By Dr. James M. Dahle, WCI Founder
I received a question today from a physician about how to buy life insurance. This is surprisingly simple for 98% of doctors. Wondering what type of life insurance and how much life insurance you should buy? Buy the cheapest, long-term, level-premium term life insurance policy from a reasonably-reputable company that you can find.
#1 Buy Term Life Insurance
Don't let anyone talk you into buying any type of permanent life insurance such as whole life, variable life, universal life, variable universal life, etc. Term life insurance is a commodity, so the pricing is very competitive and shopping/comparison is simple. Fees and commissions are necessarily kept low because people shop for it primarily on price. Don't mix insurance and investing.
#2 Buy Long-Term Level-Premium Term Life Insurance
You may become uninsurable (or your health or habits may worsen and you become insurable only at a higher price) in a few years. So buy insurance now for the longest term you need, meaning until you become financially independent. The default option should be 30 years. Level premium means the premiums never go up. So you may pay $100 a month for $1 Million in insurance. Twenty-five years from now you'll still be paying that $100 a month. As you get older and inflation kicks in that $100 a month will cost you less and less as time goes on. Likewise, the face value of your insurance will be worth less and less. But that's okay, because your portfolio will be growing to replace it so as time goes on you have less need for insurance.
Another reasonable option, especially for someone who plans to become financially independent relatively early in life (and thus cancel their life insurance), is to buy annually renewable term insurance. It starts out dirt cheap and gets more expensive each year. But if you don't need it after 50 or so, you will have spent much less money than buying a 30-year level premium policy that goes to age 60 or 65.
Are your kids as cute as mine? Then why don't you have life insurance?
#3 Buy a Lot of Long-Term Level-Premium Term Life Insurance
Your decision shouldn't be “Should I get $300,000 or $350,000.” This stuff is pretty cheap. The default option should probably be about $2 million, but it varies according to your circumstances. A dual-physician couple that has no kids and could easily live off one income probably doesn't need life insurance at all.
You need to decide what you want the insurance to cover. Until I was financially independent, I basically wanted my family to have the exact same lifestyle whether I was here or not. So if I died, my insurance would need to pay off the house, send the kids to college, allow my wife to stay at home until the kids are out of the house, and provide most of her retirement portfolio.
#4 Buy a Lot of Long-Term Level-Premium Term Life Insurance from a Reasonably-Reputable Company
Although the company can go out of business at any time, this isn't nearly the risk it may seem to be. You probably don't need to buy from the “very best” company, despite what many insurance salesmen will tell you. If the insurance goes out of business, the policy will likely be acquired by another company and its terms won't change. If not, your state will guarantee at least the first $300,000 of your insurance policy.
Let's say the worst happens and your company goes out of business and no one will buy the policy from them. If your policy was much bigger than $300,000, chances are you'll be healthy enough to buy a new one to replace the old policy for a similar price. For example, if you buy a 30-year policy at age 30, and you need a new one at age 50, you'll likely only need a 10-year policy, which really won't be much more expensive than the original 30-year policy.
Buy Multiple Policies
You can minimize this risk by buying more than one policy. Most of us end up doing this anyway as our insurance needs change. For example, you might buy a $500,000 policy as a resident, then buy another $1,000,000 policy upon graduation, keeping the original policy. You can also buy multiple policies so they expire at different times.
For example, originally I had one policy that would expire at age 53, when our original financial plan anticipated we would be financially independent. My other policy was set to expire when I was 60, which would be helpful if I had not met my goal of financial independence by my early 50s. It was a Plan B of sorts. Of course, once I was financially independent I canceled both before age 50 not long after I dropped my disability insurance. This plan cost me a bit more per month than if I had just gotten a shorter policy, but less than if I had just gotten a longer policy. It's a small cost and hassle for the extra benefit it provided.
