Life Insurance for Doctors and Physicians [Protect Yourself]

There are a lot of so-called financial gurus out there that claim to know how doctors and physicians should structure their life insurance.

The truth is that there is no one-size-fits-all approach for doctors and physicians. Instead, you need to take a look at your personal circumstance in order to make an educated decision.

Our article will focus on the most common questions we receive from doctors and physicians regarding their life insurance coverage such as:

  • How much life insurance do I need as a physician?
  • What are the best life insurance companies for doctors?
  • Do I need life insurance during residency?
  • Should doctors buy whole life insurance or term life insurance?

However, we always recommend that if you are trying to save time that you should stick to comparing rates and quotes with all life insurance companies.

You can do this easily below using our instant life insurance quotes rate engine to compare rates with 50 of the top-rated life insurance companies.

How much life insurance do I need as a physician?

The dirty secret about life insurance death benefits is there is no perfect amount. The amount of life insurance you need as a physician depends on what you want to replace when you die.

If you’re single with no children, you may not even need life insurance at all. However, if you have someone relying on your paycheck, then you need life insurance.

We have seen the DIME method work well for physicians and doctors when selecting their life insurance death benefits.

DIME Method:

  • Debts
  • Income
  • Mortgage
  • Education Costs

We usually recommend that you start with a multiple of your income. If your income were to cease today, how long would your family be able to pay the bills?

Once you have your income protected, you need to consider your debts.

Do you have student loans?

Do you have a mortgage?

Adding these to your total can free up money for your family.

If you have any aspirations of your children going to an expensive Ivy League University, then leaving money for your children’s education would be wise.

When you add up all of these costs, you can easily calculate a death benefit in the multi-millions.

This is not uncommon for doctors or physicians.

For temporary death benefit needs in the millions, term life insurance makes the most sense.

Term life insurance is extremely affordable at higher death benefits compared to whole life.

You should lock in your death benefit for 20-30 years if you’re just starting out.

However, you should reevaluate your life insurance needs periodically.

As you build wealth, and your liabilities lessen, you may no longer need as much death benefit or life insurance at all.

What are the best life insurance companies for doctors?

Life insurance for doctors and physicians does not vary greatly from the general public. Doctors need a reliable life insurance company that is affordable.

Many of the best life insurance companies can be a great option for a doctor.

However, there are certain life insurance companies for doctors that we especially like.

Below we will list our top three best life insurance companies for doctors with a short description of why we like each company.

Our decision heavily weights term life insurance, not a whole life.

Prudential Financial

We love Prudential life insurance for doctors and physicians for a few reasons.

First Prudential is an A-rated life insurance company that has been around for over a hundred years.

Prudential life insurance is very competitive at death benefit amounts over $1 million, which doctors and physicians often need.

Prudential also has unique products and features that benefit physicians. For example, Prudential has a term life insurance policy that will cover you until age 65.

Prudential also offers a return-of-premium term life insurance policy that is affordable and a great solution for buy-sell agreements.

Prudential has some of the best life insurance conversion features in the industry if you ever needed to exchange all or a portion of your term life insurance with universal life.

Converting your term life insurance can come in handy later on in life if you need to incorporate life insurance into your estate plan because it preserves your insurability.

When you convert your Prudential term life insurance policy, your new permanent policy will be at the health class that you were approved at when you were young and healthy.

Prudential allows you to currently convert into its full permanent portfolio, including survivorship universal life. This is an extremely rare and valuable feature that can save you thousands.

AIG Life Insurance

AIG Life is a great life insurance company for doctors and physicians and consistently has some of the lowest term rates. Yet, unlike Banner Life, AIG is a brand name.

You can see our full AIG Life Insurance Review Here.

AIG is an A-rated company and offers a term life insurance product called select-a-term. This unique term contract actually allows you to pick your desired term duration up to 40 years!

This allows you to lock in life insurance at an affordable rate when you’re younger, or avoid overpaying for years that you “don’t need” by not locking you into fixed durations.

AIG life also has great term conversion options. In the first 8-10 years, you can convert your term policy into any of AIG’s permanent life insurance policies without requalifying your health.

