[Financial Boot Camp] Does Anyone Depend On Your Income?

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If you’ve ever wondered whether getting life insurance was worthwhile, ask yourself the following question: Is there anybody in your life who depends on your income besides you?

If the answer is yes, then it’s simple: you need life insurance.

Even if you already own some, you should read on to make sure you have enough of the right kind of life insurance.

Can I Skip This Step?

If no one else is depending on your income and you have enough assets to pay for your burial, you’re in a great place and can skip the rest of this step.

The purpose of life insurance is to eliminate the financial consequences of your death.

To figure out how much insurance you should buy, you will need to determine what the financial plan will be if you died tomorrow. Then, buy enough insurance so that, financially speaking, the consequences are the same whether you live or die.

How Much Life Insurance Do You Need?

Deciding how much life insurance to buy requires you to do some rudimentary math, but most doctors end up with between $1 million and $5 million.

Follow these steps to figure out how much you need:

Determine how much income your loved one(s) would need going forward if you died today. First, calculate your monthly expenses and multiply that by 12 to get your annual expenses. Now, multiply that by 25. That will provide a nest egg for them to live off of for the rest of their lives.
Now, look at your latest mortgage statement. Add on the amount you still owe to the nest egg number from above. If you are currently renting, take a look at what the house you would like your loved ones to live in would cost to buy with cash. Use that amount instead.
Next, consider how much you would like to have for your childrens’ education. If you plan to pay for the entire experience, plan on $50,000–$200,000 per child.
Now, consider any other large-ticket items there may be, such as your spouse’s student loans, the mortgage on a vacation home, or any other debts. Remember that most student loans are forgiven if you die.
Add it all together. Subtract your current nest egg and college savings from it. Now, round up to the nearest $1 million.

That’s how much term life insurance you should buy.

Is the number between $1 million and $5 million? Good. Don’t worry about buying a little too much. Term life is cheap, and it’s better to have a little too much (especially when future inflation comes into play) than not enough.

Term vs. Permanent Life Insurance

There is only a limited period of time where you will need life insurance, and the least expensive way to pay for that need is to buy what is called “term” insurance.

Term insurance only pays out if the policyholder dies during a specific term. There are other types of insurance, collectively called “permanent” insurance, that will pay out whenever the insured dies, whether that is at age 30 or age 90.

You’ve likely heard of “Whole Life Insurance” before. That’s a type of permanent life insurance.

Most doctors should not buy whole life insurance.

Permanent insurance costs a lot more than term insurance (often up to 10x more) because it guarantees that if you keep paying the premiums, your heirs will get the death benefit eventually.

To make matters worse, permanent insurance has an almost endless number of variations and has a veritable army of salespeople working their tail off to sell as much of it to you as you will buy, using dozens of well-honed sales techniques.

For the vast majority of doctors and other high-income professionals, buying any permanent insurance policy is optional at best—and probably a financial error.

The reasons why are a bit beyond the scope of Financial Boot Camp (read more here), but just remember this: at this point in your financial life, what you need is term insurance and a lot of it.

If you wish to add on a permanent life insurance policy at some point down the road, be sure you understand exactly what you are buying and are committed to holding it until death.

Either way, you need some term insurance.

How Long of a Term Should You Buy?

The idea with buying term life insurance is that you need to save and invest enough money every year to eventually become financially independent. In order to decide how long of a term you need, you need to know roughly when you expect to be financially independent.

This will require another financial calculation. If you don’t have the ability or desire to make this calculation, buy a 30-year level term policy.

That gives you 30 years to learn how to make this calculation, and hopefully, you’ll learn it a lot sooner than that. It might cost you a little extra, but since you can’t really buy a term longer than 30 years, at least you won’t come up short.

How to Calculate Length of Term Needed/Years to Financial Independence

If you would like to learn how to do this calculation, it’s not that hard. Open a spreadsheet, such as Microsoft Excel, and input a calculation called “NPER.” You will need to input a few variables.

Here’s how to do it:

NPER is the “number of periods,” i.e., number of years, until you reach your financial goal. This is the solution of the equation.

RATE is the first variable and is the annualized rate of return on your investments. Adjusted for inflation, we think 5% is a reasonably conservative number, and that’s what we would recommend using in this calculation.

PMT is the second variable and is the payment, or the amount of money you intend to save for retirement each year. When you enter it into this calculation, this is a negative number, so put a minus sign in front of it.