#5 Buy the Cheapest, Long-Term, Level-Premium, Term Life Insurance Policy from a Reasonably-Reputable Company That You Can Find
Term life insurance is a commodity. This isn't disability insurance where the definition of “dead” is all-important. With life insurance, you're either dead, or you're not. By law, you have to buy life insurance from an agent. But you don't necessarily have to buy it from a “captive” agent, that is, one that is employed by a single insurance company. You can buy it from an agent that can sell you a policy from any insurance company. Two of the best places on the internet to compare life insurance policies are insuringincome.com and Term4sale.com. Both are advertisers on this site but are totally free resources to you.
Here's how it works. You enter in your information and it spits out a comparison of the same policy from several dozen insurance companies. Term4sale.com gives you the names of three local agents you can buy your policy from. Print out the list, walk into one of the agent's offices, and ask them to sell you the cheapest policy on your list. Done. You'll get the price quoted on the site. Easy, quick commission for them and you have what you need without any hassle. Well, you might have to tell the agent once or twice that you definitely don't want to buy a whole life insurance policy, but that's it. (Joe Capone at insuringincome.com promises to help you get your desired policy without having to decline whole life insurance multiple times.)
If your circumstances are unique, such as risky hobbies or health problems, a good agent can point you to the cheapest policy that is least likely to move you from the most preferred classification due to your particular risk. Lastly, remember that policies are usually cheaper if you pay annually rather than monthly, even counting in the time value of money. If you can handle the slightly more complex budgeting, you might as well save a few bucks.
Have more questions about life insurance and what kind of policies would be the best for you? Hire a WCI-vetted professional to help you sort it out.
What do you think? How did you buy your life insurance? Are you glad you used that method? Why or why not? Comment below!
[This updated post was originally published in 2011.]
Jeff,
If you were sitting in front of me asking this question, I would run a cost analysis for you buying a TEN year level term and see what the renewal rate is projected out to 30+ years. That would give you the cheapest coverage you could possibly get right now and the policy is renewable to age 95. It would go up at the end of the ten years, but I bet we could run detailed numbers and see that the idea has some merit. If youre talking to any company that offers whole life as well as term, their renewal rates will make this strategy less attractive because they DON’T WANT YOU TO RENEW IT. They want you to convert it, so the renewal rates will be sky high. If I get some more time sometime soon, ill run some numbers and post them (if that is allowed on here).
I don’t like this line of thinking- buying 10 years when you know you’re going to need more nor thinking you’re going to need insurance to age 95. I much prefer to make a financial plan, figure out about when you will be financially independent and no longer need life insurance, add a few years, and buy a term policy of that length. For example, if you’re 35 and figure you’ll be financially independent by 50, buy 20 year term. If you’re a 25 year old med student, and don’t expect to be financially independent until 60, and can’t afford to buy all your insurance now anyway, then maybe buy a million of 30 year level term now and add on a bigger 30 year level term policy in 5 years when you finish residency. While being able to renew life insurance at a better rate has some value, I just don’t think it’s a good way to make a plan.
Just going through our first term life purchase. Used term4sale and the agent listed got very upset with us when we declined multiple times different more expensive plans. One was called a “living benefit” in case we had cancer etc. He kept saying it would be “just dollars a day and so worth it”. I ran the numbers and it was a 29% price increase. Is it normal to have a disgruntled life insurance salesman? I thought this would be much smoother.
Sorry to hear about the hassle. You may try Joe Capone (who runs the same software on his site: insuringincome.com). If an agent were bullying me, I’d walk out and go to another one. When I walk in to an insurance agent’s office, they learn really fast that they can either take the commission on a big fat term policy that requires very little effort for them to sell to me, or they can get no commission at all. I suggest you project the same aura! I know what I want when I walk in, and don’t deviate from it.
Hello Joseph.
This is not uncommon. If all you have is a hammer, everything is a nail…oh, you want term life. So, I don’t want to sell you term life…..
