Life Insurance for Doctors and Medical Professionals, What You Need to Know

Just like with other professions, doctors and other medical professionals need life insurance. Professions in this field are some of the highest-salaried for various reasons, and most of these professionals are the breadwinners of their families. As the breadwinner, one of the biggest concerns is how your family would survive in case of your untimely death. This is where life insurance comes in although it is one of the hardest financial products to sell, and besides, a lot of people find it hard to even process the thoughts about the inevitability of their death. Regardless, it is very crucial when it comes to protecting the future of your loved ones.

Doctors and other medical professionals are faced with malpractice risk and this, in one way or another may affect the amount of their life insurance policy. A GP doctor working in his/her private practice might not have the same job risks when compared to an NHS doctor who works in an A+E. Job risks and stress differ depending on the specific type of profession. For instance, accident and emergency doctors have higher levels of psychological stress compared to other medical practitioners. 

Also, working for long hours with very short breaks in between might also negatively impact the health and wellbeing of medical professionals. At the end of the day, all medical professionals and doctors need life insurance to keep their families afloat when they pass on.

How Much Coverage to Get

How much coverage to get might be determined by three major factors that include your spouse’s income, future expenses, and the amount of savings built up. How much you earn will also impact the amount of life insurance you will qualify for.

Perhaps you need a life insurance policy to replace your income in the event of your untimely death. If you earn an annual income of $40,000, you will need $500,000 in life insurance, and in most cases, it is recommended to add back your annual income to the total amount. So if your policy is invested at 8%, then you will need $540,000.

Different strategies can be used to determine the amount of coverage to get with a common method being buying 10-12 times of your current annual income. While you might buy your life insurance depending on what you can afford you could also consider what you need to determine the amount of coverage to get.

However, there are more specific ways you can use to determine how much coverage to get.

Human Life Value

This is also known as the multiple of income method which is usually based on your net value after-tax income all through your work life. This is an easy method since it uses a random multiple of the income to determine the amount of life insurance. Since a random multiple is used, this method might be safe but it might not give you an accurate estimation of the life insurance amount you will need.

Needs-based Analysis

Unlike the human life value which uses a multiple of income, this method uses the current financial ability and the cost of future goals. One advantage of the needs-based analysis is that it gives a more precise figure.

What Goes Into a Rate

When determining the rates of the life insurance policy, different factors are taken into consideration. Here are some of these factors;

Gender

Women tend to pay lower policy premiums than men because they are said to live about five years longer than the latter. Hence, a female doctor would pay lower premiums than a male doctor for the same amount of coverage.

Health

Health is also another important factor of consideration. If you have a serious condition or chronic illness, the rates of your premiums will be higher than if you were healthier. Your insurer might also look into your family health history to determine the rates of your policy. Oftentimes, you will be required to undergo a medical exam, known as the underwriting process to determine your health. Policies with an underwriting process are usually cheaper with larger coverage when compared to no-exam policies that have higher premiums and lesser coverage.

Occupational Risk

The riskier your occupation is, the riskier you are to insure, and vice versa. Some medical professions are considered riskier than others. These professionals would end up paying higher premium rates than less risky ones for policies with similar coverage.

Income

The income a medical professional or doctor earns is also used to determine the rate of the life insurance policy. For instance, since a neurosurgeon earns a higher salary than a nurse and as such, they would qualify for a higher policy coverage since they can afford to pay for life insurance with higher premiums.

Smoker 

Generally, smokers pay higher premiums since smoking has a significant negative impact on health. As such they are considered riskier to insure than non-smokers. In fact, smokers pay very high premium rates, eg where a non-smoker is paying $100 per month, a smoker could be paying $400 per month.

Age

Age also affects the rates of life insurance premiums. A young medical professional is healthier and has a longer life expectancy than an older medical professional. So, the older you get, the higher the premiums get because you become riskier to insure with an increase in age.

How Much Life Insurance Do I Need to Get as a Doctor

The amount of life insurance you will need as a doctor will be determined by the stage you are in life. For instance, when you are new to the profession, the amount will be highly impacted by debt from medical school. Statistics from research have shown that most doctors leave medical school with a debt of more than $190,000. A policy with $250,000 coverage would be the most ideal in such a scenario. Later in the profession, eg when in your early thirties, the needs are different and you might have recently started a family or planning to start one. This means that the primary need of your life insurance policy is to protect your family. On average, you will require life insurance of between $2 million and $3 million. In other cases, you might even need $5 million in life insurance.