PV is the present value, i.e., the current size of your nest egg. It is also a negative number.

FV is the future value, i.e., the amount of money in today’s dollars you need to retire.To get this, estimate how much income you will need per year in retirement and multiply it by 25. This is a positive number in the equation.

Type is either a 1 or a 0, depending on whether you will be adding the payment at the beginning of the period (a 1) or at the end (a 0). It doesn’t matter all that much for the purposes of this equation.

So, let’s say you want $100,000 per year to live on in retirement, and you are saving $40,000 per year toward retirement. How long will it take you to get there? Here is what you would put into the spreadsheet:

=NPER(5%,-40000,0,100000*25,0)

The solution is 29 years. So if that is you, buy a 30-year term policy

However, let’s say you are a bit more frugal and you already have $100,000 saved for retirement. You plan to save $60,000 per year and can live on $80,000 per year in retirement. What would your equation look like?

=NPER(5%,-60000,-100000,80000*25,0)

The solution here is 22 years. A 25-year term policy ought to be adequate.

What if someone is already well into their career but still needs life insurance? Let’s imagine someone who already has $1 million and is saving $50,000 per year but wants $100,000 in retirement income. How long should their life insurance term be?

=NPER(5%,-50000,-1000000,100000*25,0)

The solution here is 11 years, so a 10- or 15-year term is probably adequate.

As you can see, these equations don’t require a precise calculation. If you’re not sure about a variable, just guess and then round up. These are not irrevocable decisions.

How to Buy Term Life Insurance

Term life insurance is essentially a commodity. For the most part, it is a simple product. You pay a premium once a year, and if you die during that year, you get the face value of the insurance policy from the insurance company. If you don’t die, you don’t get anything.

Any reasonably financially secure insurance company is going to be able to pay out if you die, so you shouldn’t spend a great deal of time, effort, and money trying to get a policy from a “better” company. It all works fine.

You want the cheapest policy for the money.

If you are very healthy, this is a simple process. You simply go to an online site using software such as “Compulife” which will provide you quotes from dozens of insurance companies without requiring any personal information. You then print out the list of quotes, go to an independent agent (i.e., one who can sell you a policy from any company), and ask them to sell you the least expensive policy for the face amount and term you have already decided on. It is that simple.

You can use our list of recommended insurance agents that have been vetted by WCI and that are sure to treat you well.

Get Life Insurance Coverage

If you are not healthy or you engage in dangerous hobbies (such as flying, skydiving, scuba diving, or climbing), it gets a little more complicated. Here is where the independent insurance agent really earns their commission. They will have to informally “shop you around” to the various companies to see which one will give you the best price.

How to Avoid Getting Sold Permanent Life Insurance

Most, if not all, insurance agents who you go to for term life insurance will attempt, at least briefly, to sell you a permanent life insurance policy. It is best to be politely persistent.

A phrase like, “I am here today to buy term life insurance only. If you treat me well today, I may be back at a later date to purchase permanent life insurance from you. But that date is not today.”

Better yet, just use an agent off our recommended list, such as this email's sponsor, and you won't have that pressure.

Next Steps

If you do not have life insurance (and are not financially independent), take action today. You’ve got this!

Calculate how much you need and for how long, using the calculations above.
Make an appointment with an independent life insurance agent to purchase a policy.
If you already have life insurance, run the two calculations to ensure you have enough and that it will last long enough. You may find you need to buy some more, but you might also find out you no longer need your policy and can cancel it.

Additional Life Insurance Resources

Term vs. Whole Life Insurance

When Is Permanent Life Insurance a Good Idea?

How to Cancel Your Whole Life Insurance Policy

Advanced Term Life Insurance Strategies

Step 2 Sponsor

Insuring Income is an independent life & disability insurance agency operating nationwide. They are long-time contributors and advertisers with White Coat Investor. For over a decade they have helped hundreds of physicians and white-collar professionals add the term life insurance, and laddered term, protection they need to take care of their families, business partners, and those they hold dear. Working with all the major life insurance carriers that are A rated or higher according to AM Best® means that they sit on the same side of the table as their clients, not a specific insurance carrier. They stand at the ready to help you understand the life insurance process, develop a plan to lock in the coverage you need, and even help you prescreen the carriers before applying if you have health history concerns that might impact the underwriting process. You can get started and review carriers/pricing HERE.

