Life Insurance - Busting the 4 Lamest Excuses Doctors Give for Not Buying Life Insurance

 

If there is one word that can make a physician shudder, it’s insurance. From health insurance to malpractice insurance to business insurance, most physicians spend a good portion of their time dealing with insurance carriers and policies. Yet many physicians drop the ball when it comes to insurance for themselves, particularly in the realm of life insurance.

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For some reason, it seems that most doctors hate, or at least strongly dislike, life insurance. Even though it is easy to get a life insurance quote in an instant, and rates are generally reasonable, many physicians don’t purchase policies for themselves. Usually, they give one of these reasons for their reluctance.

1. I Don’t Need It Yet

There is a perception that people don’t need life insurance until in their Golden Years, and closer to dying. Why pay for something now, when you are in your 30s or 40s (or even younger) that no one is going to need for another 40 to 50 years? Why buy life insurance when you don’t even have a family to benefit from the coverage yet? Why buy life insurance when you’re still a resident, and have a negative net worth?

Those are all valid questions, yet none of them is a valid reason to put off purchasing life insurance coverage. For starters, no one knows when they will die. While statistically speaking, you have good reason to suspect that you will live well into your 70’s and beyond, every day, younger people die in accidents or due to illness. Waiting until you’re older could be too late, not to mention, the older you are, the more expensive the policy will be.

As far as not having a family or assets yet, that won’t always be the case. And even if you aren’t married yet, your estate will be on the hook for any outstanding consumer debts or mortgage loans after your death. So while a life insurance policy might feel like a financial burden for a resident earning $40,000 a year, it will protect your parents or spouse from having to pay your debts after you die.

2. I’m Healthy

As a physician, you should understand better than anyone how health can change seemingly overnight. A healthy, active 40-year-old man can be diagnosed with terminal cancer and be gone within three months. Pregnancy can cause high blood pressure. Any number of health problems can pop up unexpectedly, even when you are a doctor, so the time to buy life insurance is when you are already healthy. Insurers are reluctant to take on the risk of people who are overweight or have a chronic disease, so don’t risk waiting until you become uninsurable to try to buy a policy.

3. I Have Other Investments

Maintaining a diverse portfolio of investments is a smart financial move. Not only do you build your wealth, but also you can leave those assets to your family after your death. However, cash equivalent investments, like money market accounts and CDs, are also risky. While they offer liquidity, they are also not protected against creditors. When you die, those assets can be used to pay off the debts of your estate. In addition, given the level of professional liability risk inherent in the practice of medicine, those assets can be seized by creditors in the event of that you’re sued by a patient.

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Life insurance, though, is one of a few creditor-protected assets. In other words, creditors cannot seize life insurance proceeds — nor are they subject to income taxes, in most cases. Some physicians are wary of life insurance policies because they aren’t always liquid, but certain policies do allow for some liquidity, making them an attractive option for a more affluent customer who wants to grow his or her wealth while still protecting assets against the typical risks.

4. I’m Covered at Work

Employed physicians generally qualify for the life insurance offered by their employers. Often offered for free, or for extremely low cost, as an add-on to health insurance or as a standalone benefit, employer-sponsored life insurance usually offers minimal amounts of coverage. Coverage is usually just enough to pay for funeral expenses and little else.

Many people rely on these plans because they are easy and inexpensive, but rarely do they adequately replace a physician’s income or cover his or her expenses. In short, while you shouldn’t necessarily decline your employer’s policy, you need to purchase additional coverage.

The fact is there is no good reason for doctors not to carry life insurance. Even if the premiums seem high in your early years as a resident, when your career takes off, you’ll be grateful that you had the foresight to purchase coverage when qualified for the best rates on a generous policy. 

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