In the demanding world of medicine, healthcare professionals dedicate their working lives to the well-being of others. Amid the rigors of patient care, significant educational investment, and long hours, many overlook a critical aspect of their financial wellness: personal risk management.
To ensure lasting stability, for yourself and your family, it is essential to have a sound personal risk management strategy in place. Understanding the various risks you face, and how to mitigate them, should be an integral part of your financial goals.
Understanding personal risks
Personal risk refers to the potential for events to disrupt your financial plans, health and safety, and overall quality of life. For healthcare professionals, this encompasses a range of factors, including:
- Loss of income due to disability or illness
- Liability exposure from malpractice claims
- Protecting those who may depend on your income
- Unexpected health costs or long-term care needs
- Financial planning
These risks can erode even the most robust financial plans if not proactively managed.
Protecting your most valuable asset: Your income
Your ability to earn an income is one of your greatest financial assets. The Social Security Administration reports that a 20-year-old worker has a 1-in-4 chance of developing a disability before reaching retirement age1. Disability insurance is essential yet often overlooked or underfunded. This type of protection kicks in if you are unable to perform your specific duties as a healthcare professional. As your earnings grow throughout your career, individuals should consider high-limit disability policies that reflect their income level. Group policies through employers may not provide sufficient coverage, especially if capped or taxed.
What to consider:
- Consider an own-occupation disability insurance policy tailored to your medical specialty.
- Supplement employer coverage to reach at least 60–70% of your after-tax income.
- Reevaluate policies as your income and responsibilities grow.
Liability and malpractice insurance
By the age of 55, nearly half of all physicians have been sued for malpractice, with general surgeons and obstetricians-gynecologists facing the highest lawsuit risks2. Malpractice insurance is a non-negotiable necessity in the healthcare field. While employers typically provide coverage, it may not always be comprehensive or portable.
What to consider:
- Confirm whether your policy is claims-made or occurrence-based.
- Consider tail coverage if changing jobs or transitioning to private practice.
Life insurance and estate planning
If others depend on your income, whether a spouse, children, or aging parents, life insurance becomes a pillar of your risk management plan. Life insurance can provide not only income replacement but also help to ensure that dependents maintain their lifestyle as part of a well-structured estate plan.
What to consider:
- Use life insurance for cost-effective protection during your key earning years.
- Consider if coverage is sufficient to cover debts, education expenses, and long-term living costs for dependents.
- Ensure your insurance beneficiary designation is coordinated with your estate plan.
Health and long-term care insurance
Despite working in healthcare, professionals often underestimate their own health-related risks. One major illness or accident can significantly disrupt finances.
What to consider:
- Maximize health insurance options annually, focusing on coverage and out-of-pocket limits.
- Consider long-term care insurance in your 40s or early 50s to lock in lower premiums and protect retirement assets.
Why personal risk management matters
Personal insurance is a tool and foundational component of any comprehensive financial plan. Here is why every healthcare professional should prioritize a comprehensive personal risk management plan:
Financial Stability: Having the right risk management plan provides a level of assurance that you and your loved ones will be protected against unforeseen circumstances. Insurance helps ensure that you will not face financial ruin in the event of a disability, illness, or death. Loss of income is the leading cause of personal bankruptcy in America. A study found 44% of people who file for bankruptcy reported that medical issues contributed to their loss of work3. As one progresses in their career, the financial implications can be even more significant, affecting investments and lifestyle choices.
Tailored solutions: Everyone’s situation is unique, which means a one-size-fits-all approach to insurance is not sufficient. It’s important to regularly review your risk management portfolio and keep up with your changing career and life phases. Tailored life and disability insurance policies can address specific needs and risks, ensuring comprehensive coverage reflects your career stage and financial landscape.
Take action: Your next steps
Now is a wonderful time to create a comprehensive financial plan that includes personal risk management. Here are a few actionable steps you can take today to help protect your finances:
Assess your risks
Evaluate the specific risks you face in your professional and personal life. Conduct a thorough risk assessment to identify potential vulnerabilities, considering factors such as practice liabilities, market fluctuations, and personal health. It’s important to note that some insurance products require proof of insurability, so planning ahead helps preserve your options.
Consult with your Huntington Advisor
Your advisor can provide tailored advice and guidance to help you navigate the complexities of risk management and help to ensure that you are adequately protected.
Review your existing insurance policies
If you already have insurance, regularly review your policies to ensure they remain aligned with your current and future needs. Life and disability insurance should be revisited periodically and as circumstances change—such as marriage, children, or shifts in your practice.
Create and regularly review your financial plan
According to a report from the American College of Physicians Foundation, 35% of physicians are behind where they would like to be from a retirement perspective4. A comprehensive strategy that accounts for lifestyle expectations, investment growth, and tax implications is critical. Build a comprehensive financial plan that encompasses risk management, retirement savings, and investment strategies to secure your future. This plan should be dynamic, adjusting as you progress through your career and life stages.
Secure your financial future today
For physicians, personal risk management is not just an option; it is a necessity. By understanding the risks you face, and taking proactive steps to mitigate them, you can help to safeguard your financial future and focus on what you do best: caring for your patients and building your legacy.
Contact your Huntington team or find a location near you to begin your journey toward financial security.
