Skip Ribbon Commands
Skip to main content
Sign In
OMA Insurance
Not for profit. All for doctors.
HomeGet a QuoteMeet your Advisors | Making ClaimsWhat’s NewContact Us Print Friendly and PDF

Insurance planning strategies for pre-retirement physicians

We're ready to help.


Insurance planning strategies for pre-retirement physicians: take steps now to protect your retirement income.
OMA Insurance
Insurance Services presents the third of a four-part series designed to help physicians manage their insurance and financial needs at each stage of their career — from early practice to retirement. The month’s column offers practical advice for physicians entering the “pre-retirement” phase of practice.

OMA Insurance Services has prepared a four-part series of planning tips to help physicians manage their insurance and financial needs at each stage of their career — from early practice to retirement. The third instalment, below, offers practical advice for physicians entering the "Pre-Retirement" stage of practice.

Retirement landscape

The retirement landscape today is vastly different than it was a generation ago. With life expectancies increasing, medical professionals may have a retirement period that lasts for 30 years or more. One of the greatest risks people now face in retirement is outliving their savings.

Fortunately, there are steps you can take now that will help you to protect your nest egg and also save you money during your retirement years, when your income is likely to be reduced.

Maintain sufficient Disability Income Insurance and Professional Overhead Expense Insurance

Disability Income Insurance provides a tax-free monthly income replacement should you find yourself having to take time off to recover from an illness or injury. During this time, fixed costs will continue and can build up over time. Professional Overhead Expense insurance can help to decrease the burden of these costs during your recovery period.

For physicians in the late-career stage, it is especially important to maintain maximum coverage amounts for both of these types of insurance. Why? If you have to withdraw from your retirement savings to finance your recovery period when you are approaching retirement, you may not have the time necessary to replace these savings, and recoup the lost returns on your investment growth.

Consider Permanent Life insurance protection

While Term Life insurance is a practical option at a younger age to cover your temporary needs, such as mortgage protection, a child's education, or to replace your income due to a premature death, the late-career stage is a good time to start thinking about Permanent Life insurance as a cornerstone of your estate plan.

As the name implies, this type of insurance provides lifetime coverage. There are two ways of reducing or eliminating your costs for Permanent Life insurance in retirement:

  1. Lock in lower rates at younger ages by converting from Term to Permanent Life insurance. If you have OMA Flex-Term Life insurance, there is the option to convert to lifetime term-to-100 coverage without medical evidence at any time before you reach the age of 65. Rates are based on your age at the time of conversion. At age 100, coverage is considered "paid up" and will continue until death without any further premiums.
  2. Buy Permanent insurance with a limited pay period. With this type of coverage, you only pay insurance premiums for a set length of time. Once the limited pay period ends, no further payments are required, and your coverage remains in place for your lifetime. The advantage is that you can choose a limited pay period that coincides with your target retirement age so that you will not have to worry about paying premiums with reduced retirement income.

Protect your nest egg with Long Term Care insurance

Many of us take for granted the ability to do things such as bathing, getting dressed and eating. Now that we are living longer than ever, and with constant new life-saving medical advances, studies show that we have a significant likelihood of needing a personal support worker at some point, whether at home or in a facility.

Long Term Care insurance (LTCI) provides a weekly, tax-free benefit of up to $2,000 should you require help with at least two activities of daily living, or if you suffer from a cognitive impairment that requires constant supervision. This type of protection is vital to have in retirement, especially as you will no longer qualify for Disability Income insurance.

As with Life insurance, LTCI is also available with a limited pay period feature. Along with the vital financial assistance it provides, LTCI helps you get the care you need without placing this considerable burden on your spouse or partner, children, family members, and friends. The burden often extends beyond financial considerations and includes physical and emotional demands, as well as a major time commitment to provide needed assistance.

As an example, Dr. G.* was an established family physician who loved his work and had planned to keep practising for many years to come. At age 53, he began experiencing symptoms of back strain, followed by weakness in his left quadriceps. Although initial testing for ALS was negative, he was eventually diagnosed with the disease.

As his ALS progressed, Dr. G. reluctantly cut back to working part time and began to use a wheelchair due to increasing weakness in his arms and legs. Eventually, he had to give up his practice entirely.

In just three years following his diagnosis, Dr. G.'s condition deteriorated to the point where he relied on in-home care for four hours per day, seven days per week, to help him with activities like bathing and dressing. The cost of this care was fully covered by his monthly LTCI benefit.

Dr. G. is especially grateful for how Long Term Care insurance helped his wife, Elena. At only 51 years of age, he hopes she will have a long and healthy life ahead, and is relieved to know she will not have to compromise her retirement lifestyle because of costs related to his illness. But perhaps more importantly, he is thankful she can spend their remaining time together as his wife, not as his caregiver.

Other important health insurance solutions

If you do not have Critical Illness insurance, it is still possible to qualify for coverage up to age 65. This type of protection provides a lump sum benefit payout if you are diagnosed with one of the 25 conditions covered under the plan. With a permanent plan, you can choose to prepay over a shorter period, yet maintain coverage for life.

As you age, your expenses for dental care, medication, vision care and travel insurance often increase. Extended Health Care and Dental insurance helps reduce your out-of-pocket costs for these services, along with emergency medical care.

Advice for your pre-planning needs

As an OMA member, you have access to a wide range of valuable insurance solutions that will help you create an effective protection plan for your retirement years at an affordable cost.

*For illustrative purposes, characters in the story and scenario are fictional.