Photo courtesy of Dr. Vitto Mena, who encourages ODs to protect their eyes and their future.
What to know about life insurance as a way to financially protect yourself, your loved ones and your practice
By Vittorio Mena, OD, MS
Oct. 22, 2025
I hope that my last column kickstarted your plan for protecting yourself and your business. Now that you’re thinking about the potential ways to do this, remember this: When it comes down to building your financial game plan, defense is a must.
Let’s take a deep dive into the options that are out there.
HOW TO PROTECT YOUR INCOME
For defensive measures, there are two ways to protect someone’s income. The first is life insurance, and the second is disability insurance. Here, we will explore life insurance.
There are many different life insurance policies that exist. However, there are fundamentally only two different types: term life insurance and permanent life insurance. Depending on who you speak to or ask, there will be different camps arguing either side and some will even say to have both, but what is the correct answer? It depends on someone’s needs and also what their current situation is. When it comes to price, the cost depends on your health, age (the younger you are the less it costs), sex (female vs. male) and the amount of coverage you want.
TERM LIFE INSURANCE
Since term insurance is less complex, I’ll cover this one first. Term life insurance covers a set period, such as 10, 20 or 30 years. Some companies even offer 35-year plans.
Term insurance is just pure insurance, like car insurance. There’s no savings component or cash accrual attached to it.
Here’s an example: An optometrist who graduates optometry school at 26 purchases a30-year term policy with a specific death benefit. That means the optometrist is covered from 26 to 56. If they pass away during that time period, their beneficiary (whoever they decide to give the money to) receives the death benefit tax-free. Also, if they are diagnosed with a terminal illness and given only months to live, many policies let them access part of the benefit before death.
After that 30-year term, the policy either lapses—ending coverage—or can be renewed. However, the price would change to a higher premium since the policyholder is older. Because this type of policy is only for a period of time, it costs much less and provides a larger death benefit during the term than permanent insurance.
Typically, term insurance helps young professionals with heavy debts or those supporting older parents. Consider an optometrist ages 26 to 56 who earns $150,000 in annual salary with no raises. They would earn $4.5 million before taxes over 30 years. The goal would be to have coverage anywhere between $1 and $5 million in death benefit coverage, just in case, so loved ones can cover housing, education and other expenses.
PERMANENT LIFE INSURANCE
Let’s switch gears to permanent life insurance. Permanent life insurance comes in several varieties with different caveats but share the same structure.
These types of policies last for a long time or until 100 years old and provide both insurance and investments (cash value) tied together. The cash value inside the policy grows tax-deferred. You can even borrow—take a loan—from the cash inside the policy.
However, permanent life insurance policies are substantially more expensive than term insurance for a comparable death benefit. Cash value accumulates slowly, so it can take years before you see meaningful growth. If you withdraw against the cash value, your death benefit typically decreases—unless you restore the cash value.
KEYWORDS TO KNOW
Here are some common life insurance terms to know. Understanding them can help you protect yourself financially.
- Whole life: Most common type sold and offers a set death benefit with a savings component (cash value) with a fixed premium.
- Universal life (UL): Offers a guaranteed minimum death benefit with flexible variable premium payments. You can adjust the amounts when you want.
- Indexed universal life (IUL): Offers a variable death benefit and variable premium payment and is also linked to an index. Your returns have caps (typically 8% to 12%), participation rates (credits) and floors (avoid negative returns).
- Variable universal life (VUL): Most risky and offers a variable death benefit and variable premium payment. It has an index plus stock and bond investments, which are known as subaccounts.
- Variable life (VL): The difference between this and VUL is that VL is fixed death benefit and fixed mandatory premiums.
- Infinite banking: Known as becoming your own bank, which is a cash flow management strategy similar to a whole life policy.
- Irrevocable life insurance trusts (ILITS): A legal arrangement to help with taxes and how it can impact estate planning. This is typically for very wealthy individuals.
- Bank-owned life insurance: Policy purchased by banks on key employees; however, the bank is the owner and beneficiary. Helps to offset costs of employee benefits.
- Corporate-owned life insurance: Policy purchased by corporations on key employees or executives; however, the corporation is the owner and beneficiary. It helps with employee benefit funding such as retirement plans or bonuses.
USE CAUTION MAKING INSURANCE DECISIONS
Pro tip: If an advisor has only a life insurance license, consider seeking additional financial or tax advice. And be sure to read the fine print before signing anything!
Inside that 10 to 30+ page document you receive with permanent life insurance, it typically advises you to consult a financial planner and tax consultant or attorney, since death benefits are generally tax-free. Several exceptions can create tax liabilities for the policyholder. Many agents lack investment or tax credentials, so they may not be qualified to advise on policies with investment components or tax implications.
There are often misconceptions in the life insurance game. Agents will sell this product, especially IULs, as an investment with very little knowledge of how it actually works. “Indexed universal life insurance policies are not stock market investments, do not directly participate in any stock or equity investments and do not receive dividend or capital gains participation.”1 Yet agents tout that they do most of the time. This policy actually credits interest from an outside index (such as S&P 500) and uses option-based strategies rather than involvement with the actual stock market and at a much lower rate of return.
PROTECT YOURSELF FINANCIALLY
At the end of the day, most optometrists (and people in general) will be well protected by just buying term life insurance. However, permanent policies can make sense for high-net-worth individuals with specific estate and wealth-planning needs.
For now, think of insurance as a defense tool to protect your income and loved ones—not a way to make money.
Stay tuned for part 3 of my series on financial defense.
This column is for informational purposes only and does not constitute financial advice. There is always risk and potential for loss with any investment. Please consult a licensed financial advisor before making choices about investments.
References
1 https://moneyguy.com/article/equity-life-insurance/
Read part 1 of Dr. Mena’s financial defense series here.
Read more insights from our editors on ROB here.
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Vittorio Mena, OD, MS, is the sports vision director with Optical Academy. Dr. Mena is also an optometric financial coach/fiduciary with Series 6 and 63 investment licenses and Series 2-14 life and variable annuity licenses. To contact him: menavitt@gmail.com |