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<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If you’ve ever wondered whether getting life insurance was worthwhile, ask yourself the following question: Is there anybody in your life who depends on your income besides you? <br style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If the answer is yes, then it’s simple: you need life insurance.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Even if you already own some, you should read on to make sure you have enough of the right kind of life insurance.
</p>
<h4 style="font-family:Helvetica, Arial, sans-serif;color:#111111"><br style="font-family:Helvetica, Arial, sans-serif"></h4>
<h4 style="font-family:Helvetica, Arial, sans-serif;color:#111111">Can I Skip This Step?</h4>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If no one else is depending on your income and you have enough assets to pay for your burial, you’re in a great place and can skip the rest of this step.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">The purpose of life insurance is to eliminate the financial consequences of your death.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">To figure out how much insurance you should buy, you will need to determine what the financial plan will be if you died tomorrow. Then, buy enough insurance so that, financially speaking, the consequences are the same whether you live or die.
</p>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">How Much Life Insurance Do You Need?</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Deciding how much life insurance to buy requires you to do some rudimentary math, but most doctors end up with between $1 million and $5 million.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Follow these steps to figure out how much you need:
</p>
<ol style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Determine how much income your loved one(s) would need going forward if you died today. First, calculate your monthly expenses and multiply that by 12 to get your annual expenses. Now, multiply that by 25. That will provide a nest egg for them to live off of for the rest of their lives. </li>
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Now, look at your latest mortgage statement. Add on the amount you still owe to the nest egg number from above. If you are currently renting, take a look at what the house you would like your loved ones to live in would cost to buy with cash. Use that amount instead. </li>
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Next, consider how much you would like to have for your childrens’ education. If you plan to pay for the entire experience, plan on $50,000–$200,000 per child. </li>
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Now, consider any other large-ticket items there may be, such as your spouse’s student loans, the mortgage on a vacation home, or any other debts. Remember that most student loans are forgiven if you die. </li>
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Add it all together. Subtract your current nest egg and college savings from it. Now, round up to the nearest $1 million.</li>
</ol>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">That’s how much term life insurance you should buy.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Is the number between $1 million and $5 million? Good. Don’t worry about buying a little too much. Term life is cheap, and it’s better to have a little too much (especially when future inflation comes into play) than not enough.
</p>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">Term vs. Permanent Life Insurance</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">There is only a limited period of time where you will need life insurance, and the least expensive way to pay for that need is to buy what is called “term” insurance.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Term insurance only pays out if the policyholder dies during a specific term. There are other types of insurance, collectively called “permanent” insurance, that will pay out whenever the insured dies, whether that is at age 30 or age 90.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">You’ve likely heard of “Whole Life Insurance” before. That’s a type of permanent life insurance.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Most doctors should not buy whole life insurance.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Permanent insurance costs a lot more than term insurance (often up to 10x more) because it guarantees that if you keep paying the premiums, your heirs will get the death benefit eventually.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">To make matters worse, permanent insurance has an almost endless number of variations and has a veritable army of salespeople working their tail off to sell as much of it to you as you will buy, using dozens of well-honed sales techniques.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">For the vast majority of doctors and other high-income professionals, buying any permanent insurance policy is optional at best—and probably a financial error.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">The reasons why are a bit beyond the scope of Financial Boot Camp (read more <a href="https://www.whitecoatinvestor.com/what-you-need-to-know-about-whole-life-insurance/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421943">here</a>), but just remember this: at this point in your financial life, what you need is term insurance and a lot of it.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If you wish to add on a permanent life insurance policy at some point down the road, be sure you understand exactly what you are buying and are committed to holding it until death.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Either way, you need some term insurance.
