Writing for the Detroit News, financial planner Barry Glassman identifies the three “must-have” insurance plans for American families: life, disability and long-term care.
If you have a car, the law forces you to buy auto insurance (to protect other people, if not yourself). If you buy a house, the bank will force you to pay for mortgage insurance until you pay down the loan to at least 80 percent of the value of the house. And with medical insurance, your employer or school will provide it for you or the government will make you or you will have to pay a penalty. If you get hurt at work, you’ll be covered by workers compensation insurance, which the law forces employers to buy – to protect you.
Unlike these other forms of insurance coverage, nobody is going to sit on your chest and force you to get life insurance protection, disability income insurance or long term care insurance for you and your loved ones. There’s no law that says you have to do so, and nobody is going to make you.
You’re going to have to do it because it’s the responsible and prudent thing.
Hopefully that’s enough.
3 Must Have Insurance Policies
1. Life Insurance
Right now you are in (presumably) good health. But that could change any day. Even if you have health challenges right now, things could always get worse. Furthermore, you will never be any younger than you are today. That’s why the best time to get life insurance in place is right now.
What’s more, life insurance has never been more affordable than it is right now. Advancements in medical technology and longevity have combined to make basic convertible term insurance – the best ‘starter policy’ in most cases for young families and budding physicians – extremely affordable. We’ll have to get you through underwriting first, but it is not unusual for healthy young people in their 20s and early 30s to be able to buy hundreds of thousands of dollars in term life insurance coverage for less than the cost of a couple of pizzas per month.
Many medical school students and residents will spend more on Starbucks this month than they would spend on a $500,000 term insurance policy. Considering that many of you stand to earn $5 to $7 million or more in the course of a medical career, $500,000 to $1 million is a no-brainer amount. Additional riders can lock in your ability to buy more insurance as your careers progress – no matter what happens to your health. You only have to qualify once. Right now.
How much life insurance do you need? At this point, the answer is usually this: As much as you can easily afford. With that as the criteria, there’s usually no reason to put it off.
2. Disability Insurance
For young people and those with a career as a physician in front of them, disability is an even greater threat than untimely death. Disability can still strip your family of your lucrative career as a doctor – and they still have you to support!
If you become disabled and unable to work as a doctor, disability insurance will kick in and pay you a percentage of your income, up to the insured amount. It won’t cover every dime of income, but you’ll still be able to keep food on the table and keep the lights on in the house – even if you’re disabled for years.
This insurance is critical – and yet only 7 percent of Americans own disability insurance other than the bare minimum plans typically offered by employers, according to information from Guardian Insurance.
But employers don’t pick the best disability insurance plans. They typically pick the cheapest. Meanwhile, unlike individually-owned disability insurance policies, employer-sponsored plans aren’t portable. If you develop arthritis, for example, or even have a back problem, you may not be able to go into private practice without giving up vital disability insurance protection.
As with life insurance, the time to get underwritten, qualified and get a plan in place is right now.
Many medical schools even work with disability insurance carriers to offer discounts.
3. Long-Term Care
The high cost of long-term care insurance is perhaps the number one threat to retirement nest eggs there is. It doesn’t do much good to work an entire career – only to fork over almost all that you’ve accumulated to a nursing home. But Medicare and major medical insurance generally don’t cover long-term care, nursing home care and the like.
Fortunately, if you buy it young, you can get substantial coverage for a monthly amount that is quite affordable – and lock in the right to buy more.
Ready to protect your future?
Get a personalized side-by-side policy comparison of the leading disability insurance companies from an independent insurance broker.