Contact me if you want to get more help. Question: did you get a Preferred Plus rating? Rather than focusing on up-selling you, the agent should focus on getting you that top health class. That’s what we do and I am thankful that Jim has called out our simple, no BS process on this site. Term4sale has a good quote tool. Problem can be that the site can’t “sell” you insurance. You ultimately connect with a random agent. It costs $100 per year to be listed at term4sale and you get a lead that’s in your zipcode…not a very good way to find your ideal insurance agent.
Thank you so much for the information. I appreciate your reply.
The differences in health classes were never discussed…just across companies.
You can reach me at [email protected].
Send over any questions, comments, or concerns.
Which company did you buy your policy from? What is the health class (Preferred Plus, Preferred, Standard, etc)? Term length? Premium?
Oh my gosh. Over two months into this and still dealing with lost paperwork, bloodwork, and “never having dealt with MetLife in my 40 years of experience”. I am ready to pull the plug on this guy and come talk to you, Joe.
Sounds like you could use some help.
Send me an email at [email protected]
There have been a few mentions about annually renewable term (ART) life here as part of more complex situations but I’d like it if we could discuss just an overview comparison of level term and annual renewable life insurance.
I’m 27 with 3 years left in residency (+/- fellowship) and shopping for term insurance. The agent suggested annual renewable insurance as it allows me to pay less when I have less/no disposable income. The break-even point is 23 years (or age 50), at which time premiums are 100%+ the amount of a level-term policy.
I suppose the pros for ART are 1) the >30% I save in premiums over the time I am not making an attending salary and 2) the investment potential over the first 23 years. (Also, the agent would say a third pro would be that it is convertible, though we can exclude this).
The cons of course would be 1) the future premiums are not guaranteed to match the current quoted outlays. However the agent assures me that the company has not increased premiums for the 150 years the company has been in business and as such this is not a foreseeable occurrence. 2) If I do end up needing my policy for longer than I had planned, it will cost quite a bit.
What are your thoughts? Is there anyone that has done the numbers in regard to investing the differential premium over the first 23 years (assuming we can trust the outlay of expected premium increases)?
I keep thinking about doing a post on this. Your analysis is correct. The break even period is even later than 23 years when you consider the time value of money. It’s possible it’s longer than 30 years depending on what value you assign to the time value of money. If you have two quotes/illustrations for each of these options, it would be interesting to get a copy of them to compare and build into a post.
What is your impression on the likelihood of the actual premiums significantly increasing compared to the outlay estimates? (Will get the quotes by message when I have a moment)
First of all, I love the book and the website. I also love that this post is over a couple of years old and still generating comments. My question that I can’t seem to find an answer to on the website is what about the group term life insurance policies available through the AMA? As a 30 year old male, it seems as though I could get significantly cheaper term policies through the AMA Pure Term Life Insurance plan than going through another company (240 vs 770/yr). I realize the premium will increase every five years, but wouldn’t the 400-500 dollars/year savings in premiums going to offset the increase I see in 5,10,15,20 and 25 years from now or is getting a level policy now really worth paying the difference?
Just compare apples to apples. Term4sale.com or similar sites will also quote you 5 year level term policies. If you like the AMA one better, then use it. Obviously your quote for a 30 year level term policy is going to cost more than a 5 year level term policy.
Term is absolute garbage. Why don’t you calculate the wasted dollars on the life of the term x the lost opportunity cost on the money you wasted, and do you really think it’s a good idea to have your life insurance drop off right when statistics say your probability of dying start to rise significantly. C’mon people. I’ll post a ledger if it helps.
Wow, Andy, you are really going at it today.
Can you give out your contact info too?
“Term is absolute garbage.” I would love to talk to you more about this.
Ending life insurance when insurance is no longer needed does make loads of sense to me.
Hard to know how to respond to such an eloquent argument. It calls to mind an old adage:
Permanent life insurance also has a cost of insurance that’s baked into it. Those dollars are just as “wasted” as dollars spent on a term policy. I.E. If you don’t die in the term, you get your life, but not the money. Frankly, I’m okay “wasting” that money.
