Disability Insurance for Physicians & Dentists

Physicians and Dentists have a 1/3 chance of becoming disabled at some point during their practicing years with recent surveys from McGill Hill Group suggesting many are dangerously underinsured.

Some might have the financial resources to fund a disability on their own, however, most would need disability insurance to cover this risk.

Today, the number of quality disability options for medical professionals is vast, providing for a ton of flexibility. At the same time, the number of options can make selecting what’s right for you a lot more complex and overwhelming.  Here are some of the basics you should know.

How Disability Works

When evaluating a disability plan there are three main components to be aware of:

• Benefit amount - the amount of monthly income you would be entitled to receive upon becoming disabled (all else being equal, the higher the amount, the      higher the premium)
• The waiting period (elimination period) – The length of time you must be disabled before you will be paid the benefit. Typical waiting periods are 30, 90 days, and 180 days. (All else being equal, the shorter the wait, the higher your premiums)
• The benefit period - The length of time benefits will be paid. Typical benefit periods are 5 years, 10 years, or to Age 65. (All else being equal, the longer the benefit period, the higher your premiums)

For medical professionals, we're typically looking to replace 80-85% of your pre-disability income. This is the "all-source max " meaning if your group coverage provides for 40%, your individual policy will only pay an additional 45%.

We typically select a 90 day waiting period to manage costs of the policy, and because with a proper plan in place, clients should have cash reserves to draw from during the waiting period.

We always select a benefit period that provides until age 65. We're planning for the worst-case scenario always.

Definition of Disability

Nearly all Physicians and Dentists will qualify for what is called “Own Occupation” disability insurance. This means you are considered disabled if you are unable to perform the major duties of your particular occupation. Although the premiums are more expensive, it’s the best type of coverage for a high-earning incorporated professional who wants to truly protect their ability to earn an income in their field.

For example, if a back or wrist injury prevented you from working in your job, you would be eligible to collect benefits even if you decided to work in another field.

How Cost is Determined

With any insurance, the insurance company is going to want to assess the risk and price the policy appropriately. If there is enough risk, insurance companies can decline to provide any coverage at all.

Outside of factors like the benefit amount, the waiting period, or the benefit period, other factors carriers will evaluate when determining cost include:

Age – the older you are, the more risk of you becoming disabled.

Sex – Although women live longer than men, women are also more likely than men to become disabled.

Health – Your health will be evaluated. If there are any areas of concern the insurance company may exclude coverage for certain disabilities. If there is too much risk, insurance companies may decline altogether. The better your health and lifestyle, the less risk.

Individual vs Group Coverage

Medical professionals will often have access to coverage through a group insurance plan either through their employer or their professional associations.  This is a good thing as some insurance is better than none.  However, it’s highly recommended to have individually-owned insurance as well.

Group coverage can change, be dropped, and the costs of the insurance go up over time. You own your individual insurance. It can’t be canceled or dropped, it can move with you from clinic to clinic and your costs are locked in for the life of the plan.

Summary

Disability insurance often gets overlooked because of the cost and because we typically don’t consider the possibility we might become disabled. Becoming disabled is easily the biggest threat to medical professionals and their family's financial future. Given the high probability of disability, if you’re in the position to be able to secure coverage, it’s something we’d highly recommend.

- Brandt Butt, Insurance Advisor, CIM®

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Insurance products are provided through iA Private Wealth Insurance, which is a trade name of PPI Management Inc. Only products and services offered through iA Private Wealth Inc. are covered by the Canadian Investor Protection Fund.

Brandt is an Investment Advisor and part of an award-winning team at Endeavour Wealth Management with iA Private Wealth. Brandt’s focus is working with incorporated physicians and dentists between the ages of 35-45 who are looking to set themselves up on the right financial path in hopes of reaching a point where they are choosing to work, instead of having to.

Brandt’s team delivers value through advanced financial planning solutions for incorporated professionals while working closely with their accounting and legal professionals. By doing so, Brandt’s clients’ situations are optimized which can save them hundreds of thousands in taxes each year allowing them to grow their net worth faster with the goal of reaching complete financial independence.