It takes courage to be a physician. Not only are you making life-or-death decisions for some of your patients, you run the risk of a lawsuit if the patient or the patient’s family isn’t satisfied with your treatment.
That’s why you have to take the appropriate measures to protect your wealth. Here are a couple of questions you should ask:
Are My Retirement Savings Safe from a Lawsuit?
Your first step should be to protect yourself. It is crucial that you have retirement savings in place that cannot fall victim to a lawsuit.
Many investors have individual retirement accounts (IRAs). While these are easy to establish and invest in, they have two weaknesses: They have a low allowed threshold of annual savings, and the tax-deductibility of contributions phase out after a certain level of income.
The reason an IRA account might not be protected is because it is not qualified under the Employee Retirement Income Security Act (ERISA). ERISA applies to employer-sponsored plans like 401(k)s and 403(b)s. These plans are federally protected and cannot be “assigned or alienated”. They are certainly not as easy to set up nor to maintain as IRAs. You should work with a personal financial advisor to establish a quality investment vehicle (plan type) and limited investment options.
Do I Have the Appropriate Amount of Coverage?
Once you’ve established a protected retirement savings account, you need to make sure you have an appropriate amount of insurance. Nobody likes to ask these questions, but it is important to consider how protected your family would be in the event that you passed away.
Your job requires you to use your five senses
Additionally, as a physician, your job requires you to use your five senses. If you were to lose one of those senses — say, your eyesight — chances are that you might not be able to perform your job effectively. If you are the sole provider for your family, this could be devastating if you don’t have enough savings, or insurance, to cover the cost of your ailment and replace your income.
The odds of becoming disabled are actually surprisingly high. According to the Social Security Administration, one out of every four 20-year-olds will become disabled before they retire.
As a result, you should evaluate purchasing life insurance and disability insurance.
There are basically two types of life insurance: term life insurance — which would pay a benefit in the event you passed during a specified period of time — and whole life insurance — which can accumulate a cash value that can be accessed if need be. Whole life is permanent insurance and will remain in place so long as premiums are paid.
Term insurance costs much less for coverage and protection than whole life insurance. Be sure to work with a trusted advisor to determine what’s best in your situation. You don’t, after all, want to make a choice based solely on what will put the biggest commission in an agent’s pocket!
It is expensive, but the right amount can protect you from worst-case scenarios. By purchasing a long-term disability income insurance policy, you can receive cash payments to meet expenses ranging from groceries to debt. Even if this benefit is provided through your group or employer, it oftentimes makes sense to get an individual policy in addition.
It’s important to protect your wealth. You can be proactive by protecting your retirement savings by purchasing adequate life insurance and also by purchasing long-term disability income insurance. A financial advisor can make you aware of the options available to you, as well as help set up a good financial plan for the future.
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PLEASE NOTE LIMITATIONS: Please see Important Disclosure Information and the limitations of any ranking/recognitions, at www.fostergrp.com/info-disclosure/. A copy of our current written disclosure statement as set forth on Part 2A of Form ADV is available at www.adviserinfo.sec.gov.