I only buy cash value car and home insurance too. I feel like all my premiums are completely wasted if my home doesn’t burn down or I don’t wreck my car.
You mean term?
WCI – unfortunately, sarcasm doesn’t always come through crystal clear in a blog response.
Sorry, a little slow last night. My sarcasmometer was broken.
Haha, reading through this blog (wonderful info, i bet you have been told many times) and the comments. Having a field day going through your responses to these trolls. Keep up the good work!
Keep it up Jim. This site continues to pull the veil back and educate people about what to watch out for and what to do. You will always have these Advisor Andy people and we all get a kick out of them. It’s like they stumble on this page for the first time ever and don’t realize that there is such a strong community here. It’s like watching a play unfold. A real comedy…but also scary to realize that these Andys are out there holding themselves out as “planners”. Who are they planning for? Themselves or their clients? Rhetorical…..
I don’t know if this will make you feel better, but, many of those who pimp this out to their customers probably own one themselves. They were probably given the spiel at their job that they need to own one of these policies in order to show the value of it to their customers. To make it better, the managers who sold it to them probably set it up for max commission and low cash value accumulation. They do it to themselves.
I am entering the workforce at a large academic institution that offers term life insurance. It is through Met Life. They cover 1x my salary as a benefit at no cost. Additional multipliers of my salary are at an additional cost. It appears to increase every handful of years. For example, cost per $1,000 coverage/month is $0.056 if 30-34 years old, then starts increasing every 5 years to 0.068 (35-39), 0.086 (40-44), 0.123(45-49), 0.181(50-54), 0.298 (55-59), and 0.481 (60-64), etc.
This does not seem to be what you describe as a level-premium plan. Is it even worth using any of this or just getting a plan on my own?
Thanks
Be sure to take as much as your employer is paying for, of course. Beyond that, compare it to buying a 5 year level premium policy at term4sale.com or insuringincome.com. If the price is supergood, than buy more. If not (or you really want 20-30 year level term), then shop for it independently.
Keep in mind that if you are not healthy (or have risky hobbies), your employer’s insurance may be particularly attractive.
I agree that you should own as much as they give you for free, but beyond that you should own your own policy outside of this, even if it is the slightest bit more expensive through a brokerage house (prices should be very competitive). The largest reason to me is simply that a lot of these policies do not allow portability. That means once you no longer work there you no longer have life insurance with them. That sucks. You have to reapply, etc… Worst case scenario is if you were to have some protracted illness that you had to quit your job for and then died months later. Granted that is a dramatic example, but a latent possibly. MetLife is a legitimate company, but ask to see the group contract specifics around that. A couple of other things to consider. Are you going to work there for your entire career? How is your health? What is your family health history? Are you planning on increasing your family?
That is also not a level policy you are correct. That is what they call an increasing premium policy. Basically how that policy is contractually written is that if it is a level term or an increasing term from MetLife and we were to compare the total amount of premium spent over 20 years for example they would be the same. How they work is that they are cheaper on the front end and more expensive on the back end.
Sorry for these dumb questions. I am taking your advice and trying to learn as much as I can. Still feels like a foreign language to me. Halfway through your book. Regarding life insurance:
1. I still dont understand why term is better than whole life. I am 30. Wont I still need life insurance at 65. Why should I stop at 60.
I won’t need life insurance at 50, much less 60. Why will you need it in 30+ years?
WCI,
Then what do you recommend to someone graduating residency. This is a follow up on what Mak826 said. Most of us are in our early 30’s. Should we get a 30 y policy? That would put us to 63ish. Would a 25 year policy make more sense (or do they even offer that)? Or would a, for example, 30 year 2 mil and a 20 year 1 mil policy ladder make more sense?
I know this is very subjective based on one’s needs and financial stability. I would just hate to spend the extra money over the course of 30 years or so if it doesn’t make sense to have the coverage.
