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Feel like we are over-insured...

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  • Feel like we are over-insured...

    We are in our first year out of fellowship 1/2 years toward partner in private practice ortho. Hoping to buy a house within the next two years in the 450-600k range. Income 450k currently but may increase after partner. 3 kids under 3 wife stays home

    bills per month:
    earnest loan 5800 for five years
    rent 1800
    utilities subscriptions etc 300
    other spending 4k per month

    Do I just need to replace about 14k of income? Or do we need to think about kids college-retirement investments etc and it is cheaper to get it now than in the future (what we assumed)? An increased mortgage soon once we buy our house? This is what we currently have and I feel we may be over insured based on what others have on here...

    4 term life insurance plans (3 that we just added and one from residency):
    15k per month with employer before tax (10400 after tax)
    3mil 20 costs 1030 annually
    1mil 30 costs 733 annually
    another 1 mil 30 from residency 720 annually

    two term disability plans (one from residency and one we just added):
    12,500 after 90 days costs 360 per month
    2,000 after 90 days costs 40 per month

  • #2
    You might be able to gain a touch of efficiency by combining the life contracts and also reviewing duration left vs. a new contract with that duration. What I mean by this is if you have a 30 year contract that you bought 5 years ago, price it against a new 25 year contract. As for the disability you have a $12,500 of benefit that the cost is $28.80 per month per $1,000 of monthly benefit, the other $2k contract is priced at $20 per month per $1,000. Why does the larger contract cost so much more (nearly 45% more per dollar of coverage) than the $2k policy? From a $$ standpoint is that you may have $100 per month of bloat in that larger contract so get that reviewed.

    Most people don't review the actual terms of the employer policy but I would encourage you to do so because reading the brochure or seeing what they post in an employee portal telling you that you have $15k of benefit that will be taxable just does not get you the details you will need to understand how it will perform at claim time.
    Scott Nelson-Archer, CLU, ChFC
    303-953-0263 Direct / [email protected]

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    • #3
      without diving into numbers i think it's very hard for a very early career doc w/ a sah spouse and 3 young kids to be over-insured.

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      • #4
        You probably don't need that much, but term is so relatively cheap that you should just keep it and not think about it again. The best insurance is the kind that you never need/use.

        I'm a 37 yo orthopaedic surgeon and I'm only insured for 1.5 million. Most would say I'm under-insured. However, my wife also earns a fairly good income and we have a fair amount already saved. We also have equity in my practice. So I'm not too worried about her and my kids financially.

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        • #5
          Others here may be under insured. I'm sure we are. Does that life insurance include some for your SAH spouse?

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          • #6
            Private practice ortho probably need to bump that house price about 2 or 3x.

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            • #7
              Originally posted by orthowife View Post
              4 term life insurance plans (3 that we just added and one from residency):
              15k per month with employer before tax (10400 after tax)
              3mil 20 costs 1030 annually
              1mil 30 costs 733 annually
              another 1 mil 30 from residency 720 annually

              two term disability plans (one from residency and one we just added):
              12,500 after 90 days costs 360 per month
              2,000 after 90 days costs 40 per month
              What is this. Is this another disability policy?

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              • #8
                I’m 1.5 years out from my ortho fellowship, and I am happily overinsured.

                Spouse stays at home, 17 month old toddler and another bun in the oven.

                $3 million 20 year term on myself
                $500K 30 year term on myself
                $250K 30 year term on stay at home spouse

                Individual regular occupation disability ($17K/month after 90 days)

                $5,000,000 umbrella policy

                Closed on a $435,000 house last month.

                Life is good.

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