Life insurance protects yourself and those you love. No one knows better about protecting and serving those around you than doctors and medical professionals. In the medical field, doctors, nurses, and others go through large swings of debt to financial success. This alone is a good reason for any medical professional to consider life insurance. However, the type of life insurance they need may vary on the time in their life, their needs, and their future plans.
So what is the best life insurance for doctors and medical professionals? Well, by breaking down various insurance policies we can see that one size doesn’t fit all. Here is what you need to know about the best life insurance for doctors and medical professionals.
Why Do You Need It?
It’s commonly joked that doctors are the worst patients. But just like everyone else, even if you are in good health, unfortunate things happen and it is better to be prepared. With life insurance, you can take care of anyone you provide for well after your gone. If you have a larger estate and are well into your career, you can redeem tax-friendly benefits.
Here is why you need it.
Here are several examples and situations in which you would be a good candidate as a medical professional who needs life insurance.
Large Estate: If you are well into your career and have assets and an estate that accumulate to or over $11.70 million, then you may way to consider life insurance for its estate planning purposes. This may be because you have multiple properties or fine art collections. Anything of value that isn’t liquid can be considered a part of your estate.
Large Debts This is one of the main reasons that life insurance is a great option for medical professions. Almost always they have extreme amounts of debt while trying to pay for children, family, or other reasons, while they work towards financial freedom and independence. In this time life insurance can help cover these costs if an unfortunate event were to happen.
High Income: While life insurance can be for anyone regardless of their income, those who have higher incomes are worth taking a second look. A life insurance policy is supposed to be 10 to 15 times the amount of your salary if it is being used as an income replacement to support a child or spouse who relies on you as a provider.
Types of Life Insurance
While there are three types of life insurance policies, there is really one type that seems to fit most medical professionals best. The three types are term-life, whole-life, and guaranteed life insurance, Depite term being the better option for medicals in a lot of instances, it’s worth noting the differences between the three.
Term-life is a great option for medical professionals and doctors. It is often referred to as “pure-life” and unlike the other policies covers you for a predetermined amount of time. What that means is that the death benefit is only paid out if the benefactor passes during the policy term. If the benefactor outlives the policy, the policy is expired and you can renew or end your policy. The reason this is a great benefit for medical professionals is that they often have large debts at certain points in their career that they need covering for. However, at some point, they will reach financial independence and not need life insurance anymore. Term is a very low premium option that covers you just when you need it.
Whole life insurance is the complete opposite to term life. Whole life has unbelievably expensive premiums because of its cash accrual component. You pay a range of fees for essentially someone investing your money in the market. The death benefit is paid out when the benefactor passes. How much you have is not guaranteed because your money is in the market, so there is a chance that you put in more than you get back. However, that’s not as common. This may be a good option for those who have established major assets that accumulate to millions because it can offer tax-exempt inheritance pass downs.
Guaranteed Universal Life insurance is your middle option between the two. It tends to be a favorite among the average person because it guarantees the death benefit but also get’s rid of the fancy frills and extras that come with whole life insurance. Your monthly premium will likely fall right in the middle of the two different types of life insurance making it both affordable and a money-back sort of investment.
The Different Types Of Term-Life Insurance
Even within the category itself, there are a few different types of term life insurance that may work better for you and not for another. Term-life as mentioned is one of the better life insurance policies because it’s affordable. This is important considering a young medical professional is already taking on a lot of debt.
Here is what you need to know about the different types of term life insurance out there.
Level-term insurance is one of the more commonly used policies. This is because regardless of when your payout is, your beneficiary will receive the payout for the exact same number regardless of whether you pass in year six or 20. The confirmed amount is set for the death benefit and the monthly premium you pay will not change.
Return Of Premium
This always perks a lot of ears because the one thing about term life insurance is that you don’t get your money back like the other policies. It is sort of like renting an apartment instead of buying a house. This is true except for policies that have a return of premium or ROP. If you were to outlive your policy, there are a number of insurance companies that would return a portion of your monthly premiums back. This option of course raises the rate of the monthly premium which may lead you to feel like GUL is a better option.
