4 common misconceptions about life insurance
Excerpted from page 44 of the September/October 2021 edition of AOA Focus.
Many doctors of optometry may not have adequate life insurance coverage to help ensure financial security for their families. Chris Burke, president and CEO of A.G.I.A., an AOAExcel®-endorsed business partner, clarifies some common misconceptions surrounding life insurance and provides insight on how AOA members can get started obtaining life insurance coverage to help protect their families’ financial future.
LIMRA® conducted an annual Life Insurance Barometer Study and found that among Americans, there are four particularly common misconceptions about life insurance.
1. Life insurance is too expensive.
Many doctors, particularly those at the beginning of their careers, significantly overestimate the annual cost of life insurance. Group term life insurance policies, such as the policy administered by AOAExcel’s endorsed partner, A.G.I.A., provide life insurance coverage at a specially negotiated rate.
2. Life insurance isn’t necessary until I’m older.
A common misconception is that a doctor can put off purchasing life insurance if they do not have a spouse, partner or dependents. However, life insurance is typically significantly easier to qualify for and less expensive for those who are young and healthy. By purchasing life insurance when they are young, doctors can often set themselves up to access larger coverage amounts at exclusively priced rates, helping them to protect the financial security of their family and loved ones.
3. Employer-provided life insurance is sufficient.
Many employers offer life insurance coverage as a benefit of employment, and this coverage is often offered as a predetermined flat sum or the equivalent of one year’s salary. While this coverage is helpful, it is often not enough to provide financial security to a doctor’s family in the unfortunate case of death. By adding a term life insurance policy, a doctor can create a financial safety net to help better support their family after they’re gone.
4. Obtaining life insurance is too complicated.
Some doctors associate life insurance with physicals and long, complicated applications and have put off purchasing life insurance coverage as a result. Purchasing life insurance doesn’t always require jumping through hoops. The AOA’s group term life insurance has a simple, online application.
How can AOA members get started obtaining life insurance?
To get started, AOA members must determine how much life insurance they should consider purchasing. When thinking about the amount of coverage, a doctor should anticipate what their surviving family will need, keeping in mind that it is recommended that this number fall within six to 10 times their annual salary. Doctors should keep these five questions in mind to help determine how much coverage to consider purchasing:
- Do you want your life insurance to pay off an entire mortgage or part of it?
- Do you want your life insurance to fully or partially fund college education expenses for your dependents?
- Do you want your life insurance to replace your annual income for a specific number of years?
- Do you want your life insurance to cover your family’s living expenses for a specific number of years?
- Do you want your life insurance to pay off a business loan or other debt?
Once a doctor has answered these questions and determined how much life insurance coverage is required to secure their family’s financial future, obtaining life insurance can be as simple as submitting an online application.
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While the AOA, and others, urge HHS to rethink implementation of this No Surprises Act provision, an upcoming #AskAOA webinar will help doctors meet the requirements that took effect Jan. 1, 2022.