dokta Posted June 6, 2011 Report Share Posted June 6, 2011 Hey everyone, I'm about to set up a line of credit and was wondering how many of you set up disability/life insurance to ensure that your LoC payment was protected in the event something happened? Link to comment Share on other sites More sharing options...
cheech10 Posted June 7, 2011 Report Share Posted June 7, 2011 No no no. Never buy life insurance directly tied to debt. If you have no next of kin, no one is on the hook for your debt (unless you have a co-signer). If you have dependents (spouse, children) and assets that you want to pass on, then it is far more cost-effective to buy term life insurance with a policy large enough to cover the amount of debt. As an added bonus, if your debt is largely paid off when the policy is paid out, your dependents can spend it on other things as they see fit. Disability insurance is a different story. Again, probably not worth it during med school, as you have no/limited income to be replaced. And during residency, your province likely has you enrolled in a disability insurance plan anyway (at least Ontario does). After residency, it is again a better choice to get a regular DI plan that pays out to you, and then you decide how to spend it. Link to comment Share on other sites More sharing options...
The Ace of Spades Posted June 7, 2011 Report Share Posted June 7, 2011 Disability insurance is a different story. Again, probably not worth it during med school, as you have no/limited income to be replaced. I wouldn't bother with life insurance either unless you have dependents, or you had to have a cosigner if your credit was terrible. I don't agree with cheech on the disability though. I think you should have this insurance from the moment when you first draw on your LOC. Imagine getting into a terrible car accident during 4th year and having $200,000 in debt. Without disability insurance, you would have to declare bankruptcy. A good plan from your provincial medical association is dirt cheap. With the BCMA, life insurance is free for students, and disability is only about $100 per YEAR. Link to comment Share on other sites More sharing options...
dokta Posted June 7, 2011 Author Report Share Posted June 7, 2011 Thank you for the tips. Any word on whether the OMA/CMA offer disability insurance? I know they offer Life Insurance, but not sure about disability. Link to comment Share on other sites More sharing options...
cheech10 Posted June 7, 2011 Report Share Posted June 7, 2011 Ace, I think the OP's question was about getting DI tied to the loan directly, which most financial advisors would suggest is not worthwile. The usual form of DI pays the beneficiary directly, which is better since you can decide how to spend the money. I wouldn't disagree with any med student who chose to purchase DI during med school (although I personally didn't: the payout is low at $2500 month, and the risk of becoming disabled during the 4 years of med school is extremely low). dokta, OMA does offer DI, and has separate packages for med students, residents, and practicing docs, with benefit amounts (and premeiums) scaled accordingly. Link to comment Share on other sites More sharing options...
BigM Posted June 13, 2011 Report Share Posted June 13, 2011 By registering with the OMA you get $100,000 free in life insurance. I would highly recommend taking this offer up. Personally I maxed out my disability insurance and took the $100K life insurance. The OMAs disability payout is not based on income as it is a flat rate payout ($1000 or $1500 during years 1 & 2. I think it is $2000 or $2500 during years 3 & 4). Link to comment Share on other sites More sharing options...
Andie Posted June 13, 2011 Report Share Posted June 13, 2011 I would highly recommend that when you get your LOC you also get disability insurance. I personally know 3 people who had some health issues during med school and had to take 1-2 years off. The OMA offers disability insurance that will pay the interest on your loans and also give you some money to live on as you still have rent etc to pay for while you are recovering. At least this way, if something does happen you will not be accumulating more debt during this time. I know many people entering med school think they are relatively young and that nothing will happen... but unfortunately it does The premiums are super low for med students so I think it is really worthwhile for the peace of mind. Link to comment Share on other sites More sharing options...
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