</p>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">How Long of a Term Should You Buy?</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">The idea with buying term life insurance is that you need to save and invest enough money every year to eventually become financially independent. In order to decide how long of a term you need, you need to know roughly when you expect to be financially independent.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">This will require another financial calculation. If you don’t have the ability or desire to make this calculation, buy a 30-year level term policy.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">That gives you 30 years to learn how to make this calculation, and hopefully, you’ll learn it a lot sooner than that. It might cost you a little extra, but since you can’t really buy a term longer than 30 years, at least you won’t come up short.
</p>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">How to Calculate Length of Term Needed/Years to Financial Independence</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If you would like to learn how to do this calculation, it’s not that hard. Open a spreadsheet, such as Microsoft Excel, and input a calculation called “NPER.” You will need to input a few variables.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Here’s how to do it:
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><strong style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">NPER</strong> is the “number of periods,” i.e., number of years, until you reach your financial goal. This is the solution of the equation.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><strong style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">RATE </strong>is the first variable and is the annualized rate of return on your investments. Adjusted for inflation, we think 5% is a reasonably conservative number, and that’s what we would recommend using in this calculation.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><strong style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">PMT </strong>is the second variable and is the payment, or the amount of money you intend to save for retirement each year. When you enter it into this calculation, this is a negative number, so put a minus sign in front of it.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><strong style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">PV </strong>is the present value, i.e., the current size of your nest egg. It is also a negative number.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><strong style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">FV </strong>is the future value, i.e., the amount of money in today’s dollars you need to retire.To get this, estimate how much income you will need per year in retirement and multiply it by 25. This is a positive number in the equation.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Type is either a 1 or a 0, depending on whether you will be adding the payment at the beginning of the period (a 1) or at the end (a 0). It doesn’t matter all that much for the purposes of this equation.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">So, let’s say you want $100,000 per year to live on in retirement, and you are saving $40,000 per year toward retirement. How long will it take you to get there? Here is what you would put into the spreadsheet:
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">=NPER(5%,-40000,0,100000*25,0)
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">The solution is 29 years. So if that is you, buy a 30-year term policy
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">However, let’s say you are a bit more frugal and you already have $100,000 saved for retirement. You plan to save $60,000 per year and can live on $80,000 per year in retirement. What would your equation look like?
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">=NPER(5%,-60000,-100000,80000*25,0)
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">The solution here is 22 years. A 25-year term policy ought to be adequate.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">What if someone is already well into their career but still needs life insurance? Let’s imagine someone who already has $1 million and is saving $50,000 per year but wants $100,000 in retirement income. How long should their life insurance term be?
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">=NPER(5%,-50000,-1000000,100000*25,0)
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">The solution here is 11 years, so a 10- or 15-year term is probably adequate.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">As you can see, these equations don’t require a precise calculation. If you’re not sure about a variable, just guess and then round up. These are not irrevocable decisions.
</p>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">How to Buy Term Life Insurance</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Term life insurance is essentially a commodity. For the most part, it is a simple product. You pay a premium once a year, and if you die during that year, you get the face value of the insurance policy from the insurance company. If you don’t die, you don’t get anything.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Any reasonably financially secure insurance company is going to be able to pay out if you die, so you shouldn’t spend a great deal of time, effort, and money trying to get a policy from a “better” company. It all works fine.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">You want the cheapest policy for the money.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If you are very healthy, this is a simple process. You simply go to an online site using software such as “Compulife” which will provide you quotes from dozens of insurance companies without requiring any personal information. You then print out the list of quotes, go to an independent agent (i.e., one who can sell you a policy from any company), and ask them to sell you the least expensive policy for the face amount and term you have already decided on. It is that simple.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">You can use our list of recommended insurance agents that have been vetted by WCI and that are sure to treat you well.
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<div style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;padding-bottom:10px;text-align:left;">
	<a href="https://www.whitecoatinvestor.com/insurance/" target="_blank" rel="noopener" style="font-family:Helvetica, Arial, sans-serif;text-decoration:none;color:#0875c1;color:#fff;font-weight:700;font-size:20px;background:#2b4274;padding:8px 18px;text-decoration:none;border:none;border-radius:12px;cursor:pointer;" url-id="1514421944">Get Life Insurance Coverage</a>
