Why Do Physicians Need Life Insurance?

Amber Stitt [00:00:00]:
Welcome to The Responsible Resident. I'm Amber Stitt. This podcast takes a common sense approach to financial decisions for physicians, breaking down complex topics into something clear, practical, and usable. Because you shouldn't have to have a finance degree to build financial freedom. Life insurance isn't really about the policy. It's about the people whose lives financially change if you're no longer here. I've worked in insurance for more than 15 years, So I've had this conversation with families many times, but over the past 6 months, it has felt more personal. My own family has experienced several losses. We lost my grandma, a friend, an uncle, and our family pet.

Amber Stitt [00:00:40]:
There has been a lot of grief mixed into normal life, but I've also been reminded of something I have seen professionally for years. When planning has already been done, families have a little more space to simply be families. Welcome back to the Responsible Resident podcast. I'm Amber Stitt. In our first series, we spent a lot of time talking about disability insurance and protecting your ability to earn an income. In this series, we're looking at the other side of that conversation. What happens to the people who depend on that income if you're no longer here to earn it? We're intentionally releasing this series around Life Insurance Awareness Month, and for me, the timing feels especially meaningful this year. Planning can create space.

Amber Stitt [00:01:23]:
Money doesn't make grief easier. Life insurance doesn't replace someone you love, and I would never want to suggest otherwise. But I've seen what can happen when some of the financial decisions have already been made prior to a loss. The family isn't necessarily trying to solve every financial question while also navigating a loss. There can be more space to tell stories, look at pictures, laugh, cry, help each other, and simply be together. That has stayed with me. It's also why I want this series to feel a little different from a traditional conversation about life insurance. Yes, we're going to talk about term insurance, permanent insurance, underwriting, riders, and living benefits, AI and underwriting beneficiaries, laddering, and how much coverage may make sense.

Amber Stitt [00:02:11]:
But before we get into any of that, I think there's a more useful place to begin. What are we trying to protect? Life insurance is about the life you're building. Before getting into term versus permanent insurance, coverage amounts, or insurance companies, I like to start with 2 questions that we need to ask ourselves: "Who depends on me?" And, "What is my income helping make possible for them?" Maybe that's paying the mortgage, supporting a partner, raising children, funding education, helping aging parents, building investments, growing a business, creating retirement assets, or simply giving the people you love more choices in the future. Those are the things we're really talking about. Because if you're no longer here, your family's plans don't necessarily disappear, the income that was supposed to help fund those plans does. Life insurance can be one way of transferring some of that financial risk. Here is why this conversation can be different for physicians.

Amber Stitt [00:03:11]:
Physicians have an interesting financial timeline. During residency and fellowship, current income can look very different from future income. And even after training ends, it may take time to reach the income you ultimately expect to earn, depending on specialty, employment structure, partnership track, practice ownership, or other career decisions. At the same time, life is still happening. You may get married or establish a long-term partnership during training, have children, buy a home, support family members, or begin making financial decisions based partly on the career and income you're building toward. That's why I don't think the life insurance conversation is only: "How much money are you making today?" There's another question alongside it: "What are you building, and who is part of that plan?" Let's remember, your need can be largest before your wealth is. Early in a physician's career, there can be an unusual financial combination: high future earning potential, growing financial responsibilities, and relatively little accumulated wealth. Maybe there's a mortgage, young children, childcare, student loans, or other liabilities, and decades of future earning potential.

Amber Stitt [00:04:26]:
But you haven't had decades to build the investment accounts, retirement assets, business value, or other wealth that may eventually support your family. That's part of what can create a protection gap. Fast forward 20 or 30 years, and the picture may look completely different. The mortgage may be smaller, or gone. Children may be financially independent. Retirement accounts and investments may be substantial. A business may have value. And there are fewer remaining years of income that need to be replaced.

Amber Stitt [00:04:56]:
Your insurance needs can change because your life is supposed to change. You don't have to build the entire plan today. This is an important part of the conversation for residents. Your financial life isn't finished, and your insurance plan doesn't have to be finished either. For some physicians, establishing an initial amount of coverage during training can make sense based on current income, responsibilities, financial circumstances, and insurability. I've worked with physicians who begin with something like $500,000 to $1.5 million of coverage, depending on their individual situation. Then life keeps moving. Income increases, responsibilities change.

Amber Stitt [00:05:37]:
Maybe children arrive. There's a larger home, a practice buy-in, a business venture, or simply a different vision for the family's future. At that point, additional coverage may become part of the conversation. Sometimes that happens through life insurance laddering, where different policies are purchased for different amounts and periods of time. We'll give laddering its own episode later in this series. For now, the larger idea is simple: your first insurance decision doesn't have to solve your entire financial future.

Amber Stitt [00:06:08]:
It can reflect where you are today, with room for the plan to evolve. Let's bear in mind, there is a trade-off to waiting. There's another piece of this that's worth understanding. Additional life insurance purchased later generally means looking at coverage again based on the circumstances at that time. Your age may be different. Your health may be different. Your financial eligibility may be different. And the insurance marketplace may be different.

Amber Stitt [00:06:33]:
So there can be a balance between 2 reasonable ideas: planning around what makes sense today, and also recognizing that additional planning may make sense later. That isn't a flaw in the plan; that's often just what financial planning looks like over a lifetime. I'd like to take a second to tell you about a FREE Medical Professionals Blueprint that I created with you in mind. At some point in your career, you realize it's not just about making more money; it's about making decisions that actually support your life. That's exactly why I created "The Pathways Perspective for Physicians." It's a simple, non-technical framework to help you think through your career, your money, your risk, and how everything connects as your life evolves. You shouldn't have to have a finance degree to build financial freedom. You don't need to have everything figured out.

