Why Should I Purchase Disability or Life Insurance as a Medical Student, Resident/Fellow and Physician?

Doctor talking to a young girl in an exam room

  • Illnesses and accidents happen – to everyone.  Disability insurance protects your current and future income and is recommended at all stages of your medical career.
  • As a general rule, the earlier in your career that you purchase a policy, the better the rates and more robust coverage you can get.
  • Life insurance protects your family should the worst happen.  If you don’t have a family, or co-signers on loans, you may not need that life insurance.
  • Life insurance is always cheaper the younger and healthier you are.

Understanding the “why” to buying insurance can sometimes be a perplexing thought process.  Statistically, one out of every four 20-year-olds will become disabled for longer than 90 days before they retire.  90% of all disabilities are caused by illness, not physical accidents.  The “why” to buying insurance is protection against the unknown.  And based on history and statistics, we already have a pretty good idea of what that unknown is.  

If you make it to medical school, more than likely, you will become a practicing physician.  Roughly 83% of all medical students make it to residency and 98% of those residents become practicing physicians.  Thus, as a medical student, you are highly likely to have a future 6-figure income.  Along with that you probably will have some combination of a family, student debt, practice ownership, financial goals, etc.  The list will only grow and broaden reasons for things you want to protect – the “why”.  This is relevant at all stages of your career, from medical school, into residency, then to starting your practice and beyond.

Medical Student – Why?

  • As a medical student, disability is about protecting your impending future and the income that comes with it.
  • Life insurance can ensure your medical school debt is paid, amongst other things. 

As a medical student, you are going through a lot.  All the free time you enjoyed before is now spent buried in notes, in a lecture hall or on a hospital ward.  You are managing all of this while taking on mounds of medical school debt.  These are all things you are actively worrying about while planning for your future.  What insurance does, specifically disability and life insurance, is protect that future.  

Disability insurance is about protecting income.  You don’t currently have an income, but physician disability insurance (built the right way) can protect the income that is yet to come.  There are affordable options that you as a medical student can take advantage of to protect income that hasn’t materialized yet.

Life insurance is designed to help cover that burden of cost should something happen.  If your parents or sibling (or anyone else) co-signed your medical school loan with you and you passed away, that debt would be transferred to them.  Having life insurance, even a small temporary policy, helps ensure that burden is not left with your family or loved ones.  

Residents and Fellows – Why?

  • Residency is the prime time for disability insurance.  You can protect the specific specialty you’ve chosen with lower rates and a customized plan.
  • At this stage in your career, if you have a family or debt you’re paying down, now is the perfect time to protect them and their future.

Residency and Fellowship is a whole new ballgame in your education.  Working 60 – 80 hours a week, evening study sessions for the next day’s cases or clinical prep; you’ve got an entirely new set of stress and responsibility.  You’re also making money now!  Not the income you can expect in the future, but $55,000 (average) is much more than you were making in medical school.  Whether in residency or fellowship for the next 3 to 7 years, the end (or beginning) is near and now is the prime time for you to take your financial security to the next level.

If you don’t already have disability insurance, now is the time that you absolutely need to have that conversation.  With disability insurance in residency or fellowship, you’re able to protect the future income that is specific to your specialty you’ve chosen as a physician.  All the insurance add-ons (riders, in the language of the industry) aren’t necessary right now, but there are some key components that are vastly more important than others.  We can customize your plan entirely to fit your specific situation.  

If you have a family, student debt, home mortgage, etc – life insurance will ensure that you don’t leave your loved ones in a difficult situation.  Take that step and secure your family’s future.  The younger and healthier you are – the cheaper it is and easier it is to get.

Attending Physicians – Why?

  • Underlying group disability is not enough.  An individual policy is highly recommended, even a bare-bones policy, to protect your income but also a likely future job change.
  • Life insurance – if you don’t have it by now, you’re behind.  Protect your family and legacy.

You’ve made it – the goal you set out to accomplish years ago has finally been made a reality.  This new reality is completely changed from just 6 months prior – higher pay, better benefits, more prestige; now more than ever, that layer of protection is paramount.  Beyond life and disability, you will need to consider what type of policy to carry – individual vs group. 

More than 65% of all physicians will change jobs within the first five years of their practice, and nearly every physician will change jobs over the course of their career.  That means new pay, new benefits, and more risk.  Individual insurance policies can help mitigate that risk because you are in control – they travel with you, and they are custom-built for you, not a group.  Individual insurance policies can be more expensive, but the flexibility is of higher value if you’re planning on changing jobs during your career.

The “Why” – Your Peace of Mind 

 

As a physician, you need to prepare for the uncertainty of the future.  Getting older, job change, a growing family – these are all things to consider when looking at insurance protection, because when you get it and what you get matters more than you may know.  

The “why” to purchasing disability or life insurance is perplexing.  No matter the “why”, it’s extremely important to remember a few key things.  The earlier you purchase in life, the better the rates and coverage you’re able to get.  Disability is about protecting current and future income – it is recommended no matter the stage of your medical career.  Life insurance protects your family should the worst happen.  If you don’t have a family or loved ones tied to your loans, you may not need it.  

Let’s talk – we’ll have an experience-based conversation on your “why” and build the pieces of protection around that present and future. Contact us to get a quote and discuss your specific needs.

Tyler Stafford, CFA is the Chief Executive Officer and Co-Founder of Panacea Financial. He also serves on the Board of Trustees for the Baptist Health Foundation. He has lectured nationally on personal investment strategies for physician, and physicians in training.

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