How Much Life Insurance Do I Need to Get as a Nurse

Life insurance for nurses is usually calculated as 1-3 times the annual income. So, if your annual income is $50,000, then you would have $150,000 for life insurance coverage. $150,000 seems like enough coverage, but if there are pending mortgage payments, education expenses, and so on, then it might not be enough coverage. This does not, however, mean that it’s not important, it would help a great deal in covering part of the financial obligations for your loved ones.

How Much Life Insurance Do I Need to Get as a Physician

For instance, if you earn $200,000 annually, then you can between $2 million and $3million in life insurance. Outstanding debt and kids would increase this amount. So instead of the average $2-3 million of life insurance, the amount would be inclusive of the outstanding debt, educational expenses for each of your kids, and other expenses. If there are current savings and investments, they wouldn’t be included in this amount.

How Much Life Insurance Do I Need to Get as an EMT

On average, an EMT earns $36,900 in a year. And while the occupation involves a certain amount of risk, insurance companies don’t charge them higher rates than other occupations. So, if earning an income of $40,000 annually, then you can get life insurance ten times that amount, ie, $400,000.

Why Doctors and Medical Professionals Should Consider Coverage

Doctors and most medical professionals receive very high salaries, which in most cases, makes them the breadwinners of their families. As such, it is important to provide a safety net for your loved ones to ensure their financial security after you die. 

Most professionals in the medical field are high-salaried, and this translates to more financial obligations. For instance, the more your salary, the more mortgage you are likely to take, the larger you invest in family businesses, the more expensive the schools you take your kids to, etc. That said, below are some of the main reasons why it is important to buy life insurance as a doctor or other medical professional.

Mortgage Repayments

Any doctor or medical professional would need a life insurance policy to cover for mortgage repayments if they die before the loan is fully paid. You don’t want to leave a financial burden for your loved ones, of paying the remaining mortgage when you die. Whether or not your spouse has an income, this would affect their way of living because their expenses increase. So if you had a 20 year mortgage and die in the 15th year, part of the death benefit proceeds would be paid to your creditor to complete the remaining mortgage payment for the 5 years while the rest is paid out to your beneficiaries or loved ones.

Replacing the Primary Earner’s Salary

Losing a loved one can be devastating, and it can even be harder if this is your spouse whom the whole family financially depended on. After you die, then your career stops and so does your income. To ensure that your spouse and children can comfortably sustain their lifestyle without your income when you die, then you can take out a life insurance policy.

Estate Taxes

When the family breadwinner dies, then their surviving spouse and children inherit their property including estates and other assets. Hence, they will be required to pay for the estate taxes which might eat up a lot of finances. To avoid leaving this financial burden to your loved ones, you can buy a life insurance policy that will be used to pay for the estate taxes when you die.

Replacing Childcare

Oftentimes, most doctors and other medical professionals are responsible for providing financial care for their children. Hence, the death of such professionals might leave their kids without the required childcare finances, which is why life insurance is necessary.

Education Expenses 

Doctors can also take out life insurance to ensure that the educational expenses of their children are taken care of in their absence. 

Will Life Insurance Companies Offer Them Good Rates?

Medical professionals and doctors are usually a target for most insurance companies and agents because of their high salaries. But their rates might not be the same depending on the type of profession. For example, some medical professions are considered high risk due to exposure to infectious diseases, toxic substances, psychological issues, and injury risks. All these factors will affect the rates that life insurance companies offer them.

The insurance companies will take into account the scope of the doctor’s activities before giving a final quotation. Also, depending on the type of life insurance, medical professionals can get policies with good premium rates and large coverage. For instance, term life insurance is the most affordable but has small coverage while permanent life insurance policies are costlier but with larger coverage.

So it is good to look into different options before deciding on which policy to buy. Besides, your insurance agent should be able to introduce you to different insurers. Also, depending on your situation, from your health, your income, age, and gender, etc, you should be able to find a policy with good rates even when your profession is considered risky.

And even with good rates offered by a potential insurer, don’t just buy for the sake of it. 

Before you set out to shop for your life insurance policy, you should assess your current needs and financial situation as well as the future financial needs of your family. This could help avoid buying too much life insurance because a lot of people end up purchasing more life insurance than they need, which increases the premium payments. So, go for a reasonable amount of life insurance and always consult with an expert to help you find the best policy at good rates.