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<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><br style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit">
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<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If you are not healthy or you engage in dangerous hobbies (such as flying, skydiving, scuba diving, or climbing), it gets a little more complicated. Here is where the independent insurance agent really earns their commission. They will have to informally “shop you around” to the various companies to see which one will give you the best price.
</p>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">How to Avoid Getting Sold Permanent Life Insurance</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Most, if not all, insurance agents who you go to for term life insurance will attempt, at least briefly, to sell you a permanent life insurance policy. It is best to be politely persistent.
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">A phrase like, “I am here today to buy term life insurance only. If you treat me well today, I may be back at a later date to purchase permanent life insurance from you. But that date is not today.”
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">Better yet, just use an agent off our <a href="https://www.whitecoatinvestor.com/insurance/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421944">recommended list</a>, such as <a href="https://www.whitecoatinvestor.com/partner/dr-disability-quotes/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421946">this email's sponsor</a>, and you won't have that pressure.
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<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px"><br style="font-family:Helvetica, Arial, sans-serif"></h2>
<h2 style="font-family:Helvetica, Arial, sans-serif;color:#111111;font-size:22px">Next Steps</h2>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">If you do not have life insurance (and are not financially independent), take action today. You’ve got this!
</p>
<ol style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em">
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Calculate how much you need and for how long, using the calculations above.</li>
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">Make an appointment with an independent life insurance agent to purchase a policy.</li>
	<li style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111">If you already have life insurance, run the two calculations to ensure you have enough and that it will last long enough. You may find you need to buy some more, but you might also find out you no longer need your policy and can cancel it.</li>
</ol>
<h4 style="font-family:Helvetica, Arial, sans-serif;color:#111111"><br style="font-family:Helvetica, Arial, sans-serif"></h4>
<h4 style="font-family:Helvetica, Arial, sans-serif;color:#111111">Additional Life Insurance Resources</h4>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><a href="https://www.whitecoatinvestor.com/whole-vs-term-life-insurance/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421947">Term vs. Whole Life Insurance
	</a>
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><a href="https://www.whitecoatinvestor.com/appropriate-uses-of-permanent-life-insurance/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421948">When Is Permanent Life Insurance a Good Idea?
	</a>
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><a href="https://www.whitecoatinvestor.com/how-to-dump-your-whole-life-policy/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421949">How to Cancel Your Whole Life Insurance Policy</a>
</p>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><a href="https://www.whitecoatinvestor.com/term-life-insurance-strategies-for-physicians/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421950">Advanced Term Life Insurance Strategies </a>
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<h4 style="font-family:Helvetica, Arial, sans-serif;color:#111111">Step 2 Sponsor</h4>
<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><a href="https://www.insuringincome.com/instant-life-insurance-quotes/" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421951"><img src="https://embed.filekitcdn.com/e/mQDhWfwsq9wgZ5HPg8jGDz/v6c36MT4Qjmws4KPMJS7Tc?w=800&amp;fit=max" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;max-width:100%;height:auto;float:right;margin:0px 0px 10px 10px;" alt=""></a>
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<p style="font-size:15px;line-height:1.4;font-family:Helvetica, Arial, sans-serif;color:#111111;margin-bottom:1em"><a href="https://www.insuringincome.com/instant-life-insurance-quotes/" target="_blank" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421951">Insuring Income</a> is an independent life &amp; disability insurance agency operating nationwide.  They are long-time contributors and advertisers with White Coat Investor. 
For over a decade they have helped hundreds of physicians and white-collar professionals add the term life insurance, and laddered term, protection they need to take care of their families, business partners, and those they hold dear.  Working with all the major life insurance carriers that are A rated or higher according to AM Best® means that they sit on the same side of the table as their clients, not a specific insurance carrier.  They stand at the ready to help you understand the life insurance process, develop a plan to lock in the coverage you need, and even help you prescreen the carriers before applying if you have health history concerns that might impact the underwriting process.  You can get started and review carriers/pricing 
	<a href="https://www.insuringincome.com/instant-life-insurance-quotes/" target="_blank" style="font-family:Helvetica, Arial, sans-serif;color:inherit;font-family:inherit;font-size:inherit;text-decoration:none;color:#0875c1" url-id="1514421951">HERE</a>.
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If you’ve ever wondered whether getting life insurance was
worthwhile, ask yourself the following question: Is there anybody
in your life who depends on your income besides you?

