Helping 900 Lawyers decipher Disability Insurance
As we continue to work with Lawyers (over 900 in BC) we have noticed there is a lot of confusion with regards to Disability Insurance (Income Protection), how it is effectively used to protect you and why it’s so important that it is reviewed consistently over the duration of having the plan.
As a Lawyer Income Replacement Insurance is arguably the most important insurance as being able to earn income is your biggest asset to your family. It also is the insurance that protects YOU specifically and your lifestyle should you become ill or injured. This coverage brings great value to you and your family however it is NOT OF VALUE if it is not set up correctly and isn’t protecting you the way it should!
When was the last time you reviewed your existing Disability Plan (Group or Individual)? If it’s been a while we get it, insurance isn’t exactly fun however we encourage you to take the time to review your plan or ask us about our complimentary insurance review service.
Red flags to keep an eye out for are the following:
Definition of Disability: Did you know that Group Plans only offer you 2 years of Regular Occupation? This means that after two years you can be denied claim if you are able to go back to “a job” even if it doesn’t match your income or education level. Solution: Offset your group coverage with an individual plan that would kick in when your group coverage ends or denies you claim.
Existing Benefit Amount isn’t in line with your current Income:
Have you out grown your Group Coverage and your income has passed your plans benefit maximum?
Because Group Coverage is most often taxable have you established what your actual take home is?
Solutions: Top Up or Wrap-Around your existing Group Plan with an individual plan to fill the gap.
Has your income increased significantly since you placed your Individual Coverage?
Solution: Exercise your Future Increase Option Rider (if on your existing plan) or consider re-applying for a plan that is in line with your current situation.
What do I have for Riders and how are they a benefit to me?
Cost of Living Adjustment: This rider will adjust your monthly benefit on an annual basis to offset inflation while you’re disabled and receiving benefits.
Example: If you became permanently disabled at age 35 with a benefit period going until age 65 inflation would catch up to you being on claim for 30 years.
Future Increase Option: this rider is an easy way to make sure your disability plan keeps up with your growing income and prevents you from having to re-apply and prove good health!
Example: you take a disability plan out when you have an income o $60,000, you can use this rider to “top up” your benefit as that income grows and only have to provide them with proof of current income!
Own Occupation Rider: If you were not able to work as a lawyer for could work in a different field with your disability you can collect your disability benefit as well as collect an income from your other job.
Example: If the stress of being a lawyer took a toll on you which caused you to go on claim, but you were able to take a less stressful job as Professor at the University you could continue to receive your monthly disability benefit of $5,000/month and have an income of $120,000 as a professor.
If any of the above has triggered any questions or concerns, please feel free to contact us for further discussion.
We have included some support material on the above topic and encourage you to visit Lawyers Financial/CBIA’s (NEW) Website to https://www.lawyersfinancial.ca for information on how this coverage was designed specifically for lawyers, their families and employees.
And, as always we are here for you should you have any insurance or investment questions.
Sincerely,
Meghan Hicks and Dustin Serviss