As a lawyer, you spend your time resolving disputes and combing through endless legal documents, but when’s the last time you assessed your own life insurance coverage?
You might think your employer-provided life insurance is enough, or maybe you’ve purchased a group term policy as a perk of being a member of the American Bar Association (ABA). If either sounds familiar, you’re likely either severely underinsured or you’re paying more than you need to for term life insurance.
If you have loved ones depending on your income as a lawyer, it’s time for a deep dive into your term life insurance coverage to make sure they’re adequately protected.
Let’s explore term life insurance for lawyers, including what your colleagues tend to buy, how much coverage you realistically need, and where to find an affordable policy.
What life insurance policies do attorneys have?
More than 1,500 clients and readers responded to our 2022 Student Loan Planner Insurance Survey. Of that group, 92 lawyers submitted information about their existing life insurance coverage and views. Here’s what we learned about the legal community’s term life coverage.
Lawyers recognize the importance of term life, but most are gambling with their coverage
Our survey found that 71% of attorneys believe they need to buy term life insurance. Yet, only 37% have purchased a term life policy of their own.
Instead, many lawyers are relying on their employer’s group life benefits or, worse, going without coverage altogether.
Just over half of our surveyed lawyers have some level of term life coverage through their employer. Although some coverage is obviously better than none, employer-provided policies have some serious limitations.
Unless you happen to have a portable policy, you’ll lose coverage entirely if you leave your current law firm. Plus, your death benefit is likely capped at an amount that’s far below what you actually need considering your lawyer salary.
For example, many employers offer $50,000 of term life coverage. Why that number? Because a premium on that level of coverage for a group term life policy is deductible for the employer and the employee.
But that’s below an annual salary for most attorneys. If you have one child with expected six-figure college costs, you’re already severely underinsured. I’d wager that most lawyers don’t even know the amount of group term life coverage they have. The reason is that the life insurance benefit is relatively insignificant.
Based on our findings, it’s clear that many young attorneys don’t realize how underinsured they are or how vulnerable they are to losing coverage if their employment changes.
Do lawyers need term life insurance?
If your income supports your spouse, partner, or children, then you need life insurance as a lawyer. Some attorneys might also be supporting their parents, financially, which poses an additional need for coverage.
If you passed away prematurely (we know it’s uncomfortable to think about), your loved ones would be faced with many financial decisions during a time when their focus should be on grieving and supporting each other.
Life insurance can help cover the cost of funeral arrangements, living costs, outstanding debts, future expenses, and any other financial variables that you can plan for now.
For example, you might want to send your kids to college without the burden of student loans. It’s also common to plan to pay off the mortgage with a large death benefit so your spouse and children won’t be abruptly uprooted.
Most young attorneys choose to buy life insurance on the cusp of a big life milestone. This might include getting engaged or planning to have a child.
But it’s also smart to reassess your life insurance coverage as your family moves through new life stages. For example, you’ll need significantly more coverage if your spouse transitions to being a stay-at-home parent or reduces their income to follow a passion.
The more dependent your family is on your income, the more important it is to carry adequate term life.
If you don’t have anyone depending on your income, then you don’t need term life insurance at this time.
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Lawyers need the portability of an individual term life policy
A career in law can mean ridiculous hours, constant pressure to answer emails and generate billable hours, and intense competition to rise through the ranks. Additionally, female lawyers face pay disparities and workplace policies that can make it difficult to maintain a career while having a family.
So, it’s understandable that many young lawyers jump ship or change professions altogether. Case in point: the ABA recently released a report detailing why women lawyers leave their firms and the profession.
If you find yourself in this situation during your career, you’ll lose employer-provided life insurance benefits. At which time, it’ll be more expensive to find a policy of your own because coverage costs increase as you age or develop health concerns.
But an individual term life policy will follow you wherever your career takes you. Plus, your low fixed premiums are locked in from a young age and last throughout the full term of your policy.
Mental health concerns for lawyers
Unfortunately, the constant stress, lack of sleep, isolation and hypercompetitive culture of the legal profession as a whole doesn’t make it conducive to healthy habits.
Research shows that attorneys are at greater risk of alcohol abuse, depression, anxiety and other mental health issues. Lawyers are also at a greater risk for suicide than the general population.
We hope you and your family will never need to use this knowledge. But it’s important nonetheless.
Most life insurance companies pay out the policy death benefit if a suicide takes place outside the first one to two years of the policy. Your policy’s suicide clause will outline the exclusionary period.
