CHAPTER 4

If anyone is financially dependent on you, you probably need life insurance.

As the saying goes, nothing is certain except death and taxes. A career in emergency medicine has unfortunately taught us that bad things happen to good (and bad) people at random times and for no discernible reason. Fortunately, you can insure yourself against an untimely death and protect anyone depending on you with a life insurance policy.

Before we wade further into the topic of life insurance, there is one very important question to consider based on your personal circumstances: do you need to get life insurance?

The decision to obtain life insurance depends basically on one factor: Is there anybody financially depending on you right now to the point where your death would be financially ruinous? If the answer is no, feel free to skip to the next chapter.

To be a bit more clear, life insurance isn’t technically for you. Or at least, it doesn’t directly benefit you. Life insurance policies serve as a financial safety net for your family, children, spouse, or anyone in your life who relies on your income. Unsure of whether that includes you? Here are a few scenarios to consider:

If you…
Have children,
Have a spouse who supported you through medical school and deferred their career for yours,
And/or you are the main source of income in your household…
you probably need life insurance.

If you…
Are single,
Have no dependents,
Your spouse has a secure career with a comfortable income,
And/you already have several million dollars…
you probably don’t need life insurance.

And if you already have several million dollars, why are you reading this?! Go ride your boat or whatever.

Not All Life Insurance is Created Equal

There are many different types of life insurance policies out there, and you’ll need to do a bit of research to figure out which one best fits your situation. However, being that you are a resident, there are some general pointers we can give about the types of insurance to look for.

Insurance Providers

Your hospital: Most hospitals offer a group life insurance for free or very cheap (a couple dollars a month), but in the grand scheme of life insurance, it covers very little. As a single person, it would be helpful for “final expenses”. If it is free or dirt cheap, you might as well get it, but if you have a family, you’re gonna need more than that.

Private life insurance: The private insurance market has options for low monthly rates as long as you are in good health. If you have people financially depending on you, this is what you are looking for.

Insurance Policy Types

Term: Term life insurance policies cover you for a certain length of time, in the event of your death during that term. Cheery, right? Typically terms are 10, 20, or 30 years long. If you die during that time period, the life insurance benefit gets paid out to your beneficiary. If you don’t die during that time period, congratulations! Unfortunately, you don’t get your money back, but at least you’re alive. Term policies are generally pretty affordable, often under $100/month for over 1 million dollars of coverage. You can also “double-up” on these policies, and have multiple term policies at one time.

Whole: This is not what you want. Just don’t do it. It’s an investment structure that entraps you with high, inflexible payments you don’t want or need and benefits your financial advisor more than it benefits you. Stay away!

But what about your student loan debt or consumer debt? How does that interact with a life insurance policy? For the answers to those questions and for additional insight on life insurance for medical residents (plus a bunch of other super helpful financial advice tailored perfectly to your situation), check out our book Advanced Wallet Life Support: How to Resuscitate Your Finances (And Your Sanity) During Medical Training.