By Jamie Johnson, WCI ContributorEvery life transition comes with new financial and emotional hurdles. In particular, residency, marriage, and parenthood all require you to think differently about your insurance needs.
This is especially important for physicians due to the high income potential and liability risks that come with the profession. Let’s look at the main types of insurance coverage you’ll need and how those needs will change during each life transition.
Residency
Once you’ve entered residency, you need more than basic life, auto, and renters insurance. Despite your modest salary during residency, life insurance becomes essential coverage, and you should secure a term life policy as soon as possible.
Any health issues that develop during your training years could either disqualify you from coverage or lead to much higher premiums. Most financial professionals recommend between $500,000-$1 million in coverage, and you should be able to find plenty of low-cost options.
If you have to relocate for residency, this could trigger a potential rate change for auto insurance. Even still, you’ll want to purchase more than the minimum state-required liability limits.
If you’re renting, purchasing renters insurance is non-negotiable. A comprehensive renters insurance policy costs between $15-$20 per month, protects your belongings, and provides liability coverage.
More information here:
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Marriage
Once you’re married, you need to shift your financial priorities to protect the life you share with your spouse. Even if you already have a life insurance policy, you should reassess your coverage to account for new financial responsibilities, like a mortgage and student loan payments. Adequate life insurance coverage ensures neither partner will have to deal with financial hardship if the other person dies.
Depending on your spouse’s driving history, you may want to merge auto insurance policies to take advantage of a 10%-25% multi-policy discount. If you’re a homeowner, your home insurance policy should have adequate replacement cost and liability coverage. But even if you’re still renting, it’s a good idea to re-evaluate your coverage to account for any higher-value items you now own.
Becoming a Parent
Becoming a parent is one of the biggest life transitions you can make, and it significantly changes your financial planning. You have to think about your growing financial responsibilities and ensure your family’s financial well-being is protected.
New parents should consider significantly increasing their life insurance coverage—aim for a term policy that’s 7-10 times higher than your annual income. You’ll also want to set up a will and name a guardian for any minor children. Putting your assets in a revocable trust can help your beneficiaries avoid going through a lengthy probate.
You’ll also want to reassess your auto and homeowners insurance policies. Consider adding roadside assistance and rental car coverage so you’ll be covered in case of emergencies.
You should also update your dwelling coverage to account for any renovations or additions to your home. It’s also a good idea to purchase an umbrella policy providing between $1 million-$3 million in liability protection. An umbrella policy adds an extra layer of financial protection if you’re sued for any damages, and it can help cover any gaps left by your primary policy.
More information here:
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The Bottom Line
Regularly reassessing your insurance needs is the best way to protect your loved ones and set up a strong financial future. The best way to do this is by scheduling an annual insurance review. During your annual review, you can evaluate whether your coverage still aligns with your circumstances and assets.
You should also consider working with an independent insurance agent or financial advisor who can guide you through these life transitions. Look for someone who can provide unbiased guidance and ensure you have adequate coverage.
Bundling your policies and taking advantage of discounts can be a good way to save money on insurance, but don’t sacrifice coverage for minimal discounts. As a physician, your income and responsibilities will only continue to grow, and being underinsured presents significant financial risks.
At The White Coat Investor, we’ve partnered with Farmers Insurance Choice to help our readers shop home, auto, and umbrella insurance more easily—and access a WCI-exclusive discount in the process. You can start by viewing quotes online, but with all the moving parts in a physician’s or a professional’s life, we strongly recommend calling 888-805-2001 to speak with a licensed agent. They’ll help you compare options, tailor coverage to your needs, and apply any discounts available. Plan on 30-45 minutes to get the most accurate quote. See how much you could save with Farmers Insurance Choice today!
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The White Coat Investor may receive compensation from White Coat Insurance Services, LLC; licensed in all states including MA and DC; CA license #6009217; NY license #1758759 (exp. 6/2025); Registered address: 10610 S. Jordan Gateway, #200 South Jordan, UT 84095. This does not affect the cost or coverage of insurance.
