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After the Match

After the Match: The Sex Appeal of Insurance

Cook, Thomas MD

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doi: 10.1097/01.EEM.0000441170.14555.b2

    There is zero sex appeal to insurance. No one really wants to think about it because it represents you spending a lot of money for something you hope you will never need. I'll date myself badly here by bringing up a scene from the 1976 Woody Allen movie, “Take the Money and Run” in which the main character, a criminal named Virgil Starkwell (played by Allen), is punished by being locked up in a sweat box with an insurance salesman.

    So why should you learn about insurance? Here is a little bomb for all you residents out there. My 2012 total insurance bill was more than $50,000 (and I got off easy). Now consider that all of you will pay this for at least 30 years after you graduate from residency. That is $1.5 million in today's dollars, and who knows what it will cost in the future.

    Before you start thinking that someone in my family has a pre-existing health issue causing my rates to go up, they don't. We are a relatively average family of four. So it must be all my cars and boats that are jacking up the cost. Nope. My total insurance bill on three cars and one old boat for past year was just $800. Is it my malpractice insurance? Granted, it's a big chunk, but it's not even half the total bill. “So what's your problem, Cook? What are you insuring?” Here's the list: disability (the most important), life (my wife insists), health, home, malpractice (you cannot even get a job without this), automobile, boat, and an umbrella policy. None of this is crazy, and it's the game you will all play after graduation.

    Why buy insurance and subject yourself to this huge lifetime cost when the risk of a lot of these things is not really that high? Do you really need to enter this complicated system and insure everything? After all, the rosy picture insurance companies paint with “Good Hands” and geckos is just a strategy to lull you into a sense of security that they will be there to cuddle you in your hour of need.

    The bottom line is that these companies are investment firms filled with all the finance majors you were chugging beer with a few years ago. They are betting you will not get sick or hurt or crash your car or burn down your house. They churn money and make bets on what will make them more money, and they usually do a good job of it (AIG being a huge exception). Just check out the MetLife building on Park Avenue in New York. They bought that with one hell of a lot of insurance premiums. But why should you care or even know about this stuff? I'll tell you why. Because you need them.

    If I asked residents to tell me what possession they have that is worth the most money, many would struggle to come up with anything of significant value. They do not own large houses, fancy cars, or have huge portfolios of stocks and bonds. Most are looking at a frighteningly high student loan debt and wondering if they will ever be in the black.

    But, wait, I am here to tell you that you are very wealthy. You just cannot see it yet, and that's because you have not considered that all of your value is wrapped up in the medical school and residency diplomas on your wall. You are your most valuable asset, and you better make sure you are really, really well protected.

    Unlike college athletes waiting for their big payday when they sign a professional contract, you will not get a big bonus. But you might be surprised to see how your career earnings compare. Let's consider the average NFL player. Most players are out of the league by age 27 (and usually are pretty busted up), and although the average NFL salary is $1.9 million per year, this number is inflated by a handful of quarterbacks with salaries in the stratosphere. Drew Brees makes $20 million per year. Peyton Manning makes a paltry $19.7 million. (See FastLinks for how poorly athletes are paid.)

    But for the sake of argument, let's say the average salary of an “average” NFL player is $1 million per year for six years. That's six million dollars. Sure, that's a lot of money, but most of it is taxed at the highest level (around 50% for everything over $250,000 each year). The player's agent also gets a big cut. Forget endorsements; these players are average, for crying out loud. No one cares.

    Now how do you compare as an “average” emergency physician? The average salary for an EP in the United States is $300,000 per year, and you will get a consistent paycheck for three decades. That's $9 million over 30 years, and most of this is taxed at considerably lower rates than the NFL guy. So you will end up kicking the butts of those big, muscular guys. But you have to protect this wonderful skill you have, and there are plenty of insurance firms that are going to make that bet. After all, you do not get your head smashed in every Sunday.

    The idea of giving away 15 percent of your income each year seems incredible at first, but you are entering a profession that has a lot of upsides financially. You will make a lot of money compared with most folks. But making it, taking it home, and protecting it are very different things, and you better know a lot more about the “taking home” and “protecting” parts before you graduate.

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