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A Basic Guide to Life Insurance— for Medical Students

August 20, 2023 9 minutes
Medical Students Guid

You’ve made it to medical school. Along the way, you may have accumulated student loan debt. You may now have a spouse or partner and maybe a child. And all are reasons to think seriously about life insurance.

Let’s face it: You don’t buy life insurance to financially benefit you. You buy it to take care of people you love, people whose lives would dramatically change if you were gone. You buy it because you don’t want people you care about to have to deal with new financial worries on top of personal grief and loss.

But how do you know what to buy?

It’s easy to get caught up in unfamiliar terms, but the basic premise of life insurance is easy to understand. You sign up for a policy and pay the premiums. If you should die while the insurance is in force, the insurer will pay the contracted benefit to a person or persons you have named as beneficiary.

At some point, you may be offered life insurance by an employer, and it is a valuable benefit. Be aware, however, that employer-provided life insurance is generally effective only as long as you remain with that employer, and you may not have an option to convert it to a personal policy when you change employers.

Purchasing your own life insurance is making an investment in peace of mind. With that in mind, choose your provider carefully and become familiar with various life insurance types.

Look for policies underwritten by highly rated insurance companies with strong reputations for policyholder service. Of course, you’ll also want favorable pricing.

Insurance offered by a professional organization can deliver an outstanding combination of stability and pricing, because the association works in the best interest of members and wields the impressive buying power of a large group.

Begin shopping with some basic knowledge of types of life insurance and specific terms you’ll need to understand.

Two main types of life insurance: Term and Permanent

Term Life Insurance

This is insurance that provides coverage for a specific period of time. Typical terms are 10, 15, 20 or 30 years. Term life insurance is the most economical choice, and it is a great option for those who are looking for an inexpensive way to free survivors from the burden of financial obligations such as student loan debt and mortgages that have a foreseeable end. Benefit amounts can range from a few thousand dollars to several million, with premiums that vary just as widely.

Remember that when the term is up, the insurance will end, and you will most likely want to replace it. Because you will be older, the replacement cost will likely be higher for an equal benefit amount.

Permanent Life Insurance

As long as premiums are paid when due, this type of insurance will remain in force throughout your life. There are several types of permanent insurance, some of which involve benefits that are accessible during the policyholder’s life. These include whole life insurance, variable life insurance, and universal life insurance. As a medical student, you will likely be best served by the very affordable term insurance, but as you develop your long-term financial plan and begin to reach peak earnings, you may find that permanent life insurance fills a need in your portfolio. You will benefit from a consultation with an insurance professional who understands your financial goals and the special needs of your profession.

You can customize.

Many policies offer opportunities for customization with riders—amendments to the primary contract that let the policyholder add desirable features. Common riders include accidental death benefits and waiver of premiums in the event of disability. Be aware that not all policies offer optional riders and riders may vary by state.

Life insurance belongs in every financial plan.

Right now, you are probably giving more thought to your next exam than to planning for your family’s financial future. Nonetheless, now is the time to begin laying the foundation for the financial security of the people who depend on you—and those who have invested in you.

The younger you are, the lower the risk, and that is reflected in your rates. You are more likely to pass any required health screening now, if it is required at all, than you will be in future years. This is also the best time to develop a relationship with an insurance specialist who is not only well-versed in life insurance, but also in the special insurance needs of physicians. This physician insurance specialist will help you build a plan that offers basic and affordable protection now, and that will, when the time comes, adapt to your increasingly sophisticated needs. Here again, your professional association is a good place to look for knowledgeable assistance. You’ll be working with folks whose priority is achieving financial solutions that work for you.