Annual Renewable Term
One of the least popular options is the annual renewable term. This is less popular because it doesn’t lock in your premiums and can be an inefficient way to do this. It can be particularly helpful for someone who thinks they will only need insurance coverage for a year or two. Having said that, it’s not very common that’s the case.
This is one of the other popular options because the goal of the medical professional is to get to a place where they are self-insured. With a decreasing term, your monthly premiums will lower as your term goes on because the benefit will lower as well. This is meant to follow the same path as paying off a massive debt. As time goes on you pay it down and you don’t need as much coverage in the term insurance policy as you did at the start. This can be another great option during residency.
Tips And Tricks For Finding The Right Policy
Here are some tips and tricks that you should know when heading down the path of finding the right insurance policy. Having a good agent is crucial to finding the right policy for you. It doesn’t hurt to know some of these things yourself like which rider benefits you will want to be included in your policy.
Find A Good Agent
Before you start shopping around for policies you may want to consider looking for a good independent agent first. Typically, when you go straight to insurance companies, it is easy to get sucked into something without knowing it’s not in your best interest. The job of the insurance company is to sell you their policy, but the job of an agent that works for you is to find you the best insurance policy.
Finding a good agent isn’t hard but it also shouldn’t be a breeze. The agent should go through some of the basic questions that you would get when qualifying for an insurance policy because that will determine what will be a good fit for you. Any agent that immediately opens up a file with the cheapest options is a no-go. They have a similar job to a real estate agent. They need to get to know you and what you want first.
Know Your Rider Options
Even though you have an agent who will be looking for the very best policy that fits your needs, it’s important to know what your rider options are. Riders are the add-ons to a policy to customize and tailor it to your needs. Several add-ons can be beneficial to a medical professional and worth taking a look at.
Accelerated Death Benefit
This is a common rider for all term life insurance and typically a no-cost one. This is so that the beneficiaries can access the death benefit sooner than death in the event of a diagnosed terminal illness or something of the sort. If the death benefit is accessed early by the accelerated rider there is usually an administration fee that is deducted from the total.
Wavier Of Premium
Not always necessary to add on if you have long-term disability insurance riders. Essentially, the monthly premium is waived if the benefactor were to become disabled and unable to work. This is important for doctors since this would prevent them from providing as their job and their job is likely the reason they have this insurance policy in the first place.
Term Conversion Rider
This would allow the medical professional to convert their term life insurance policy into a permanent life insurance policy or a whole life insurance policy should they wish. There is a deadline for this as insurance companies wouldn’t allow that to happen near the end of a term life policy agreement. This is helpful because you won’t have to go through a new application process meaning your health and age factors will remain the same regardless of when you apply for the conversion.
This helps cover any of the costs associated with getting elderly and needing assistance from a nurse or nursing home. These costs can add up quickly and this rider helps manage some of those costs. It allows for accelerated payments to help cover these costs similar to an accelerated death benefit.
Know Your Situation
While term life insurance is said to be the best route for doctors and all medical professionals, it is still worth the time to explore your other options. Term life rates high among medical professionals because of their low cost in an expensive time like residency. It also covers massive debt that you don’t need to worry about being passed on to beneficiaries in the event of a sudden passing. While you won’t get your money back unless it an ROP, term life offers the ability to work towards financial freedom as most medical professionals will get there.
Whether you choose term life or decide to go in a different direction it’s worth trying to find an agent that is independent of the life insurance companies you are looking at. This is because their sole focus will be finding you the right policy whereas the insurance companies just want to sell you theirs. When an agent goes through the process of getting to know your needs, debts, and health history, they can find the best policy for the most affordable rate. You will still need to go through the application process with the actual company you land on, but the agent can take the work of finding the right company and policy off your shoulders.
In the end, you will likely find that term life is the perfect fit for medical professionals looking for life insurance.
CFA Insurance agents specialize working with professionals to fulfill all of their life insurance needs. We shop around with all of the companies on the market at no extra cost to you. Contact us today for a no obligation quote!