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Life Insurance for Young Physicians: Avoiding Mistakes and Taking Advantage of Opportunities (Part 3)

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, in this four-part series I 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. (Part 1 focused on buying the wrong amount of insurance and Part 2 addressed buying the wrong insurance product.)

Underestimating life expectancy

Now that we’ve determined the amount and type of life insurance to purchase, let’s consider how average life expectancy factors into your life insurance decisions.

At the turn of the 20th century, the average life expectancy was age 42. In 1935, the average rose to age 66. Life expectancy today for a 30-year-old man is age 87, and age 91 for women. Some projections show that more than half of the children born today are expected to live past 100 years old!

It’s easy to think about life insurance only providing a benefit to your family if you die prematurely, however life insurance can also provide financial benefit to your family after you’ve lived a long life. Here’s how life insurance can help on both sides of the equation:

  • Some life insurance contracts will fund themselves if the insured becomes disabled. This means that even if one cannot work and save, the policy builds cash during the insured’s life. With this type of policy, if you were to become disabled, your loved ones would have peace-of-mind knowing that there is money accumulating to assist with any bills that remain upon your passing.
  • Some life insurance contracts build tax-sheltered cash that can be used later in life for college funding and/or supplemental retirement income. It’s wise to plan for a time when the stock markets may not be performing well. In a poor economy, being able to access money on a tax-favored basis in retirement while waiting for your retirement portfolio to recover from the market’s ups and downs is extremely beneficial.
  • Riders, a provision of a life insurance policy, can now be added to contracts inexpensively to provide living benefits for chronic, terminal or critical illnesses. That can be very beneficial, especially later in life. According to a report by AARP, the lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68 percent for people age 65 and older. When attached to permanent contracts, riders are truly golden protections when needed, and if not needed, the life insurance gets paid out when the insured dies.

In the final post in this series, I will talk about reviewing your life insurance policy and listing minors as beneficiaries.

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.

Dave Serena, Insurance Agent

Dave has been an insurance advisor with Wisconsin Medical Society Insurance and Financial Services since 1995. Working exclusively with physicians (he has over 800 active clients), Dave provides guidance for income and asset protection. He is dedicated to working with residents, fellows, and practicing physicians and their families. Dave is a member of the National Association of Life Underwriters and the National Association of Insurance and Financial Advisors. He is a recipient of the National Association of Life Underwriters’ prestigious National Quality Award.

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