If the answer is yes, then it’s simple: you need life insurance.

Even if you already own some, you should read on to make sure you
have enough of the right kind of life insurance.

Can I Skip This Step?
---------------------

If no one else is depending on your income and you have enough
assets to pay for your burial, you’re in a great place and can
skip the rest of this step.

The purpose of life insurance is to eliminate the financial
consequences of your death.

To figure out how much insurance you should buy, you will need to
determine what the financial plan will be if you died tomorrow.
Then, buy enough insurance so that, financially speaking, the
consequences are the same whether you live or die.

------------------------------------
How Much Life Insurance Do You Need?
------------------------------------

Deciding how much life insurance to buy requires you to do some
rudimentary math, but most doctors end up with between $1 million
and $5 million.

Follow these steps to figure out how much you need:

* Determine how much income your loved one(s) would need going
forward if you died today. First, calculate your monthly expenses
and multiply that by 12 to get your annual expenses. Now,
multiply that by 25. That will provide a nest egg for them to
live off of for the rest of their lives.
* Now, look at your latest mortgage statement. Add on the amount
you still owe to the nest egg number from above. If you are
currently renting, take a look at what the house you would like
your loved ones to live in would cost to buy with cash. Use that
amount instead.
* Next, consider how much you would like to have for your
childrens’ education. If you plan to pay for the entire
experience, plan on $50,000–$200,000 per child.
* Now, consider any other large-ticket items there may be, such
as your spouse’s student loans, the mortgage on a vacation home,
or any other debts. Remember that most student loans are forgiven
if you die.
* Add it all together. Subtract your current nest egg and college
savings from it. Now, round up to the nearest $1 million.

That’s how much term life insurance you should buy.

Is the number between $1 million and $5 million? Good. Don’t
worry about buying a little too much. Term life is cheap, and
it’s better to have a little too much (especially when future
inflation comes into play) than not enough.

---------------------------------
Term vs. Permanent Life Insurance
---------------------------------

There is only a limited period of time where you will need life
insurance, and the least expensive way to pay for that need is to
buy what is called “term” insurance.

Term insurance only pays out if the policyholder dies during a
specific term. There are other types of insurance, collectively
called “permanent” insurance, that will pay out whenever the
insured dies, whether that is at age 30 or age 90.

You’ve likely heard of “Whole Life Insurance” before. That’s a
type of permanent life insurance.

Most doctors should not buy whole life insurance.

Permanent insurance costs a lot more than term insurance (often
up to 10x more) because it guarantees that if you keep paying the
premiums, your heirs will get the death benefit eventually.

To make matters worse, permanent insurance has an almost endless
number of variations and has a veritable army of salespeople
working their tail off to sell as much of it to you as you will
buy, using dozens of well-honed sales techniques.

For the vast majority of doctors and other high-income
professionals, buying any permanent insurance policy is optional
at best—and probably a financial error.

The reasons why are a bit beyond the scope of Financial Boot Camp
(read more here (
https://click.convertkit-mail.com/p9uzkwq5xnuqu6ed6dsrum4q2333hr/vqh3hrhn63l39niw/aHR0cHM6Ly93d3cud2hpdGVjb2F0aW52ZXN0b3IuY29tL3doYXQteW91LW5lZWQtdG8ta25vdy1hYm91dC13aG9sZS1saWZlLWluc3VyYW5jZS8=
)), but just remember this: at this point in your financial life,
what you need is term insurance and a lot of it.

If you wish to add on a permanent life insurance policy at some
point down the road, be sure you understand exactly what you are
buying and are committed to holding it until death.

Either way, you need some term insurance.

----------------------------------
How Long of a Term Should You Buy?
----------------------------------

The idea with buying term life insurance is that you need to save
and invest enough money every year to eventually become
financially independent. In order to decide how long of a term
you need, you need to know roughly when you expect to be
financially independent.

This will require another financial calculation. If you don’t
have the ability or desire to make this calculation, buy a
30-year level term policy.

That gives you 30 years to learn how to make this calculation,
and hopefully, you’ll learn it a lot sooner than that. It might
cost you a little extra, but since you can’t really buy a term
longer than 30 years, at least you won’t come up short.

-----------------------------------------------------------------
How to Calculate Length of Term Needed/Years to Financial
Independence
-----------------------------------------------------------------

If you would like to learn how to do this calculation, it’s not
that hard. Open a spreadsheet, such as Microsoft Excel, and input
a calculation called “NPER.” You will need to input a few
variables.

Here’s how to do it:

NPER is the “number of periods,” i.e., number of years, until you
reach your financial goal. This is the solution of the equation.

RATE is the first variable and is the annualized rate of return
on your investments. Adjusted for inflation, we think 5% is a
reasonably conservative number, and that’s what we would
recommend using in this calculation.

PMT is the second variable and is the payment, or the amount of
money you intend to save for retirement each year. When you enter
it into this calculation, this is a negative number, so put a
minus sign in front of it.

PV is the present value, i.e., the current size of your nest egg.
It is also a negative number.

FV is the future value, i.e., the amount of money in today’s
dollars you need to retire.To get this, estimate how much income
you will need per year in retirement and multiply it by 25. This
is a positive number in the equation.

Type is either a 1 or a 0, depending on whether you will be
adding the payment at the beginning of the period (a 1) or at the
end (a 0). It doesn’t matter all that much for the purposes of
this equation.

