advisors use the Human Life Value method, looking at your current and projected income and debt. Others use the DIME formula, estimating your death benefit by looking at your expenses plus obligations.
Whichever method you choose, be sure to include factors like inflation and cost-of-living increases. Add a sufficient amount for college tuition for your children and any other milestones you’d like to ensure they are covered for when you’re gone.
4. What Should I Expect to Pay For a Policy?
Looking for a quote for life insurance should be easy. But you’ve likely seen that every time you fill out a quick “complimentary” form for a quote, you have to add your phone number and email address and subscribe to unlimited marketing calls.
In general, you can expect to see cheaper rates for short-term policies (about 10 years) and higher rates for whole life. Specific factors can decrease or increase your rates, such as:
- Age, as younger people are thought to be “less risky” and are given lower premiums.
- Health, as those without any pre-existing conditions or diseases are often given lower premiums.
- Gender, as women may be given lower premiums than men because of the statistically lower risk in lifestyle and longer lifespan.
- Habits, with those who smoke or drink alcohol regularly seeing higher rates, and those with hobbies that are considered high-risk also receiving increased premiums or agreeing to policy exclusions.
To avoid receiving unwanted phone calls, ask your financial advisor to give you multiple quotes for various types of life insurance and walk you through the advantages and drawbacks of each.
Conclusion
Do you need life insurance? If so, what kind and how much? The initial life insurance coverage debate can seem like a hassle, but once you decide on a policy, the peace of mind it brings makes it worth the deliberation. Talk to a financial expert, and find out what kind of coverage will take care of your needs and goals today.
