By Dave Serena, Insurance Agent
Having been a Life Insurance agent for 25 years, it’s been my distinct pleasure to work exclusively with physicians. I’ve learned many lessons along the way and, because of that, I think I may be in a unique position to share some insights about some of the milestones that lie ahead for young physicians.
With that in mind, this four-part series will address some of the most common mistakes as well as opportunities for physicians who may be buying insurance for the first time as they begin their careers. In my experience, one of the most common mistakes is…
Buying the wrong insurance product
Last month, I discussed how to determine an appropriate amount of life insurance coverage. This month, I’ll talk about how you to choose the right insurance product.
Once you know the correct amount of life insurance you need, your next question will most likely be, “How much can I get, for how little?”
The lowest price can be found by purchasing term insurance with level term premiums for a guaranteed time period. The most common time frame for term insurance is 20 years, which means, once issued, premiums cannot be increased for the first 20 years of the contract. It also means that the contract gets expensive around the young age of 50.
In my experience, this is when mistakes are made. Most people will want to choose a 20-year term, but in reality, it is better to set the time frame of your term insurance for as long as possible, rather than regretting that you made it too short.
The problem with too short of a term insurance contract is that, quite simply, life happens. People get injured or ill and can’t work or save as expected. When they want to get more life insurance later, health issues prevent them from obtaining new contracts or getting them for reasonable rates.
For example, right now I am working with a 42-year-old physician, practicing full time, who cannot get life insurance at any price because of health issues. Like I said, life happens.
Life insurance is meant to provide emotional comfort and security. For someone who is young and healthy, it is inexpensive to buy insurance for longer terms. Don’t be shortsighted—plan for the future. The good news? You can always cut back when you reach your goals.
In part three of this series, I’ll talk about matching insurance coverage to life expectancy.
The views and opinions expressed in this blog are solely those of the author and do not necessarily represent the views of the Wisconsin Medical Society, Wisconsin Medial Society Holdings Corporation or its subsidiaries. Nothing in this blog should be construed as legal, financial or clinical advice.