I ask because I lose the benefit of academia (if I stay at my current job, my kids go to college free). If I die, that benefit goes away. So I would like that coverage to last until at least my youngest would go to college. So, in my situation, would 30 year policy make sense?
I appreciate your insight and sharing it with the community. We novices appreciate the input.
Two reasonable options. If you’ think you’ll have a “standard career” I’d just get the 30 year level term. That’s basically what I did. If you think there’s a good chance you’ll FIRE at 50 or so, then I’d probably go with an annually renewable term. That’s what I wish I did. But you’ve got a good reason to hold on to that policy for 30 years.
The safest bet might just be to purchase a 30 year level term plan. If you end up not needing the coverage for the full 30 years, then cancel it. In this case, yes you pay more per year than if you bought a 20 or 25 year plan, but it gave you some flexibility. If you buy a 20 year plan, this brings you to age 50. What if your spouse needs income and/or cash to meet the demands of life beyond when you would be age 50. Something happens unexpectedly at age 51 in this case and it could be bad news for the family. Some people would say that the same could happen at age 61 in a situation where you buy a 30 year plan…..we just don’t know. 30 years has more of a “fit” than 20 or 25. Run instant life insurance quotes at our site, insuringincome.com
If the goal is also to save money and that is why you are comparing 20 vs 30, etc…make sure that whoever works with you as an agent goes out and obtains the best possible health rating. The difference between a Preferred rate (2nd best class for some companies) and a Preferred Plus rate (top rate class for some companies) is significant. Far too often people focus on the product and not on shopping for the best rate or fighting for an improvement in the rate class.
When is an ideal time to purchase life insurance?
We have no kids at the moment – should we wait till we have a kid, or during pregnancy or before (which is now)?
The ideal time is either never if no one depends on your income but you or as soon as someone does.
I agree. There isn’t really a right or a wrong time, just as there is not a right or wrong amount. Life insurance can have a lot of nuance in WHY it is owned. At minimum though you should look at it and say, “What is important to me to have taken care of if I was to not come home today? Why?” From there any insurance broker, advisor, whomever should be able to give you a real number of how much the face amount suggested would be from what is important to you, your options around cost, contract, companies.
Don’t wait UNTIL the pregnancy. If Mom to be needs coverage, might not be able to get it while pregnant? Not have time of pregnancy covered? And for both expecting parents, the lag time between seeking the policy and actually getting coverage might leave pregnant Mom widowed and broke, or new Dad widowed with a very ill baby and broke (or unable to quit the job just when they most want to).
I am working on my first term insurance purchase and your article has been very helpful, but also raised some questions…
For 2.5 million 30 yr level term, I was quoted at 175/ mo with an accelerated conversion rider and waiver of premium rider. I am preferred plus and this is with the same company that my disability insurance is through. From reading the comments, i gather that most, if not all, policies have the accelerated conversion rider built in? If that is the case, am I able to fairly compare the above premium with quotes from the comparison sited you listed? I ask because there is a $40/ month difference, which would certainly add up over 30 years!
Also, how important is it to stay with a company that will use own occupation definition for the Waiver of premium?
Thanks for your input.
I don’t see a conversion rider or a waiver of premium rider to be particularly valuable benefits. I would look for the least expensive policy from a reasonably reputable company, with or without those riders. My term insurance policies are so cheap I can certainly pay them living on my disability policy, and I don’t plan on ever converting them.
You are correct, nearly all life insurance policies have the conversion rider built into their policies. You can definitely go with a carrier offering a better price although you also mentioned the quote you received included the Waiver of Premium Rider which is not typically included in the quotes you see from the comparison tool. There is typically an extra charge for the Waiver of Premium option. As mentioned in the previous response many people don’t see the value to add that rider so it would depends if you think that is important in your individual situation. Own occupation definition can definitely be important in your disability policy or Waiver of Premium rider to be sure you are covered adequately. For instance, if you were a surgeon and had a serious hand injury and could not perform your typical occupation, you would not want a policy that was labeled “any occupation”. In that situation, if you could perform a different occupation the benefits may not pay out. Just like shopping for your life insurance I agree with the comment that you should shop your disability coverage as well…every company underwrites and prices differently so as long as it is an “A” rated or higher company you should be fine.
