I have written previously about how not wanting to confront our own mortality can be a major cause in neglecting to address our life insurance needs. So it seems logical to me that someone who is constantly reminded just how tenuous life can be, such as physicians, would understand the importance of having life insurance. Apparently not.
According to a recent article in Physician’s Money Digest, as many as 40% of physicians have no life insurance! Are you kidding me? I’ve long been aware that there is little correlation between intelligence and common sense, but come on! 40% of physicians are uninsured? Unbelievable!
I find it hard to believe that there is a legitimate reason for any physician to forego life insurance, let alone 40%. Even without the traditional reasons, i.e., a mortgage and/or dependents, a young physician should buy a significant policy for at least three reasons: 1) to cover any debt incurred in obtaining her education, 2) to protect her future earnings, and 3) it will only get more expensive in the future. Let’s review each reason.
Even if no debt was incurred, that is, the physician’s parents were wealthy enough to fund the education without borrowing, it still took a significant amount of money to pay for it, and there would be no return on that investment if the physician met an early demise.
The second reason is related to the first. What are the expected lifetime earnings of a physician? Using a 35 year working career, even averaging only $250,000/year, that comes to $8,750,000. An early demise would wipe out that potential earning power.
The last reason goes without saying. As we age, our time left on Earth grows shorter, so the insurance company has to charge a higher premium because (presumably) they will be collecting it for a shorter period of time.
Now I’m not advocating that personal finance courses be taught in med school, but goodness gracious, there needs to be some mechanism to get these physicians the information they need to make intelligent decisions.
Granted, the 40% number is in line with the percent of all Americans who have no life insurance. But some in that group are barely getting by, and when you’re having trouble paying your monthly bills, well, life insurance may not seem like much of a priority. But I have trouble believing that 40% of physicians are having trouble paying their bills.
Whatever the cause or whatever the reason, it is society as a whole that suffers when a breadwinner dies with no (or insufficient) life insurance. I’m trying to do my part to make a difference (but I sure could use your help).