Doctors often wonder when they can stop paying for disability insurance once they've built wealth. The video discusses whether you actually need it after reaching financial independence and what factors determine when coverage becomes optional.
Disability insurance is a temporary type of insurance like term life insurance. When you no longer have a need for it or it is no longer a good deal, you should cancel it and use what you would have spent on premiums to save, spend or give more than you now do. The idea is to have disability insurance in place from the time you start earning money until the time when you no longer rely on that earning stream. Since any type of insurance is a losing proposition, you should only insure against financial catastrophe. Acquiring a long term disability while your family relies on your income is a financial catastrophe. Becoming disabled after you are already financially independent or for only a short period of time is not so. When you reach financial independence, you can cancel your disability insurance and your term life insurance. In addition, since most disability insurance policies only pay out until age 65 or 67, the possible payout becomes less and less as you age. As you move into your 60s, you may decide it is no longer worth the premiums to only get a few years of benefits in the event of long term disability.
The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.
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