Life Insurance For Physicians – How To Decide On A Policy | Student Loan Planner

Can you afford to
get term life insurance as a resident, or even as a fellow? And if you’re already an attending, how much should you be buying
if you have kinda put it off and you’re a little ashamed that you did, and you knew you needed to do it, but you just let other
things get in the way? So that’s what I’m gonna
talk about in today’s video is buying life insurance for physicians. Now, most physicians at some point get hit up with the offer
of a free steak dinner or some sort of really
nice gift or presentation or very helpful person that
is randomly interested in you, you know that you barely
talked to in college or high school and
suddenly wants to hang out and meet for coffee. That’s usually a dead
giveaway that they’re trying to sell you whole life insurance. So whole life insurance
is basically this product that has term life insurance combined with an investment product. Basically the life insurance company has a long, long history
of investing money to cover their insurance obligations. So they take the money, they invest it in conservative things, and then give you some sort of lower return
on your investments and then they promise to back it up because they’re putting the money in stuff that they presume is
somewhat conservative, and they’ll never have
to worry about crashing and Great Depression kind of environment. That’s basically whole
life is they’re giving you a lower return for a
very complicated product that I do not recommend at all. Physicians should
absolutely only be buying term life insurance. So if anybody ever tries to
sell you whole life insurance, that’s a clue that you should
never buy term life insurance from them instead. Now, the alternatives is
just to comparison shop in a marketplace. The one that we recommend is our referral partner Policygenius. So you can actually go to to compare a lotta different
offers as a physician, which is pretty convenient. That’s what my wife and I use to get our own life
insurance policies set up. So let’s talk about a little bit about why you would get term life insurance. These are the reasons. If you have anyone depending on you for your income or your future income, you should have term life insurance. Now, for residents, you might
be making 60,000 a year, but as an attending, you could
be making 300,000 a year. We generally recommend
people have eight to 10 times their income in term life insurance for the duration of the
period that they’re going to be responsible for someone. So for example, if you
have a, let’s say a parent who’s making a pretty
low income who would be really in big trouble if
something happened to you, heaven forbid, then you need to make sure that you have a policy that’s large enough that would be able to give
them a lump sum of money that they could maybe get 5% of every year and have their expenses covered. So for example, maybe if
you’re giving your parents say 20 to $30,000 a year of assistance, you would need maybe 500,000 to 750,000 of term life insurance for
kind of the expected life that they would not be in a
nursing home, for example, okay? So until they’re maybe like
85, 90, something like that. Now if you have children or are thinking about having children, that’s another really important reason why you need to have term life insurance. Now if you have kids
and you don’t have that, then you’re basically walking around with a loaded gun situation. And the reason I use that terminology is because if something bad did happen, then suddenly this future
life that your kids were going to have is
totally, totally different and is now reliant upon
whoever your partner, assuming that you have
a two-parent household, whoever your partner is
going to end up marrying. That’s going to be that new lifestyle that that child is going to have. Most people want that
child to have the lifestyle they would’ve had
regardless of whether or not you’re here or not. Okay, so in terms of
what college they attend, in terms of maybe getting their first car, in terms of what house
that they’re gonna live in. And so for that reason,
that’s why we come up with eight to 10 times
your income as being a good amount of coverage
for term life insurance. Now, as a resident,
you’re making 60, $65,000, so that might be, that’s not the income
multiple you wanna use. It’s the attending income multiple. So you might not get approved
for eight to 10 times your attending income, which is fine. I would say the vast majority of people would be well-served with
a 20-year term life policy for about $2 million. Most physicians would
find that that is enough that they would at
least have enough to pay their kids’ college, pay off the mortgage, probably pay off car loans,
have an emergency fund, and then still have a little bit leftover to handle other bills
and to get your spouse and your children a
little bit of extra leeway as they adjust to this new
normal in their lives, okay? So the reality is is the
vast majority of people don’t think about getting
term life insurance in place until way after the fact when
they’ve already been exposed for several years to that risk of losing a primary breadwinner type income. And that’s not a good thing, because you just got lucky
that nothing happened, right? And luckily, life insurance,
for term life insurance, is very, very cheap. You can buy a policy for
about 20 to $40 a month for $1 million term policy for 20 years if you have really excellent health. Probably closer to 40 a
month for a 20-year term, but that’s really cheap. $40 a month to not have
to worry about your family is a very cheap price to
pay for that peace of mind. And if you have net worth
in the millions of dollars, you don’t need term life insurance. But the vast majority of
you watching as physicians do not have that coverage, right? So that’s why if you shop, I would suggest getting
a policy from a company that’s rated A, A plus, or
A plus plus from AM Best, which is the company that
rates life insurance companies. And again, if you apply through, you’ll be able to compare a whole bunch of different options all at once. It’ll be a fairly
straightforward process, I think. And in most cases, if
you’re applying for one to two million, they may or
may not require a medical exam, but I would just be prepared to do one, because it’s going to get you a lower rate if you go through a medical exam, which is generally just a
nurse comes to your house, takes a blood sample, and
asks you a couple questions. And it’s very, very straightforward. So get term life insurance
and stop putting it off. And if you have any
questions about that process or how much you think that you need to get or any experiences that you wanna share, feel free to sound off in the comments, the video below, or on the
blog post that we link to in this YouTube video.

1 thought on “Life Insurance For Physicians – How To Decide On A Policy | Student Loan Planner

  • This was really helpful, Travis! We are in the process of getting term life insurance, through Policy Genius, and just did the medical exam! The nurse came to my and my husbands work and it took 15 min! The underwriting process is going to take 4-6 weeks, but we have been pleased so far!

    We are looking at a 30 year policy for my husband, the physician, is there a reason why we should lower that to 20 or 25? (2.5m is what we are insuring at, anesthesia).

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