The one thing of which physicians can be certain is change. Life happens every day and, as a result, we are constantly assessing our situation and changing our course, usually by making small adjustments. A life insurance purchase is one of the few decisions we make with a more long term perspective. But, over time, as life unfolds, physicians may find that their life insurance coverage may no longer provide the protection it once did. As with any core element of our financial situation, a change in life insurance coverage should only be considered after a thorough review of your current and future financial needs.
This issue comes up for many physicians who have either let life pass them by without
periodically reassessing their financial situation, or because they experienced a major life change for which their current coverage may no longer be adequate.
Ideally, life insurance coverage should be reviewed regularly, as often as annually. In doing so, it is more likely that only smaller changes in coverage will be necessary. But, for most people, life can change in big ways, sometimes abruptly – a birth, a death, a marriage, a new home, a divorce, a big increase in earnings. And, all of these changes should prompt an immediate review of your life insurance coverage.
When Change may be Good
There may be some instances when it might make some sense to change your coverage, but it should be done with careful deliberation and in consultation with an unbiased, financial professional.
Cheaper Term Life Insurance
If you already own a term life insurance policy, you may be surprised, depending on your age and how long you’ve owned the policy, to find that term rates have dropped significantly over the last decade. It is not uncommon to find the same amount of term coverage available for less than what you might be paying. This is especially true for some super preferred term rates, which, by the way, require that you be in excellent health.
Policy Consolidation
It’s not uncommon for physicians to acquire smaller policies over time. They may start out with a $50,000 policy out of college, and then add another $50,000 policy when they get married, and then another $100,000 policy after the birth of their first child, and so on. In some cases, a person who owns, say, $400,000 of life coverage from five or more policies, may benefit from consolidating all of the life coverage into one policy. Again, depending on your age and the age of the policies, it may be possible to find one policy for the complete coverage of $500,000 for less than the combined premiums of the other policies. Many life insurers offer breakpoint pricing on larger face amounts which could result in a reduction of total premium costs.
Summary
When planning your financial future you should expect things to change, and with that, you should review your financial plan to ensure your future needs will be met. Life insurance is a long term commitment that should be revisited regularly, but certainly in anticipation of or as a result of major life events. It is rare that the first life insurance policy that you purchase will suffice in the long run. The issue as to whether your life insurance plan needs an addition, and adjustment or even a wholesale change can only be addressed after a thorough analysis of your current policies and your long term needs.