Life insurance is one of the most widely owned financial instruments because it can fulfill so many different needs. While the overriding need for most people is to provide financial security for those who are dependent in one way or another on a bread-winners income, the specific reasons people buy it are wide-ranging. If you ask 10 different people why they purchased their life insurance policy you are likely to get 10 different reasons. Here are the most common reasons why young physicians need life insurance:
Not to be a Burden
This is probably the number one reason why younger, single people will buy an insurance
policy. Even though they are not married or they don’t have anyone who is dependent on them for security, they recognize that their death will create a financial burden on someone. Most physicians carry student loan debt that needs to be repaid, and they realize that there will be some final expenses that have to be paid. Unfortunately, it is a minority of single people who understand their responsibilities in this way as many leave the financial burden of debts and final expenses to others.
Because You Can
Most physicians recognize that they will need life insurance at some point in their lives. The time to buy it is when you are young and healthy. With level term or whole life policies, you can lock in a low, fixed premium. More importantly, if you wait, and your health condition changes, you could wind up paying a much higher premium, or worse, you may not be able to get life insurance.
Keep my Family in their Place
This is the number one reason why married bread-winners buy life insurance as they don’t want to imagine their surviving family members suffering any decline in life style or security. The most responsible of these will want to see their family be able to stay in their home, continue to attend the local schools dressed in nice clothes, and to fulfill the dreams they have for their children. So, their life insurance coverage will be sufficient to pay off the mortgage, provide a continuing income stream to meet lifestyle needs, and set up a fund for college expenses.
It’s the Right Thing to do
For whatever actual needs they might have, these people feel an overwhelming sense of responsibility as individuals to make sure that their obligations are met. It is likely that they benefited from the proceeds of a life insurance policy, or, at the very least, were instilled with the virtues of life insurance by their parents. In many cases, people with a strong sense of responsibility will buy life insurance even before their situation requires it because it is the right thing to do.
Keep Your Practice Alive
Physicians who operate a practice with partners need to protect their practice in the event that one of the partners dies. Should one of the partners die, the bills will still have to be paid. Also, depending on the equity arrangement, it is possible that the surviving family members will want to be compensated based on the deceased partner’s equity share. If you don’t have the cash, you could be forced to liquidate your practice or go into debt. Solo-practitioners can also face financial problems if a key person in their practice dies. The cost of replacing a valuable employee could mount up creating financial stress on the practice.
My Spouse Made Me Buy It
It’s not uncommon for people to avoid buying life insurance or procrastinate as long as possible. Some people can’t stand the thought of the process for buying it. Others don’t want to think about the possibility of their family actually needing to use it. There are even some who imagine that their spouses will just take the money and run off with another partner. For whatever reason, many bread-winners need to be cajoled into do what is right.
Spouses who insist on their partner buying life insurance do so out of real concerns over their financial future should the unthinkable happen. Spouses who need to brow-beaten into buying life insurance need to understand that their partners don’t understand why the person who supposedly loves them wouldn’t commit the ultimate act of love and devotion by protecting their financial security.
Most physicians recognize they have a need for life insurance, but it is usually the underlying reason why they want it that gets them out the door or onto the computer to go find it. Physicians will buy life insurance when their reason becomes clear to them. Whatever the reason is, it is always the right reason if it makes them act on such an important purchase.