Buy A rated or better. The “own occ” in the waiver definition is sort of crazy, sounds like a “pitch” to get you to buy from the “home” company of that agent. Just so happens that your life and DI are BEST suited with the same company even though there are dozens of companies that are battling for your business.
Drop me an email at [email protected]. It would be great to learn more about what you are buying. Anytime that someone is presented products from the same company you have to wonder is this being done for your best interest or is it being done in the best interest of the agent/insurance company?
You are a healthy person (maybe) and you are going to make for a great client of an insurance company. Make them battle for your business.
I am looking into buying some life insurance for myself. Through work I can get life insurance at half the rate quoted on insuringincome.com. The rates do change annually though (from 2015 to 2016, the rate is actually going down, one perk of working for the state). The benefits website says that the policy can be converted to an individual policy upon separation. I don’t know how much the premium would be for that option. I don’t plan on changing my job, but things happen. Should I just go with the life insurance through work? Or should I get an individual policy for twice the price? Or should I do a little of each? The cheap option sounds good, but then so does the individual option.
You’re not comparing apples to apples.
One policy is individual, portable, and probably level premiums for 20 or 30 years. The other is a group policy, not portable, and probably annually renewable term. Of course it is cheaper…for now.
How much can you get through work. I bet it’s limited to just 1 or 2 times your annual income. You almost surely need more. So sure, get the work policy, but get a real policy too in order to have enough insurance.
Hi,
How do I decide how much term life insurance I need? My net worth is around 1.2 M and I am 48 years old with 3 kids, the youngest will go to college in 10 years.
Thanks
I work with Primerica and sell term life insurance. What we are taught to recommend is the DIME method. Add up the DEBT INCOME MORTGAGE & EDUCATION needs in current dollars and buy that amount in level term for as long as you think you will need it. For the income component, consider the lump sum amount now, that would fund your family’s income needs for X years at 3% or 5% annual return. The X is whatever you agree is needed, commonly 10 or 20 years.
I guess you use DIME because DIE doesn’t sound as good? I mean, last I checked, a mortgage is debt. One thing to keep in mind if you do choose to use DIME, is that student loans, the main non-mortgage debt for most high-income professionals, goes away at death.
I dislike your method because it doesn’t take into account current savings. The more you have, the less life insurance you need.
Not enough info. What’s the plan if you die? Will spouse go to work? What does spouse earn? What are expenses etc? You can either do the math, or just buy a whole bunch. I would guess you’re probably going to want $2-4M, but if you’re really thrifty, maybe just $1M. Hard to say without more info.
Hi
Our expenses are around 30- 40 G per year. Mortgage paid off. No loans of any kind. No CC debt.
Wife works part time now and will not do so if I die. She makes around 80G/year.
3 kids – only have around 30G each for their college education.
Do you need anything else?
And we are 48 and 46 years old right now.
With the kids still 10 years away from college, I would go for $3M. It is so cheap. You are talking about a few dollars . You and your wife are doing excellent! Congratulations!
Why in the world would someone with expenses of $35K a year and a portfolio of $1.2M need another $3M in life insurance? So the family could quadruple their standard of living if you die? Seems like a waste. I guess it wouldn’t hurt to buy a little more if you wanted to, but there’s no need there, and certainly no need for $3M.
That $1.2 M could easily be wiped out in its entirety with college funding, for one.
But I don’t get paid to make recommendations. 🙂
College funding can’t wipe you out without your consent.
A. The deceased is already “wiped out”.
B. Most docs I know would be happy to pay their children’s schooling costs as an inheritance.
Personal choices, sure, but still 3 kids to get through college. I think it is premature to pull the life insurance policies. Also, about the yearly spending… Do you think the family is going to want to continue that spartan lifestyle? Loosening the spending would not be a surprising development.
