life insurance

[obiwan]

Advertisement - Members don't see this ad

wanted to get some thoughts regarding life insurance, i'm in a dual physician marriage and both of us are finishing up residency and begin working as hospitalists with comparable incomes ~ 200K. how high up in priority is life insurance for us as opposed to disability insurance which alot of people have been talking to us about.
thanks

 

[The White Coat Investor]

I'm a little lost. Why can't you get both? Life insurance is cheap and easy.

http://whitecoatinvestor.com/how-to-buy-life-insurance/

If you don't have kids yet, maybe you don't need it, but make it a conscious decision.

 

[snoggy6]

From things I've read, people say disability insurance is more important than life insurance. You're more likely to become disabled than you are to die at an early age. If you become disabled and can't work, you still need some way to pay all your living expenses, plus medical expenses related to your disability, plus other things like maybe student loans, etc. Depending on the disability (stroke, serious illness, head trauma from a car accident, etc.), out of pocket health care costs can be huge. Whereas if you die, you don't really have any more expenses, aside from funeral costs. Of course if you have kids or other people depending on your income, life insurance is important as well.

 

[heybrother]

I'm a little lost. Why can't you get both? Life insurance is cheap and easy.

http://whitecoatinvestor.com/how-to-buy-life-insurance/

If you don't have kids yet, maybe you don't need it, but make it a conscious decision.

I read this site cover to cover and it opened my eyes up to a lot of things I'd never considered. I took a hard look at my investment strategy after reading. Strongly recommend. One year ago a friend of mine who was just starting a dental practice told me that a life insurance salesman advised him to forget things like 401ks/ROTH/etc and that a whole life insurance policy would supply him with everything he needed. If I'd read whitecoat by then I'd have had plenty to tell him.

 

[DocProtector]

Disability should always take the lead given you as a professional have a much greater chance of being taken out of your profession than death. Depending on your specialty we may be only talking about losing the use of your index finger...

 

[Sheldor]

wanted to get some thoughts regarding life insurance, i'm in a dual physician marriage and both of us are finishing up residency and begin working as hospitalists with comparable incomes ~ 200K. how high up in priority is life insurance for us as opposed to disability insurance which alot of people have been talking to us about.
thanks

Term life insurance is incredibly cheap. You should both get a 10 year term, likely under $40 a month, and when that is up your net worth will likely make it such that you no longer need life insurance.

I believe this is also recommended by whitecoatinvestor.

 

[flipmd]

If you or your spouse passes away, any children you have would still be well-supported on the remaining spouse's 200K income. I don't think Life Insurance would be warranted in your case.

 

[ctenj]

Yes and no... The OP doesn't mention if they have kids yet. If they don't, they might not need life insurance unless they have large expenses that the surviving spouse wouldn't be able to cover with just their salary (the first comes to mind is mortgage?). But assuming that you are planning to still live relatively modestly as you start your attending careers, I think it's pretty safe to say that individually, you each make enough self-insure yourselves.

Once kids come into the picture, I'm not sure that I agree with flipmd. The surviving spouse will presumably still be paying off their own student loans (the spouse that passed away should have their loans forgiven) as well as trying to save for their kids' college tuition, pay for additional childcare/household help (since they'll need it if they're a single parent, although the amount needed will depend on their kids' age), save for their own retirement, all while being taxed at a fairly high rate because of their income bracket. As others have said, life insurance is relatively cheap especially if you're young & healthy. I think if you have kids, it generally makes a lot of sense to put a little money into insuring yourselves for the "just in case" scenario.

That said, I also agree that disability insurance is crucial. It's not nearly as cheap as life insurance, but others have already pointed out a number of reasons that it could be financially devastating for one spouse to become disabled... I think regardless of whether you have children, you should probably get disability insurance.

My 2 cents 🙂

 

[MD Financial Services Scott]

In my opinion the main reason to own life insurance is to simply leave cash behind after a death to allow the surviving members to continue living the lifestyle that has been built. If that lifestyle can be continued without the income from the deceased member then the Need for life insurance really is not there, now you are only dealing with the Want aspect. Keep in mind and assuming you are healthy $1 million of term life would only cost about $20-$25 per month each so pretty cheap......about the cost of pizza night.

As for Disability, you buy that to provide on going cash flow during your time when you can't work due to an illness or injury. My opinion is to look at your monthly bank account statement, total up the last 12 months of withdrawals, add in any loans that might be coming out of deferment, and now you know your annual expense. Take that annual expense divide by the equal ratio of your household income (say your wife makes $120k and you make $80k then she makes 60% of the household income) and then each of you buy your ratio of the expenses. As an example your household income is $200,000, your monthly expenses are $8,000 your wife makes 60% of the household income so she would buy $4,800 of coverage (60% of the $8,000) and you would buy $3,200 of coverage, this way if either of you were to become disabled and not able to contribute to the economics of the household then your family would still have the income they needed to come in to maintain the family income. Now this is a needs based process and Not a 'Wants' based process, you may 'Want' more coverage and certainly can purchase more but this is an easy way to figure out what you Need.

Let me know if we can be of further service.