Life insurance: A financial solution for generational wealth for health care professionals

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In my experience, physicians want a more holistic approach to protecting their finances, lifestyles and families. A portfolio that offers them the ability to address key financial planning considerations without unnecessary financial pressure or limited visibility into financial growth. Everyone, regardless of their role or company, should find smart ways of managing and building their financial portfolio so they are protected in the long and short term.

One key way of crafting this portfolio is through life insurance. Life insurance plays an important role in planning for physicians, but many practitioners aren’t aware of the benefits. There is a significant knowledge gap between what life insurance offers and how health care practitioners can leverage it effectively.

A well-structured life insurance policy can provide financial stability for a health care practitioner’s family and serve as a cornerstone of generational wealth, while also helping to minimize the tax burden on their passing. It should be part of any physician’s financial strategy from the outset.

Shawn Goheen

Life insurance supports debt and builds personal security

Medical practitioners face several comprehensive challenges as they move through their careers and into the future:

• Medical school can be a significant expense that, depending on where a practitioner studied, for how long, and what specialties, can leave many doctors in debt. Paying this off requires careful financial planning that helps to ensure physicians balance their income with debt payments. Life insurance can help to alleviate the cost of medical school and help to ensure that any debt left by a practitioner on their passing is not carried by their family.
• Health concerns are not personalized to patients. Doctors experiencing high stress levels, long working hours and burnout are at risk of their own health issues and need a financial package capable of supporting them should they need to recuperate or take significant time off work. A robust life insurance policy that’s convertible can help ensure continued financial coverage despite changes in health status, providing value over both the long and the short term.
• Running a medical practice while pursuing ongoing career development is a challenging task. Medical professionals need to invest in continuing medical education and they need to manage the ongoing – often very high – costs of managing a medical practice. From purchasing specialty equipment to hiring staff and managing accounts, doctors are small business owners as well as medical professionals. Life insurance can offer them financial stability and access to emergency funds should they need support during a tough period, or to improve the practice or manage unexpected costs. For physicians starting their careers, life insurance can help alleviate the cost of medical school and opening a practice. They can also opt into buy-sell agreements to safeguard partnerships and create a stable portfolio and plan with trusted support from a financial advisor that makes their short and long-term needs a priority.
• Personal life and day-to-day challenges, such as divorce or a change in relationship with a partner, can significantly alter a practitioner’s future plans. In such instances, a buy-sell agreement can be life-changing. A contentious divorce can be costly and time-consuming without a buy-sell agreement. There is also the value of having access to funds and protecting financial assets with an iron-clad life insurance policy.
• Building a holistic, well-rounded financial portfolio early on is beneficial, and should include life insurance, which has the potential to deliver long-term value and financial confidence in the event of an emergency. Often, physicians overlook life insurance at the early stage of their careers. But why? Despite routinely insuring their cars, homes, boats, and liability – why not secure their and their family’s future with life insurance? Life Insurance should only be one part of an overall portfolio. It is a tool that can help diversify a financial strategy while simultaneously helping reduce taxes.

Planning for the future shouldn’t be complicated

Life insurance facilitates seamless wealth transfer to future generations, helping to ensure that beneficiaries receive the full value of the estate without the high cost of estate tax. Additionally, it can help to manage potential tax increases in the future. The life insurance death benefit provides can provide tax-free liquidity, further helping one’s beneficiaries.

It is important for health care professionals to work with a wealth management professional to create a portfolio that’s more attuned to their personalized needs. For example, a doctor could invest in a cash-value life insurance policy that allows them to withdraw tax-free funds on retirement. It then shifts from a source of generational wealth to a source of income when a practitioner decides to step away from his or her career.

A trusted adviser can also help determine what level of life insurance a person needs, how much to invest, and the time frame required to help ensure the policyholder receives optimum value. As a high-income earner, a medical practitioner can use a life insurance policy as a trusted vehicle that can help provide confidence in their family’s financial well-being.

In collaboration with a financial adviser who is well-versed in life insurance, physicians can enjoy the benefits of tax-advantaged growth, flexibility and effective estate and wealth management that life insurance provides. It can be a strategic tool that can help optimize a wealth management strategy.

Shawn Goheen, CSA, LUTCF, serves as Partner at Goheen Insurance: A Simplicity Company. A 33-year veteran in the insurance industry, he is a leader in the premium finance life insurance space, providing solutions to estate tax issues and helping high-net-worth individuals preserve their financial legacy.

Disclosure: Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This is not a comprehensive review of all features and is intended for educational purposes only. 3753959-0724