Considering a Professional Disability Insurance Program?
Some important things to be sure to address in the plan details are:
Ownership is the first thing to look at. Should it be held inside your corporation as a Wage Loss Replacement Program, or outside as an income replacement program. Consult with your Insurance Advisor along with your accountant before putting a plan in place.
1. Make sure you have OWN Occupation as an extension in the plan.
There are three levels of coverage in Disability Insurance Plans.
· The first level is ANY Occupation, which means if you can lift a broom, there is a job for you out there.
· Regular Occupation Period Extension (ROPE) is the next level, which means if you cannot perform a large percentage of your daily tasks, this option pays you your benefits.
· OWN Occupation is the top level, which allows you to collect the benefits if you are disabled and look for a new carrier while still collecting the benefit.
2. Always add Future Earnings Protection Option (FEPO)
When you are being underwritten for coverage, it is based on age and health. What you always want to do is plan for the future on the health side of things. Add as much FEPO to your plan if you have the potential for growth in the future. This way you are able to increase the benefits based upon your financials only, with no need for medicals.
3. Another option to add is Cost of Living Adjuster (COLA)
If this is a long-term plan to age 65, then having the program rise with an inflation factor is a must.
4. Enhanced Partial Disability option is another must
When we become disabled, it can take a long period for recovery, which might mean being able to work only a few hours a day, then one day a week, and so on. This option allows you to collect a partial income, as you are able to also make a partial income from your corporation.
5. Some carriers offer Return of Premium (ROP)
Each carrier may have their own version of this option, but it is always something to consider. You pay a 25% increase, to receive 50% of the premiums back every 7 years, as an option from one of the carriers.
At the end of the day, these are very complex programs to suit your individual needs and they should always be built and put together by a professional advisor. To learn more, don’t hesitate to reach out to myself Merv@palladiuminsurance.ca or our educated team at Palladium Insurance.
Merv Clost, CFP, CHS, CEA