American National Life Insurance Company (ANICO)

American National is another great life insurance company for doctors and physicians.

While ANICO may not always have the rock-bottom lowest rate like AIG, they are still competitive.

However, what sets ANICO apart is its value-packed term life insurance with living benefits. Doctors and physicians know first hand to the effects of critical and chronic illness.

American National’s term life insurance has built-in living benefits for critical and chronic illness that lets you accelerate the death benefit while you’re alive for serious conditions like a stroke.

These critical and chronic illness benefits can supplement your disability income while you get back on your feet with a tax-free lump-sum cash benefit.

ANICO also has great conversion options built into their life insurance as well that allow you to convert to any permanent product that ANICO makes available at the time of conversion.

ANICO has some low-cost universal life insurance options that also include the built-in living benefits riders for critical and chronic illness.

This combination of affordable rates, strong conversion options, and living benefits makes ANICO’s term life insurance a great value for doctors and physicians.

Do I need life insurance during residency?

Residency is the beginning of your career in the medical field. It is not unusual for a resident to have a net worth of zero along with a spouse and possibly children.

In addition to the general need for life insurance in residency, many residents anticipate that their income will increase with some level of predictability.

If you expect that you will need $2-$5 million in life insurance needs after leaving residency, now is the time to lock in as much life insurance as you can afford as it will never be more affordable.

Now, this is not always a slam dunk. If your current income does not justify that level of coverage, your agent may have to lobby your case on your behalf to the insurance company.

This is where working with a veteran independent life insurance broker pays dividends. However, just because you need $3 million of life insurance doesn’t mean you can afford it.

Cash can be tight while you’re completing your training.  If you need to compromise on your coverage, we usually suggest lowering the term length to lower the cost, not the death benefit.

A 10-year term life insurance policy will significantly less than a 30-year term.

Once you’re making more money after your training, you can always replace the policy with a longer-term.

If you’re uninsurable, you can convert all or a portion of the policy you purchased in residency.

If this happens, you’ll be glad you went with a company with great term conversion options.

Should doctors buy whole life insurance or term life insurance?

This is a loaded question when it comes to life insurance. There is no shortage of physicians who’ve been burned by whole life insurance out there.

However, there are instances where permanent life insurance does make sense. Yes, this includes the whole life.

Term life insurance will be the most cost-effective way of buying high death benefit amounts temporarily. There is no debate here.

Whole life insurance offers lifetime death benefits with a cash savings component. The cash value within the policy grows tax-deferred and can be withdrawn tax-free through loans.

Whether or not you find whole life insurance attractive will depend on what you compare it to and your risk tolerance.

For high-income earners in high tax brackets, a whole life policy can be a principal-protected modest yielding asset with great tax efficiencies if structured correctly.

The keyword here is a modest yielding asset.

If you’re looking for stock-market-like growth on your money, then you should be in the stock market, not whole life insurance.

However, if you compare whole life insurance to a high-yielding savings account or CDs, starts to look more attractive due to the death benefits and tax advantages.

Also, you want to make sure that you’re working with a life insurance agent who understands how to structure whole life to maximize cash value if this is something that you’re interested in.

Additionally, permanent life insurance can make sense in business succession planning and estate planning; although, we usually will use universal life insurance to reduce costs here.

Final Thoughts on Life Insurance for Doctors and Physicians

If you’re a doctor or a physician, you most likely will need life insurance at some point in your career. The younger and healthier you are, the more affordable your life insurance will be.

You should look at term life insurance to provide you the death benefit that your family needs first and foremost. Term insurance is the best way to purchase high death benefits temporarily.

You can request a term life insurance quote on the side of our website or give us a call today.

We also recommend purchasing a term policy from a life insurance company with strong term conversion options. Successful doctors often run into estate planning issues.

Having a term life insurance policy with a strong conversion option can save you both hassle and expense if you need to incorporate life insurance into your estate plan later in life.

Finally, if you are looking for a principal-protected asset with tax advantages and modest growth, whole life may be an option for you. However, carefully consider your options.