Strengthen Your Financial Safety Nets with Two Disability Plans

March 28, 2011

Statistics show that you have about a 50% chance1 of becoming disabled for an extended period during your working life. Some of the leading causes of disability for dentists are neck and back problems, mental and stress illnesses, cancer, cardiac disorders and accidents.2 Two types of insurance plans can provide financial safety nets when you're unable to work due to a disabling illness or injury:

  1. Long Term Disability (LTD) Insurance helps to cover your personal expenses such as home mortgage payments and groceries when illness or injury prevents you from working; and
  2. Office Overhead Expense (OOE) Insurance pays your share of expenses that the dental practice incurs while you are disabled, such as rent, mortgage payments, property taxes, business taxes, interest charged on loans for office equipment, utility charges, telephone and Internet services, and staff salaries (excluding other dentists).

Having both of these insurance plans will allow you to cover these two distinct needs during a disability. Review your LTD coverage annually to ensure you have the highest amount of coverage that is available for your income level to help maintain your standard of living during a disability. Your OOE insurance should also be kept up to date as your office expenses increase to avoid unnecessary financial hardship during a disability. Even if you have made arrangements with colleagues or a locum to fill in for you in the event that you are on disability leave, it's wise to obtain adequate OOE insurance to help cover office expenses (excluding the locum's salary), since your replacement may not generate sufficient revenue to cover all your overhead costs.

If you need to top up your disability insurance, you can apply to obtain additional coverage through the Canadian Dentists' Insurance Program, regardless of whether you have disability coverage elsewhere or through the Program. (Proof of good health and financial information are required to apply.) When you're choosing coverage for the first time or for a coverage increase, look at the amount of insurance that's available and whether you can customize the coverage.

The Canadian Dentists' Insurance Program's Long Term Disability Insurance plan offers comprehensive coverage to protect your income and features you won't always find elsewhere, such as HIV and hepatitis B and C coverage—at no extra cost. The plan provides a monthly benefit of up to $12 000, depending on the amount of your earned income, and the flexibility to tailor your coverage with insurance options, such as the Own Occupation Option which protects your earning potential. If a continuing total or residual disability prevents you from engaging in your regular occupation (all occupation(s) in which you were engaged immediately prior to becoming disabled), this option allows you to receive benefits even if you are able to earn income from a new occupation. (This option is also offered with the OOE plan.)

The Program's OOE insurance plan provides monthly benefits of up to $40 000* to cover practice expenses and includes a waiver of premium benefit, so you don't pay premiums if you cannot work because of a total disability lasting 6 continuous months or more. (This benefit is also included with the LTD plan.) The Program's LTD and OOE plans also offer the Future Insurance Guarantee Option which allows you to increase your coverage at specific points in your life without having to submit additional evidence of good health. You must be 50 years of age or younger and actively practising dentistry to exercise this option.

To address the unique needs of women dentists, the OOE plan includes—at no additional cost—the Maternity Leave Benefit. It's designed to help offset some of your office costs while you're away from your dental practice due to maternity leave. The OOE benefit applies to a maternity leave following a pregnancy. OOE benefits are payable for up to 15 consecutive weeks for a full-time maternity leave. The amount of Maternity Leave Benefit you're entitled to receive under the plan is the lesser of: 50% of the amount of the monthly OOE coverage you have in force; and the current employment insurance monthly benefit. To be eligible for the Maternity Leave Benefit under the plan, your OOE coverage must be in force for 12 months prior to the date of the birth of your child.

For personalized advice about the amount of disability coverage that is appropriate for your situation, contact a licensed insurance advisor at CDSPI Advisory Services Inc. at 1-877-293-9455, ext. 5002.

THE AUTHOR

Susan Roberts, BA, FLMI, ACS, AIAA, is a licensed life and health insurance agent and a licensed general insurance broker. Ms. Roberts is the director and deputy principal broker, Insurance Advisory Services at CDSPI Advisory Services Inc.

1. 1985 Commissioner's IDA Morbidity and Commissioner's SO Mortality Tables, Society of Actuaries.

2. Source: The Canadian Dentists' Insurance Program.

*Coverage of up to $40 000 per month is available to dentists under age 55. Dentists aged 55–65 are eligible to apply for up to $20 000 of monthly coverage. If you obtain more than $20 000 of monthly coverage prior to age 55, you will be able to keep this amount of coverage (up to age 70) provided that your premiums are paid, subject to the terms and conditions of the contract.

The Long Term Disability Insurance and Office Overhead Expense Insurance plans are underwritten by The Manufacturers Life Insurance Company (Manulife Financial). Precise details, terms, conditions and exclusions are set out in the insurance contracts.

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