Physicians are pretty risk averse as a professional group. Evidence-based medicine is built around eliminating it, and practices are built to anticipate and defend against it. Insurance transfers the financial risk of life’s events to an insurance company. Medical professionals generally need more insurance and types of coverage than most other professionals. It is wise to seek professional counsel when it comes to selecting your insurance portfolio.
Types of Insurance to Consider
Health Insurance
A sound insurance strategy will protect you and your family. Like non-physicians, health insurance will cover events like having a baby and your general healthcare costs and prescriptions. Health insurance is often overlooked, but we recommend checking every year to make sure your benefits are working for your family. Open enrollment is a good time to do this. For example, should you have a high deductible plan or traditional PPO?
A serious medical event like a stroke may also require disability insurance to supplement your high income if you are unable to work. Additionally, a life insurance policy will provide help in the event of your passing.
Disability Insurance Requires Being Proactive
Disability insurance may appear pricey, but it should be purchased before you find yourself in need of it. Disability income insurance provides supplemental income if you should become disabled and no longer be able to work. This benefit is used to help maintain your standard of living and pay your living expenses. The two most common types of disability income insurance are short term and long term.
Short-term disability income insurance typically starts after being disabled for 7-14 days and will pay a benefit up to 90 days, sometimes 180 days. Long-term disability income insurance typically starts after being disabled for 90 days and will pay a benefit until age 65 or in some cases longer.
It is a good idea to purchase disability insurance as a resident and then expand as you transition into a practice. Your premiums tend to be lower the younger and healthier you are.
Life Insurance
Life insurance protects your biggest asset -- you -- in the event of your death. It helps replace the income you and your family were expecting to educate your children, go on vacations and maintain the lifestyle you wanted.
There are two primary life insurance questions to consider -- how much do you need and what type of insurance. When determining need, think about the continuing needs of your family. There are two main types of life insurance, term and whole. Each has advantages and disadvantages that you should review with a financial advisor.
Personal Liability Insurance
Malpractice insurance is a type of liability insurance that is a requirement for your chosen profession. But because you spend most of your life away from work, it’s wise to make sure you have enough personal liability insurance to cover accidents that occur outside the workplace. For example, auto and homeowner’s insurance policies typically include personal liability coverage that takes care of injuries and property damage. Personal liability insurance is critical because it helps you protect your personal assets in case of a judgment against you.
Your financial advisor can help you make sure your policies contain appropriate amounts of liability insurance, and can help you decide whether you might need additional coverage in an umbrella insurance policy.
You have chosen a noble profession and a career that is worth protecting. Make sure you know what type of coverage you need, how much you need, and when you need it. As a physician, your priorities and coverage will shift during the course of your career. Find a reliable financial advisor who specializes in your coverage like you specialize in your medical practice.
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John Dameron has been a financial planner and partner with Spaugh Dameron Tenny since 2002. With the help of the SDT team, John created a lecture series called Physicians Financial Focus, authored a book entitled The Residents and Fellows Financial Survival Guide, and has coached hundreds of physicians from residency/fellowship into practice. His expertise has also been featured on KevinMD.
