Insurance is a necessary evil, and some forms of coverage are more evil than others. I believe physician families should make it a policy to avoid the following kinds of coverage:
- Cancer (or specific disease) insurance: There are few diseases scarier than cancer, which must be why people buy cancer insurance"¦ they're afraid they'll get the Big C. The problem with this coverage is that there are limitations. For instance, some policies exclude payments for skin cancer, one of the more common forms of cancer. If you have solid, comprehensive health coverage, skip the specific disease insurance.
- Accidental Death & Dismemberment (AD&D) Insurance: "Accidents happen" all the time, so it seems like a good idea to have coverage for it. But an E.R. doctor will tell you that most people don't die from accidents; they die from disease. That's why physicians should skip the AD&D. A physician-grade disability policy would cover you for a loss of income resulting from dismemberment, and it also covers disability due to illness. Some policies feature a dismemberment benefit or a capital sum for accidental death, but the better policies tend to offer strong coverage for full and partial disability, pure and simple.
- Credit Life Insurance: The last time you refinanced or bought a home, did you get an offer for life insurance? Don't get me wrong"¦ it's important to leave your spouse and kids with enough money to pay off the house but the cost of credit life insurance is exorbitant when compared to the cost of coverage in a free-standing policy because there's no underwriting for credit life.
When you own solid health insurance, adequate life insurance and quality disability insurance, you can confidently say "no" to this junk insurance. But if you're not certain, it's time to consider the risks and put together a well-considered plan to make sure your family will reach their goals.