With about 54% of Americans owning life insurance, it is easy for physical therapists and occupational therapists to wonder if you should purchase your own policy. This statistic was reported in the landmark 2020 Insurance Barometer Study by LIMRA, an international non-profit research and consulting firm.
However, the study also revealed that an additional 16% of Americans want to purchase life insurance but do not have the financial means to do so yet. Since that means a total of 70% of the United States’ population either already own a policy or want to own a policy, Americans do truly value having life insurance.
While the study reveals several other informative statistics, LIMRA unfortunately requires that you create an account in order to access their study. However, the Insurance Information Institute, a United States association dedicated to expanding consumer knowledge of insurance, provides an excellent overview on the reading’s findings if you’d like to learn more.
With so many Americans already owning or hoping to purchase life insurance policies, it is no wonder you came here looking to learn more about life insurance.
It’s actually very important that you are here because chances are that most physical therapists and occupational therapists currently fall into one of the following groups:
- You should purchase a life insurance policy right now
- You already own your own life insurance policy
- You should learn about life insurance right now so that you won’t miss the opportunity to purchase a policy when the time is best for you to do so
That’s why this article will provide occupational therapists and physical therapists with information on the following:
- What life insurance is
- Who should and should not purchase a life insurance policy
- Which types of life insurance policies are available to purchase
- Which type of life insurance you should purchase
- Where a policy can be purchased
- When you should purchase a policy
Let’s get started.
WHAT IS LIFE INSURANCE?
To answer this question, the term ‘insurance’ must first be understood.
The Consumer Financial Protection Bureau, a United States government agency with the goal to ensure banks, lenders and other financial companies treat the consumer fairly, describes insurance as a means to manage risk.
Each one of us encounters some level of risk every day. When you get into a car and drive to work, there is a risk of an accident occurring. When a natural disaster occurs, there is a risk of damage to you and/or your home. Every minute we are breathing, there is a risk that it may be our last moment alive.
For many of these risks, insurance policies can be purchased to prepare for that “just in case” scenario.
If you happen to end up in a car accident, having car insurance can help alleviate some of the financial costs endured. If your house became damaged or lost due to a fire or earthquake, having fire and/or earthquake insurance can help alleviate some of the financial hardship experienced. And if you happen to pass away unexpectedly, leaving behind your spouse and children without sufficient income for them to live on, having a life insurance policy in place could be vital to ensure the future financial well-being.
But if you were no longer alive, how can you ensure your loved ones will get the money the insurance company promised?
When insurance is purchased, it is written in the form of a contract. This contract is referred to as a policy and the individual who purchased the policy is referred to as the policyowner. The contract typically stipulates that the insurance company has agreed to certain financial arrangements should certain circumstances arise.
In the case of a life insurance policy, these circumstances usually involve the passing of the policyholder which results in the insurance company distributing money to the policyholder’s beneficiaries.
WHICH PHYSICAL THERAPISTS AND OCCUPATIONAL THERAPISTS SHOULD PURCHASE LIFE INSURANCE
If you are an occupational therapist or physical therapist with dependents, then odds are you should have life insurance.
What are dependents? They are anyone who relies on your income for financial security. This can include but is not limited to your children, your spouse, and other loved ones.
Now, not all physical therapists and occupational therapists should have life insurance. If you happen to be independently wealthy so that, in the case of your unexpected passing, your dependents would still be financially secure, then having life insurance is probably not necessary.
Likewise, if your spouse works and in the event of your passing their income would be sufficient to maintain their desired standard of living and support themselves, along with any other dependents you have, then purchasing a life insurance policy is not necessary.
But, if your passing would leave your dependents financially vulnerable, it makes sense to have a life insurance policy.
It is also important to keep in mind that having life insurance not only helps ensure that your loved ones can afford life as they currently know it, but also afford future financial obligations as well.
For example, if you have a child who one day would like to attend college, purchasing a life insurance policy with enough coverage to pay for this large expense is important.
Other examples of important costs to keep in mind could be paying off the rest of your home, having enough for your spouse’s eventual retirement and paying off any other debt you may be leaving behind.
Also, although it is hard to think about, having your life insurance policy be robust enough to cover your funeral costs can allow your loved ones to focus on grieving your passing rather than stress about finding the money to pay the necessary immediate expenses.
WHEN SHOULD YOU PURCHASE YOUR LIFE INSURANCE POLICY?
It is common to purchase a life insurance policy when you are either getting married or having your first baby.
In fact, purchasing life insurance is one of the steps I recommend occupational therapists and physical therapists complete when preparing for having your first baby.