He’s got $30K a piece already for college. Obviously, how much he needs there comes down to how much he plans to contribute to college. But if it’s $30K or less (+ whatever that $30K grows to in the meantime) then he’s done saving for that goal. If he wants to give them each $250K for their educations, then he needs insurance.
He also needs insurance if he plans to loosen the spending.
WCI, I don’t necessarily disagree with your recommendation but we would need to know if that $1.2 million “net worth” as he put it includes home equity, which I think it does. That home equity doesn’t count for much unless the widow sells the home and buys a smaller, less expensive home. I think $3 million is overkill. If he died today the wife an children would get survivor benefits until the blackout period and then the wife would be able to claim the husbands full SS benefit in retirement.
I would say $500k to $1 million 10 yr term would be more than enough based on the info I’ve seen. Could they get away with $0, sure, but now its a personal decision on what kind of lifestyle/legacy John wants to leave behind.
I agree home equity doesn’t count.
The life insurance probably has nothing to do with his legacy as the odds are quite low he will die during the next ten years.
Congratulations. You’re financially independent. Based on the numbers you’ve supplied, you have no need for life insurance at all. Your portfolio is highly likely to be able to support your income needs for the rest of your life. You may still want some life insurance, but I don’t see a need here if you’re really that frugal.
How much life insurance do you think that you should have? Try the various calculators that come up on Google. It should be you that comes up with the number and people can help you to validate your logic or to help to make changes. Nobody knows your financial situation and personal feelings with your spouse and family more than you. Be careful of what insurance agents tell you to do. : )
Lots of great calculators out there, be aware of who has built it and the math behind the calculation. Really only a few variables. Assumptions for what inflation would be, assumption for return on money after check comes in….the rest really is based upon how you feel and your personal situation.
I am in residency and have a non-working spouse with no children. I would like to keep the monthly life insurance bill below 70 if possible. Would you choose 2 million for 20 year term or 1 million for 30? I do anticipate having kids at some point in the next few years and will need 2 million at some point, but it may be more than I need at this second. Can’t choose between the two. Thanks!
Just my $0.02, but I think you want to create the bottom rung of your ladder now, so $1M for 30 years now makes sense if you think you’re as healthy now as you’ll ever be and you want to lock in that insurability. In a few years, if/when you have kids, you can buy another policy for $1M, with a 20 year term. How far out you need to be insured depends on when you expect to be financially independent and until what age you expect your kids to be financially dependent on you — two somewhat related questions. If you expect to be financially independent in 20 years, then a 20-year policy today may be the longest term you need, and you can buy a 10-year policy once your first kid is born.
Have you considered doing a laddered plan, with $2,000,000 for years 1-20, dropping to $1,000,000 for years 21-30?
$1,500,000 for years 1-20, $1,000,000 for years 21-30?
Look at laddering coverage. Banner only charges a single policy fee where other companies would charge two so they might be the lowest cost. You just need to compare pricing and plan options.
I wrote an article about laddering coverage here. Do a quick search to find it.
No you didn’t, but here is the article I think you’re remembering:
https://www.whitecoatinvestor.com/term-life-insurance-strategies-for-physicians/
I didn’t know you could get a built in laddering plan like that. What I thought about doing was when I was out of residency getting a 2nd plan for 1 million/30 years, then decreasing my current plan benefit to 1 million for the duration of the 20 year term. I guess it is kind of the same thing? Except I am not locking in my health for those final 10 years now.
The quotes I got were 67/month for 2 Million/20 Years and 56 for 1 Million/30 Years…so a laddered plan right now might be more than can fit in my budget at the moment.
Send me an email at [email protected]. We can run laddered quotes. Keep in mind that it all hinges on getting that top health rating too. Sort of late here on the east coast but our team can help. We have a quote tool for laddered quotes that we run internally (not available at the site) and we can generate a bunch of reports for you.
Have a nice night.