That said, your family needs you far more than they do a policy payout.
How much life insurance do attorneys need?
Your life insurance policy should be enough to adequately cover any debts and future expenses for your family. To make planning for these expenses easy, we recommend purchasing a term life policy that’s at least 10-times your income, rounded up to the nearest $500,000.
Basic formula: Salary x 10 = Minimum Coverage (rounded up to nearest 500K) = Policy Amount
Using income data from the Bureau of Labor Statistics, the average lawyer earning $126,930 annually needs a $1.5 million policy in order to adequately protect her family. Here’s the math:
Average lawyer: $126,930 x 10 = $1,269,300 (rounded up to nearest 500k) = $1.5 million
But breadwinners need additional coverage since their families primarily rely on their lawyer income to survive.
Breadwinner lawyers need more term life coverage
Our survey found that 63% of attorneys are the breadwinners of their family. Considering only a relatively small percentage of our surveyed lawyers carry their own policy, we can safely assume the majority of breadwinner lawyers are severely underinsured. Here’s why.
If you’re the primary income earner of your household, we recommend buying at least 10- to 15-times your salary. This general rule also applies if you have multiple children within a two-income household (more kids equals a lot more expenses).
Using the same data set from our previous example, the average breadwinner lawyer needs at least $1.5 million to $2 million in term life coverage to cover 10- to 15-times their salary.
What life insurance benefits do lawyers get through their employer?
Our survey found that 55% of lawyers have term life available through their employer. If you happen to fall into this category, then you likely have a death benefit that is one to two times your salary (maybe three times if you’re lucky). In some cases, your employer might cap your benefit at a set amount, such as $50,000.
On the surface, a policy that is several times your salary might seem sufficient. But let’s say you make $150,000 a year. Even with a policy that covers three times your salary (the most generous benefit), your death benefit will only be $450,000.
Considering the average lawyer needs $1.5 million or more of coverage, employer-provided term life falls severely short of what’s needed to protect your loved ones in your absence.
How much does term life cost for lawyers?
Term life rates vary by insurance carrier. Your own rate will depend on your age, gender, term length, policy amount and overall health.
Surveyed lawyers reported paying an average of $70 per month for their existing life insurance. But monthly premiums ranged from $18 to $188 or more.
To give you a better understanding of how much to expect to pay for adequate term life coverage, we ran cost estimates through various life insurance companies.
Below are policy cost estimates for a 20-year term policy of $1.5 million versus $2 million for an attorney in excellent health. We’ve broken each estimate down by age (e.g. 25-year-old versus 35-year-old) and gender.
|$1.5 million policy
|$2 million policy
|$31 per month
|$38 per month
|$42 per month
|$54 per month
|$40 per month
|$50 per month
|$46 per month
|$59 per month
A healthy 25- to 35-year-old attorney can purchase a $1.5 million to $2 million term life policy for about the same (or less) as taking their family out for dinner once a month.
These cost estimates also show just how cheap an extra $500,000 of coverage could cost — about $10 more a month.
So, don’t hesitate to buy additional coverage that’ll help provide a significant financial safety net for your loved ones.
If you’d like a free life insurance quote for your policy scenario, use the SLP insurance quote tool.
Shop around for term life insurance for lawyers
If you don’t have life insurance as a lawyer, it’s time to make some moves. Even if you have a policy with your employer, there’s a good chance that you’re underinsured by $1 million or more. We recommend shopping around for a term life insurance policy of your own to supplement your existing coverage.
Some professional associations partner with insurance companies to provide discounted life insurance to their base. However, these group benefit plans aren’t necessarily cheaper than what you can find on your own.
For example, the ABA offers several group term life insurance options underwritten by MetLife, including 10-year, 20-year and renewable term life policies. However, plans aren’t available if you live and work in Alaska, Maine, Montana, Oregon, South Dakota or Washington.
Using the ABA quote tool, a 35-year-old female attorney can purchase a $1.5 million group term life policy for $70.50 per month.
For comparison, our cost estimates for the same attorney show $40 per month. This is why it’s so important to shop around to find the best rate for term life insurance for lawyers.
With just a few minutes of your time, you could get the same coverage for $30 less per month, resulting in thousands of dollars of savings over the life of your policy.
And there are plenty of no medical exam required policies available up to $3 million in coverage through the companies available through our lawyer term life insurance quote tool.
Start the free life insurance quote process today to ensure your family is adequately protected, while keeping more money in your pocket.
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*Includes optional 0.25% Auto Pay discount. For 100k or more.
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