If you wait to purchase a life insurance policy until years after getting married or having your first baby, the policy can be much more expensive because you’ve aged and you also may have a more involved medical history, making you a greater risk for the life insurance company to insure.
WHAT ARE THE TYPES OF LIFE INSURANCE YOU WILL SEE WHEN SHOPPING AROUND?
Now that you are better able to better assess if you should purchase a life insurance policy and when you should purchase it, you are probably wondering which type of policy to get.
There are 2 major categories of life insurance you need to be aware of.
It is important to know about both of these categories so you can get a better understanding as to what you want to purchase.
The last thing you want is to spend money on a policy you later regret.
The first of these two categories is term life insurance. When I started to learn about each of these categories, I found that educating myself on term life insurance first was the best place to start since term life insurance is easier to understand.
The second major category is permanent life insurance. Within the category of permanent life insurance are several different types of policies:
When learning about the permanent life insurance category, it is easiest to start by learning the similarities these different major types of permanent life insurance policies share.
After that, you can then read about each type of permanent life insurance listed above to gain a better understanding on their differences.
After you become more familiar with the different types of life insurance policies available, you will then want to decide which one to purchase.
WHAT TYPE OF LIFE INSURANCE SHOULD PHYSICAL THERAPISTS AND OCCUPATIONAL THERAPISTS PURCHASE?
Most physical therapists and occupational therapists would be best suited with a term life insurance policy.
There are instances when purchasing a permanent life insurance policy can be a better option, but this will not be the case for the large majority of occupational therapists and physical therapists.
In short, term life insurance will give you the coverage you are looking for at the cheapest price. There are other benefits term life insurance offers too, so be sure to read more about term life insurance here.
Some insurance agents will counter the above recommendation by stating that term life insurance will eventually expire while permanent life insurance can last your entire lifetime and also offer the opportunity to invest your money.
While this is true, permanent life insurance is much more expensive and, therefore, the insurance agent stands to make a significantly greater commission should you purchase a permanent life insurance policy rather than a term life insurance policy.
The best plan is to purchase the cheaper, term life insurance coverage rather than the more expensive permanent life insurance option. You can then invest the money you would otherwise have spent on purchasing a permanent life insurance policy, with the goal of being able to eventually become financially independent. Of course, you will need to maintain financial discipline so that you do not just spend this saved money on your next big screen television or vacation, but it will be worth it in the end. Reaching this level of financial stability will allow you to no longer rely on your life insurance policy in the case of your passing later in life, which is why the permanent aspect of permanent life insurance becomes unnecessary.
For example, having life insurance early in life is important because you have so many income-generating years ahead of you along with many liabilities such as a house and student loans.
But once you become older in age, you will have fewer income-generating years ahead of you. At the same time, you will hopefully have substantial investments built up over the years (eg growing retirement accounts) and fewer liabilities (eg fewer years left on your mortgage).
You may also not have as many dependents replying on your income for financial stability since your children may now be self-sufficient.
All of these factors make having life insurance last your entire life less important later in life and therefore permanent life insurance becomes less relevant.
To top if off, who wants to continue paying for the more expensive permanent life insurance option their entire life?!
That is why I have and recommend term life insurance and not permanent life insurance.
WHERE CAN YOU PURCHASE YOUR LIFE INSURANCE POLICY?
Ready to purchase your term life insurance policy?
Much like with long-term disability insurance, I recommend working with an independent broker to purchase your life insurance policy.
Not all brokers are created equally, unfortunately. Some brokers work for a specific life insurance company and therefore will only offer you life insurance policies from that one company.
In comparison, an independent broker will not be tied to a single life insurance company and therefore can provide you with quotes from several different life insurance companies so you can assess your options and find the best policy for you.
While there are many independent brokers to choose from, I found working with Pattern to be convenient as they helped me purchase my long-term disability insurance policy at the same time.
Many life insurance brokers often try to persuade you to purchase a permanent life insurance policy so that they can make a larger commission, but I never had this experience with Pattern.
Pattern was also able to provide me with one-on-one attention but still work with me remotely without requiring any in-person meetings.
You can click here if would like to work with Pattern as well.
FINAL THOUGHTS. . .
The purpose of life insurance is to provide your loved ones with financial security.
I am both astonished and saddened to find out how many physical therapists and occupational therapists are unaware of the importance of having this financial security until much later in life when purchasing a policy is much more expensive.
Don’t wait to purchase a policy years after you could have at a much cheaper price – provide your loved ones with the financial security they deserve sooner rather than later and purchase your policy when you first start having others rely on your income, or purchase a policy now if others already rely on your income and you have not already a policy yet.
Do you have any questions about life insurance? Any other insights you would like to add? Let me know in the comments section below!