Amber Stitt [00:07:26]:
You just need a place to start. You can download the FREE Medical Professionals Blueprint at StittStrategies.com/blueprint. Now, here's how my own plan evolved. I want to share more of my own experience throughout this series, too. Not because my plan should become anyone else's plan. It shouldn't. But I think it's helpful to hear that even someone who works in insurance didn't sit down one day and build a perfect 30 year insurance strategy. I grew into my financial plan as I grew into my life.

Amber Stitt [00:07:58]:
My needs changed when I got married. They changed again when I became a mom. When my daughter was born, I remember feeling grateful that we already had planning in place for both my daughter and my stepdaughter. It made the purpose of the insurance much more tangible. Even today, I notice it when I travel. There's a certain freedom in knowing that I've addressed a financial risk that's important to me. If something happened to me, no amount of money could replace their mom. But I know that the opportunities I want for my daughter, or husband, doesn't necessarily have to disappear because my financial support does.

Amber Stitt [00:08:33]:
That matters to me. As our family changed, our businesses grew, our income changed, and my insurance planning changed, too. I added term coverage as some of our temporary needs grew. Later, in my 40s, I incorporated permanent coverage for different longer-term objectives, including some planning around potential extended care needs. We'll get into permanent insurance and living benefits later in this series, because those products deserve a much more thoughtful conversation than simply saying they're good or bad. The point for today is that my insurance plan evolved with my life, and that's completely normal. Another thing to consider is that life insurance and disability insurance grow differently, and that is useful to understand. Many individual disability insurance policies can include a future increase feature that may allow additional coverage to be purchased later if certain contractual requirements are met.

Amber Stitt [00:09:27]:
Term life insurance generally doesn't work the same way. If I decide years later that I want another $1 million of term coverage, I'm generally looking at purchasing additional insurance based on my age, health, financial eligibility, and the options available at that time. That's one reason life insurance can evolve in layers. Some coverage may be established earlier. Additional coverage may be added as income and responsibilities grow. And eventually, some of those temporary needs may disappear. Again, we'll get much deeper into this when we talk about laddering. We'll spend more time on coverage amounts in episode 2, but I want to introduce one idea here.

Amber Stitt [00:10:05]:
Insurance calculators can be helpful. They can give us a starting number. What they can't necessarily understand is the plan behind the number. A calculator doesn't know your family. It doesn't know the conversations you've had with your partner. It doesn't know which goals are flexible and which ones really matter to you. That's why one of my favorite questions in these conversations is, "What was the plan?" Yes, let's account for the mortgage, but what was supposed to happen after the mortgage? Were you building an investment portfolio? Growing a business? Was your partner eventually going to work less? Were you planning for education? Travel? Retirement? Helping parents? And if something happened to you, which pieces of that plan would you still want your family to have the option to pursue? That's a different conversation than simply, "How much debt do you have?" Both matter, but they answer different questions. I also want to be clear about where all of this is headed.

Amber Stitt [00:11:02]:
The goal isn't to own the most life insurance. The goal is to understand the financial risk and decide how much of that risk makes sense to transfer to an insurance company. Hopefully, over time, your assets grow. Your liabilities decline. Your children become independent. Your investments become stronger. Your financial plan becomes more resilient. And eventually, you may be able to retain more of that financial risk yourself.

Amber Stitt [00:11:27]:
That's a good outcome. Insurance is a tool. The life you're building is the point. And proper planning can create freedom. You'll probably hear me use the word freedom throughout this series. That's intentional. Insurance is often discussed through the lens of everything that could go wrong. I tend to think more about what happens after we've addressed the risk.

Amber Stitt [00:11:47]:
The coverage is in place. You understand why you own it. You know who it's intended to protect. And then? You get back to living. When I get on an airplane, I don't want to spend the flight thinking about every terrible thing that could happen. I've addressed a financial risk that's important to me, and that gives me the freedom to focus on the life I'm actually living. To me, that's what good risk management can do. It doesn't eliminate uncertainty; it can give us more confidence to live alongside it.

Amber Stitt [00:12:16]:
So here's your Responsible Resident prescription. For this first episode, there are 3 ideas we need to keep in mind. Identify the people. Who financially depends on you today? And who might be affected financially if you weren't here? Preserve the plan. What is your income helping make possible? The home, education, investments, a business, retirement, or opportunities for the people you love. This is where what was the plan becomes such an important question. We need to protect what makes sense today. The plan can reflect the health, income, cash flow, responsibilities, and information you have right now.

Amber Stitt [00:12:54]:
And as your life changes, the plan can change with you. Your first insurance decision doesn't have to solve your entire financial future. It can simply address the responsibilities and risks that already exist. So that's our first Responsible Resident prescription: identify the people, preserve the plan, and create the freedom to keep moving forward. In our next episode, we'll tackle the natural next question: "How much life insurance does a physician actually need?" Spoiler alert: there isn't one magic number. We'll look at some of the traditional ways coverage needs are calculated, but then we'll put an actual life around those numbers, because for residents and early-career physicians, there can be several different numbers in the conversation. What does a traditional calculation suggest? What does your actual family plan call for? And what amount can reasonably be supported based on where you are today? Those numbers may not always be identical, and that's what we'll work through in our next episode. I'm Amber Stitt, and this is the Responsible Resident Podcast.

Amber Stitt [00:13:56]:
People first, plan second, product third. I'll see you next time. If this episode helped you think a little more clearly about your next step, that's the goal. You don't need to have everything figured out, but you do need to take ownership and take a meaningful step forward today. Thanks for listening to The Responsible Resident. As a reminder, this podcast is for general educational purposes only. It is not legal, tax, or individualized financial advice, and coverage options will vary based on your personal situation.