What are the benefits of purchasing the additional group insurance instead of purchasing and individual policy?

Scott and Lisa Smith recently got married and moved to your area. They are both 30 years old. Scott just finished his residency in internal medicine and has been offered a job at Memorial Hospital as a staff doctor. He will be employed by hospital directly at beginning salary of 250000. He financed his medical school through a series of student loans, which total 275000. They recently purchased a new home and signed a 30yearmortage for350000.Lisa does not plan on working outside the home at this point. They are already trying to have children and are hoping to have at least2 in the near future. Neither one of them has ever done any financial planning on their own, but they know they need to begin to look at the big picture. Memorial Hospital offers a defined contribution pension in which they contribute6 % of Dr. Smith’s income. He can also take advantage of a voluntary 403b plan sponsored by the hospital. Both retirement plans begin after one year of employment. He will begin working next week. Memorial Hospital offers a consumer Directed health plan to its employees. They have a group life insurance policy that automatically covers Dr. Smith for 2 times his annual salary, subject to the normal eligibility requirement of group plans. He has the option of purchasing additional group life insurance of up 5 times his salary. The hospital provide doctors with a group long term disability play that cover 60%of his salary in the event be becomes totally disabled. Lisa has no life insurance. They have come to you to seek advice on how to get started moving in the right financial direction.

Scott does not feel good about only having 60% of his income protected in the event of a disability and asks you for advice on the subject.
What options does he have?
What sort of definition of disability would you recommend he purchase and why?
What elimination period would be best for Scott and Why?
Scott ask you whether he should purchase the additional life insurance protection offered through the hospital or whether he should do something else.
What are the benefits of purchasing the additional group insurance instead of purchasing and individual policy?
Suppose you agree that he needs approximately 2500000 of death benefit in order to cover his debt, provide education savings and replace his lost income. What type of policy would you recommend and why?
What sort of considerations would you explain to him to help him find the best carrier?
Lisa asks you about life insurance for her.
Do you recommend that she purchase any life insurance on her? If so, Why
what type of coverage would you recommend for her and Why?
they are eager to begin saving money and have agreed that they can save 10% of his gross income pretty easily starting immediately.
Can Scott and Lisa both open a traditional IRA?
Can they deduct their contributions from their taxes? If so, will that change next year if Scott decides to contribute to the 403(b) plan?
Can either he or Lisa open a Roth IRA? WHY or Why not.
assuming they contribute the maximum amount allowable into traditional IRAs. What would you recommend they do with any additional savings up to the 10% to which they have committed?
if you recommend an annuity contract, what type of contract would you recommend based upon their current age and expected retirement age of 65? Why?


 

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