Life Insurance Decision Tree

Who this is for

Attending physicians, fellows, and residents. The first branch (does anyone depend on your income?) sorts the chart into two paths: physicians with no dependents (probably no need right now, revisit when life changes) and physicians with dependents (run the sizing methods and pick a product).

The decision this chart helps you make

Life insurance is product-loaded. The industry sells five product types (term, whole life, guaranteed universal life, indexed universal life, and variable universal life), with annual premiums for a $1M policy ranging from about $540 (term, 20-year) to $25,000+ (VUL). Three of the five are permanent products engineered with significant fees and commissions. The chart cuts through this by asking the right questions in order. The first question is whether you need any coverage at all. If no one depends on your income, the answer is usually no. Skip to the reassessment triggers. If someone does depend on your income, the chart moves to sizing: three methods of increasing precision (income multiple at 10-12x, DIME, and human capital), with concrete benchmarks for a 35-year-old attending earning $400K (floor $4M, typical $5-6M, high $7-8M for heavy debt and multiple dependents). Group life through an employer rarely covers this need (most attendings get 1-2x salary, so a $400K attending tops out around $800K versus a $4-6M typical need). The last branch (which product fits) is where most physicians get sold something they do not need. Term life covers the years of dependent risk at the lowest cost. The permanent products bundle insurance with a cash value vehicle that almost always costs more than separating the two (term plus a Roth or taxable brokerage). The chart includes an off-ramp for physicians who already own a permanent policy: a cash value vs cost basis comparison to decide whether to surrender, exchange, or hold.

Essentials vs Ultimate

Both versions cover the same three-question framework (need, sizing, type) and the same five-product matrix. The difference is in the edge cases. Use Essentials when the standard decision is the right one: term life sized to 10-12x income with a 20- or 30-year level term. Use Ultimate when any of the following apply: federal estate above $15M ($30M MFJ) or state estate tax exposure, a child needing a lifelong special needs trust, a practice buy-sell agreement requiring permanent funding, interest in a hybrid long-term-care policy with death-benefit return, an already-owned permanent policy you are evaluating for a §1035 exchange or surrender, or partnership/LLC structures (cross-purchase vs entity buy-sell for 2-4 partners vs 5+). Ultimate also covers the state-by-state cash value creditor protection map (~31 states with meaningful protection) and the convertible term option for physicians who want optionality.

How to read this chart

The chart is a decision tree starting with one question: does anyone depend on your income? Two paths follow. The chart uses six box types: • Dark green diamond boxes are decision questions • Pale green boxes with ✓ are affirmative outcomes (probably no coverage needed, good fit) • Pale red boxes with ⚠ are red flags (group life inadequate, locums no baseline) • Pale orange boxes flag reassessment triggers (marriage, children, mortgage, practice buy-in) • Pale cream boxes with green headers are the sizing methods and product recommendations • Pale parchment boxes are context (product matrix, sizing benchmarks, exceptions) Most physicians reach a decision within four questions. Use the toggle above to switch to Essentials if the Ultimate view is too dense.