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Help with life insurance for two doc couple

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  • Avatar russiandoc 
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    Status: Physician
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    I’m hoping for some advice about life insurance.

    Me: 35 year old ophthalmologist in private practice – expect 300-500k salary

    Her: 25 year old orthodontic resident with a kid on the way – expect 200-400k salary

    We don’t yet own a home, have about 500K in debt, we live in a high COLA area will likely own a home at around 1million in the next few years.

    I was thinking getting 1 million 20 year term and 1 million 10 year term on me and just 1 million 10 year for her.

    If I die in the next 10 years she’d have 2 mil. I hope that in 10 years we would have assets closer to 1 million which would replace the 1 million I give up.

    Thoughts?

     

    #244053 Reply
    Avatar Peds 
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    Why is she worth less than you?

    I digress. As long as you are talking multiples of millions, it’s fine.

    #244057 Reply
    Liked by CordMcNally
    Avatar jhwkr542 
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    Status: Physician
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    Joined: 02/15/2016

    It depends on your expenses now and in the future. Also your salaries play a big role, which you haven’t disclosed. Since you’re in a HCOL area, that seems light. But your salaries may be such that you don’t need any for her (but i doubt that’s the case).

    #244058 Reply
    Avatar russiandoc 
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    Status: Physician
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    Joined: 02/21/2018

    I’m thinking taking less on her as I expect she will work less AND since she is younger she would have more time to work more if needed.

    #244059 Reply
    CordMcNally CordMcNally 
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    Seems a little light. I would probably do at least several million for both of you. You two thinking about kids? Thinking about possibly paying for college or higher education at some point? $1 million can go pretty quick in a HCOL area. Term life is cheap.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #244061 Reply
    Avatar nephron 
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    Status: Physician
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    Joined: 05/09/2019

    Is your 500 K in debt all federal student debt that goes away if you die?   I don’t think that there is any right number for life insurance, if either one of you were to die, it is obviously going to be financial blow to your family.   I personally don’t think that you need the recommended 5-7X your income if you are both high earners just as long as you understand that your financial lifestyle will need to change if one of you should die.   The way that I see it, if one of you dies, and the other one gets enough to take away the house payment, you will probably be able to maintain most of your current lifestyle but just have less net worth when it comes time to retire/may have to work longer/more to maintain things.  If both of you should die, I would think that 1-3 million dollars is enough for some designated guardian to raise a child until they were 18.   I think that as long as you and your wife are ok financially with what would happen in the unlikely event that one of you would die based upon your current rate of coverage of life insurance, you have probably enough life insurance.   You just have to contemplate the different expenses that would increase if you became a single parent household, like getting a nanny, etc, and the survivor having to work more.   I have a 1 million dollar life insurance on myself which would pay off my mortgage and cover childcare expenses while my wife continued to work.  It is probably more important to get the number right when one spouse does not work.

    #244065 Reply
    jfoxcpacfp jfoxcpacfp 
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    Status: Financial Advisor, Accountant, Small Business Owner
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    We typically plan for clients with young children to have enough to have the freedom to stop working for X# of years if one spouse passes before FI. My philosophy is that the surviving spouse should be free to quit work and stay home for as long as they need to grieve and allow the children to adjust without mommy/daddy (this sounds so horrible) at least until they’re in school or beyond to whatever the target date is.

    Iow, in a dual doctor household, if one spouse dies, the goal is for the surviving spouse to not be encumbered with the need to go in to work to pay the bills and/or to keep from upending the children’s lifestyle. Up to the clients to decide what that time period is, of course – there is no ROT or right/wrong answer for any family, of course, just this general guideline, then discussion to decide what their personal requirements are if they agree with this line of reasoning. It’s actually not any different for a single doctor household with a SAHP but I’m responding to the title of the post.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #244072 Reply
    Avatar Insurancepro 
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    Status: Financial Advisor, Insurance Agent
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    Joined: 03/26/2019

    Assets and liabilities have nothing to do with it at this point. Start by calculating your lifetime economic value- the net present value of your future earnings and benefits discounted at at a conservative rate, maybe 5%. Look at premium per year per $1M of benefit. Decide if you want to cover basic needs, full replacement value, or something in between. Involve your wife in this discussion. Keep in mind that dad dying prematurely won’t necessarily be the only hardship your survivors have to go through.

    #244081 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
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    Joined: 01/14/2016

    I’m hoping for some advice about life insurance.

    Me: 35 year old ophthalmologist in private practice – expect 300-500k salary

    Her: 25 year old orthodontic resident with a kid on the way – expect 200-400k salary

    We don’t yet own a home, have about 500K in debt, we live in a high COLA area will likely own a home at around 1million in the next few years.

    I was thinking getting 1 million 20 year term and 1 million 10 year term on me and just 1 million 10 year for her.

    If I die in the next 10 years she’d have 2 mil. I hope that in 10 years we would have assets closer to 1 million which would replace the 1 million I give up.

    Thoughts?

     

    Click to expand…

    At a cost of only $20-$30 per month per $1 million of benefit it is cheap and easy to provide the amount you need/want.  Don’t let the price of a couple of Dominio’s pizzas come between buying what your family might need if you are not around to provide the income.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #244206 Reply
    Liked by q-school
    Avatar mjohnson 
    Participant
    Status: Physician
    Posts: 54
    Joined: 05/05/2019

    With the debt, HCOL, high incomes, just starting a family I would get more than your current plan including more at the 20-30 year mark to cover kids through college.

    #244212 Reply
    Avatar Anne 
    Participant
    Status: Physician
    Posts: 1174
    Joined: 11/07/2017

    I agree wholeheartedly with Joanna.

    People either die suddenly and unexpectedly or after a period of illness.

    If suddenly–it’s a huge emotional shock. You will want the financial buffer to take as much time as you need to. The last thing you will want on top of the emotional devastation is to be like “well, at least I make enough to support us…back to work!”

    If after a chronic illness, that may have come with its own financial hardships and you may have taken months off work/adjusted your schedule to be your partner’s caregiver during that time. Life insurance helps you recover financially from that, so you don’t have to worry about that while you are recovering otherwise.

    #244216 Reply
    Liked by q-school
    q-school q-school 
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    Joined: 05/07/2017

    respectfully, you are already in practice and under 40.  i would suggest getting more term life, no need to be quite so efficient with money with both of you making good incomes.  it’s cheap insurance.  hopefully you never need it, but at least you know your family is well provided for if needed.

    especially if you anticipate having more kids, college costs for each kid might be a million for private school by the time they are in.

    i’m not sure why you hope to have 1 million in assets in 10 years.  your income should allow for that easily in much less time … unless you spend a lot.  and if you spend a lot, you need more insurance to manage the lifestyle.

    jmo

    ymmv

    good luck!

     

    #244217 Reply

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