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What Types of Insurance Do Most Physicians Need?

  • 6 days ago
  • 7 min read

For most physicians in our online physician communities, insurance isn't about covering every little inconvenience, as most doctors can afford the occasional out of pocket expense, even if it’s unwelcome. It's more about protecting themselves from financial disaster after working so hard to create a life where there is financial stability. The things that can be truly catastrophic for physicians financially are (generally speaking) lawsuits, death, disability, and personal issues such as divorce or vices that could result in poor financial management. While you can’t purchase insurance policies for all of them, it’s generally good practice to buy policies that address the ones that you can protect against. Below, we cover the insurance policies that most physicians consider getting, and when they may or may not apply to you.


Disclosure/Disclaimer: Our content is for generalized educational purposes.  While we try to ensure it is accurate and updated, we cannot guarantee it. We are not formal financial, legal, or tax professionals and do not provide individualized advice specific to your situation. You should consult these as appropriate and/or do your own due diligence before making decisions based on this page. To learn more, visit our disclaimers and disclosures.


The physician insurance stack: the 6 types of insurance coverage doctors typically need to protect against financial catastrophe


What types of insurance do most physicians need?


Most physicians need a mix of three things: liability protection, income protection, and asset protection. The exact combination depends on your current financial situation, your specialty, where you are in your career, and who else relies on your paycheck. 


The main principle to keep in mind when choosing what to purchase (and how much to purchase) is that you should insure against the things that would be devastating to you or those that rely on you. As for the rest, it’s going to depend on your risk tolerance, but most financial advisors would agree physicians don’t need protection against everyday or occasional costs like having to replace a TV or dishwasher, or having to cover a few weeks of lost income.


As such, a typical physician insurance setup looks something like this:

  • Malpractice insurance for professional liability

  • Disability insurance for income protection

  • Life insurance for your family's financial security

  • Home, auto, and umbrella insurance for personal liability

  • Health insurance for medical costs



Malpractice insurance


If you're practicing medicine, this one isn't optional for most physicians. While some physicians may choose to go bare in states that allow it, it’s a risky proposition, and physicians tend to be risk averse. Given how large malpractice lawsuits can be for, and the unpredictability in outcomes (even if you did everything wrong), you’ll want to make sure that you’re not left holding the bag. 

How much malpractice insurance you need will vary. Coverage is often written as $1 million per claim / $3 million per year, though what you actually need varies by state and specialty. If you're in a higher-risk field or a more litigious area, you may need higher limits.


For more context, read our article on how much malpractice insurance is enough. 


Relevant PSG resources:



Disability insurance


Disability insurance is a core staple of physician finances, and for good reason. Early in your career, your ability to earn is your single biggest financial asset. If illness or injury keeps you from practicing, the hit lands immediately and can last for years. Until you’re financially stable to the point where not having any incoming income would not affect your lifestyle or your spending choices, you likely need one of these - yes, even if you have a rich spouse or an incoming inheritance. You’ve worked too hard to not stand on your own two feet and have to ask others for money - and death and divorce for your spouse does happen.


Some important things to keep in mind when shopping disability insurance:

  • Buy it early. A lot of people don’t qualify later in life. Plus it’s way more expensive the older that you get, especially once you no longer qualify for trainee discounts.

  • Get an own occupation policy. It pays out if you can't work in your specific specialty, even if you could technically go do something else. Nobody wants to have to work in another (likely lower paying) profession because they aren’t considered disabled enough to qualify for a payout from their disability insurance because they are capable of working, just not as a doctor in their specialty.

  • Employer policies are not enough. They’re nice bonuses, but don’t travel with you if you leave the job, and you may not always qualify for an individual disability insurance policy later. Plus they can have significant downsides, like needing to pay taxes on the payouts. Read more about the downsides of relying on employer sponsored disability insurance.

  • Choose the optional riders carefully so that your policy grows with you as needs change. Learn more about disability insurance riders. For example, you will likely want a future increase rider, which lets you bump up coverage as your income grows without going through medical underwriting again.


Relevant PSG resources:



Life insurance


If other people depend on your income, you’d want to continue this support in the event of your passing, and you don’t have enough saved up to do so from what they’d inherit, you likely need (term) life insurance. This can help cover things like:

  • Continuing cash flow for your dependents

  • Educational costs for kids

  • Covering debt or a mortgage so they don’t have to move

  • Keeping a surviving spouse financially stable


A note on permanent life insurance: Permanent life insurance doesn’t usually make sense from a financial perspective, though there are some exceptions, such as with estate planning or special needs situations. If anybody’s pushing permanent life insurance on you - especially when you’re not financially stable yet - be very wary. Run away from financial advisors that are really looking to be insurance agents in disguise and make money off of commissions from selling you expensive products.


Instead, always use an insurance broker who can shop policies for you across different companies. We have several of these companies that have helped thousands of our members on our insurance agents for physicians page.


Relevant PSG resources:



Home, auto, and renters insurance


While everyone needs these policies (and may even be required to have them), it’s especially important for physicians for not just covering losses, but also for asset protection purposes. As a high earner, the minute somebody who slipped on your property or who your kid accidentally backed their car into finds out that you’re a physician, you're a more attractive target for a lawsuit. The bare minimum coverage isn’t often enough. Make sure your liability coverage is genuinely high, revisit your policies as your income and assets grow, and don't settle for the skimpy coverage that just satisfies your lender. This is the set of policies that physicians often wish they hadn’t skimped on when things happen.


Relevant PSG resources:



Umbrella insurance

This is the cheapest asset protection you can get, but many physicians don’t know about it or figure it’s unnecessary. For those cases where people find out that you’re a physician and want to sue above policy limits, umbrella insurance adds liability coverage on top of your home and auto limits. It’s generally very reasonably priced, offering you millions in extra protection for a fairly small annual premium. 




Health insurance


Here’s one you likely know that you need, and that you’ve had far longer than you had an attending paycheck. As you know better than most as a physician, healthcare costs can be massive. Make sure you’re covered from huge financial losses. Employer plans are common but iif you're between jobs, COBRA or buying insurance on the marketplace can keep you covered during the gap if you don’t have access to a policy via a significant other.


Five insurance policies that protect what you've built


Long-term care insurance


This is one we have very mixed feelings on (which is why we didn’t include it in the graphics above), and members have echoed the same. In many cases, physicians have the ability to cover these costs in retirement, and increasingly, these plans are more restrictive or make it harder to qualify. Additionally, in some cases, just adding riders to your disability insurance policy may make sense to cover issues before you have saved up enough money. Read more about the pros and cons of long term care insurance.



Conclusion


Physicians need a lot of insurance, because they have a lot to protect (not just income or bank accounts, but the life that they've sacrificed so much to build). It's important to cover the bases early on in your career to ensure that you protect income, assets, and your family or loved ones. The specifics are going to shift with your specialty and career stage, but the core idea stays the same: focus on the catastrophic risks, rather than minor expenses you can absorb yourself and ensure that the coverage you purchase adequately addresses what you are trying to protect against. If you're not sure where to start, sitting down with a qualified insurance professional can help you spot gaps and avoid expensive mistakes.



Additional insurance related resources for physicians


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Related PSG resources:

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