Insurance. If you’re a Millennial, the word probably evokes yawns and shrugs. But insurance is needed for many reasons in our lives. We purchase travel policies when we book a vacation. We insure our cars. But what happens when that car gets smashed by another car, sending you sideways into the landscape? Or the plane falls out of the sky? Or you get sick.
These are dramatic images, but they can happen. To anyone. At any age.
For any physician, the future likely holds the promise of a little hardship, more than a little happiness, and a lot of hard work. As you embark in the medical field, looming somewhere close by should be the question of your growing financial needs and the value of insurance coverage.
Approximately 11 percent of licensed physicians in the United States belong to the Millennial generation (those age 34 or under in 2014). This group of nearly 100,000 multitasking young physicians is just as prone to physical and mental breakdowns as previous generations, but in an era of rising healthcare costs and regulatory pressures.
Yet Millennials are the most underinsured group in the United States today. Nearly 80 percent of college students polled by the Griffith Insurance Education Foundation said that they know nothing about insurance.
5 Types of Insurance for Young Physicians to Consider
But what types of insurance should physician Millennials be looking at, and why?
Health Insurance: As a medical resident or practicing physician, you know the importance of health insurance coverage, but are you using it? A research study by ZocDoc found that 93 percent of Millennials avoided scheduling doctor’s visits. Long waits, lingering feelings of invincibility and easy access to emergency clinics are no excuse to skimp on using your policy, especially for medical professionals.
Term Life Insurance: Aterm life policy is a hedge against premature death. It has a beginning and it has an end. The policy only pays if you die within the insured term. However, when your finances are tight and futures up in the air, young physicians should buy term life insurance, especially when children enter the picture because the term can cover the time it takes to raise a family. Plus you can get a large death benefit for a reasonable cost.
Permanent Life Insurance: Similar to building equity in a home, permanent life insurance grows in value the longer you pay into it. By allowing policyholders to borrow against this built-up cash value, a permanent life policy insures against much more than accidental death. For an established physician in her 40’s -- one who has a family and a growing estate -- there’s value in knowing she can shelter additional funds from income taxes, fund her retirement, plan for estate taxes and cover her debts if she’s incapacitated.
Disability Insurance: People under age 40 accounted for about one-in-five disability claims in 2013. Once you’re unable to work the chain of disaster begins, accelerated by the hard fact that no work equals no income. Disability insurance ensures that a portion of your salary keeps coming in even when seeing patients becomes impossible.
Accident Insurance: While medical insurance covers your bills, accident insurance provides an immediate benefit upon should you suffer a debilitating injury. The cash payout you receive can then be used to maintain the lifestyle you’ve built for yourself and your family. For a young resident physician, perhaps with a spouse and child who depend on him for income, the financial lifeline provided by accident insurance helps to quell the effects of an unexpected injury.
Budgeting for Insurance
Buying insurance isn’t a decision: It’s a process.
Consider what you’re trying to protect. As a young physician, your responsibility may lie only with yourself. On the other hand, as you become a more seasoned practitioner, start raising a family, and acquire significant assets and debts, you expose yourself to more risks.
You may eventually choose to run your own practice -- one that employs fellow colleagues and staff. In that event, one of many things you’ll need to consider is what type of benefits package to offer them. Health insurance is a must, but in order to attract the best employees, be prepared to provide a variety of group insurance options.
And if you make it this far, you’ll want to protect your business, as well. Office overhead insurance can make up for your practice’s temporary cash flow issues so that everything gets paid on time -- employee salaries, commercial rent, administrative costs -- whenever shortfalls occur.
At this point in your medical career, as you settle into your work-life pattern, protecting your assets begins to carry a value all its own. With additional responsibilities comes the need to offset additional risk. In the meantime, consider insurance with the same regard as you do your emergency fund -- and sleep well at night knowing you’re fully covered.