Obtaining a life insurance policy is just another part of being an adult. You are facing your mortality. You are protecting the ones you love. But there are different options available to you and as a busy doctor, you may not have time to become an expert in yet another field of study. There are three basic types of life insurance: term life, whole life, and universal life. Known as the original life insurance policy, whole life insurance may be the option you want to consider if you’re looking for a savings vehicle in addition to protective coverage.

Unlike a term life insurance policy, which lasts for a limited time, a whole life policy is permanent if you continue to keep up with your premium payments. As clarified by Investopedia, whole life insurance guarantees your death benefit in addition to offering you a savings tool over time. As you regularly pay your premiums interest may compound tax-deferred. So, if your death benefit is $500,000, as long as you pay your premiums your beneficiaries will receive $500,000. In addition, over the years as your premium payments accrue, you will also amass a cash value that you have access to while you are still alive.

To retrieve the cash stockpile, you will need to request a withdrawal or take out a loan. If you take a loan you will need to return that money with interest or else, you will reduce your death benefit. The policyholder can withdraw funds tax-free so long as the funds withdrawn add up to the total premiums paid. You should note that premiums for a whole life insurance policy are significantly higher than the premiums for a term life insurance policy.

Physician investors truly benefit from a whole life policy if they are able to hold on to it for a long period of time. The reason for this is that over time the interest or possibly the dividends that accrue grow larger than the total amount of premiums paid into the policy over the years. For this reason insurance provider, New York Life, describes this type of policy as a low-risk investment.

Choosing your life insurance plan is a highly individualized process. According to TheBalance.com, you should take the time to speak with a trusted insurance agent about the pros and cons of this type of policy. Make sure that your goals are at the forefront of your discussions on this topic.

Author