So, let’s say you want $100,000 per year to live on in
retirement, and you are saving $40,000 per year toward
retirement. How long will it take you to get there? Here is what
you would put into the spreadsheet:

=NPER(5%,-40000,0,100000*25,0)

The solution is 29 years. So if that is you, buy a 30-year term
policy

However, let’s say you are a bit more frugal and you already have
$100,000 saved for retirement. You plan to save $60,000 per year
and can live on $80,000 per year in retirement. What would your
equation look like?

=NPER(5%,-60000,-100000,80000*25,0)

The solution here is 22 years. A 25-year term policy ought to be
adequate.

What if someone is already well into their career but still needs
life insurance? Let’s imagine someone who already has $1 million
and is saving $50,000 per year but wants $100,000 in retirement
income. How long should their life insurance term be?

=NPER(5%,-50000,-1000000,100000*25,0)

The solution here is 11 years, so a 10- or 15-year term is
probably adequate.

As you can see, these equations don’t require a precise
calculation. If you’re not sure about a variable, just guess and
then round up. These are not irrevocable decisions.

------------------------------
How to Buy Term Life Insurance
------------------------------

Term life insurance is essentially a commodity. For the most
part, it is a simple product. You pay a premium once a year, and
if you die during that year, you get the face value of the
insurance policy from the insurance company. If you don’t die,
you don’t get anything.

Any reasonably financially secure insurance company is going to
be able to pay out if you die, so you shouldn’t spend a great
deal of time, effort, and money trying to get a policy from a
“better” company. It all works fine.

You want the cheapest policy for the money.

If you are very healthy, this is a simple process. You simply go
to an online site using software such as “Compulife” which will
provide you quotes from dozens of insurance companies without
requiring any personal information. You then print out the list
of quotes, go to an independent agent (i.e., one who can sell you
a policy from any company), and ask them to sell you the least
expensive policy for the face amount and term you have already
decided on. It is that simple.

You can use our list of recommended insurance agents that have
been vetted by WCI and that are sure to treat you well.

Get Life Insurance Coverage (
https://click.convertkit-mail.com/p9uzkwq5xnuqu6ed6dsrum4q2333hr/l2hehmhopvevm3ig/aHR0cHM6Ly93d3cud2hpdGVjb2F0aW52ZXN0b3IuY29tL2luc3VyYW5jZS8=
)

If you are not healthy or you engage in dangerous hobbies (such
as flying, skydiving, scuba diving, or climbing), it gets a
little more complicated. Here is where the independent insurance
agent really earns their commission. They will have to informally
“shop you around” to the various companies to see which one will
give you the best price.

--------------------------------------------------
How to Avoid Getting Sold Permanent Life Insurance
--------------------------------------------------

Most, if not all, insurance agents who you go to for term life
insurance will attempt, at least briefly, to sell you a permanent
life insurance policy. It is best to be politely persistent.

A phrase like, “I am here today to buy term life insurance only.
If you treat me well today, I may be back at a later date to
purchase permanent life insurance from you. But that date is not
today.”

Better yet, just use an agent off our recommended list (
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), and you won't have that pressure.

----------
Next Steps
----------

If you do not have life insurance (and are not financially
independent), take action today. You’ve got this!

* Calculate how much you need and for how long, using the
calculations above.
* Make an appointment with an independent life insurance agent to
purchase a policy.
* If you already have life insurance, run the two calculations to
ensure you have enough and that it will last long enough. You may
find you need to buy some more, but you might also find out you
no longer need your policy and can cancel it.

Additional Life Insurance Resources
-----------------------------------

Term vs. Whole Life Insurance (
https://click.convertkit-mail.com/p9uzkwq5xnuqu6ed6dsrum4q2333hr/e0hph7hkzw6w34h7/aHR0cHM6Ly93d3cud2hpdGVjb2F0aW52ZXN0b3IuY29tL3dob2xlLXZzLXRlcm0tbGlmZS1pbnN1cmFuY2Uv
)

When Is Permanent Life Insurance a Good Idea? (
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)

How to Cancel Your Whole Life Insurance Policy (
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)

Advanced Term Life Insurance Strategies (
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) is an independent life & disability insurance agency operating
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For over a decade they have helped hundreds of physicians and
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They stand at the ready to help you understand the life insurance
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even help you prescreen the carriers before applying if you have
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