Global Courant
You can’t get good home insurance if your house is on fire, and if you wait until you’re sick or injured to review your disability insurance contract, the fine print may surprise you.
1 in 3 Canadians will be disabled for a period of more than 90 days at least once before age 65. For those who are disabled for more than 90 days, the average duration of that disability is 2.9 years. Despite the statistics, many professionals and business owners often overlook or postpone proper disability insurance planning.
For business owners and professionals covered by group insurance, it may be a good idea to take the time to dust off that benefit booklet for an assessment as soon as possible. Typically, group insurance plans have a NEM (Non-Evidence Maximum) of $4,000 to $5,000, depending on the size of the group and the nature of the business. This NEM limits the monthly benefit a high-earning owner or professional would receive while providing rigid guidelines on when to return to work and in what capacity.
Disability insurance contracts can pay up to 66.7% of pre-disability earnings of high-earning professionals or business owners with a completed application and medical exam. Built-in features such as “Own profession”, “Additional insurance” and “Residual and partial disability” are often NOT included in group insurance and will have a significant impact at the time of claim. An assessment and understanding of these options is worth considering. Below is more information about each term mentioned above:
– Own profession: If you are unable to perform the substantial tasks of your regular profession due to an accident or illness, you will still be considered fully incapacitated if you choose to work in another profession. Group insurance has a definition of “any profession”.
– Supplementary insurance: Guaranteed insurability up to the age of 55 as long as you are not incapacitated for work and your income justifies the increase.
– Residual/partial incapacity for work: you are not fully incapacitated for work, but you are unable to work full-time. You will then receive part of your monthly benefit to compensate for this drop in income.
If you became disabled, would your business continue to make the same profit? Many business owners are so deeply involved in their business that they find it hard to be sick for a day, let alone not show up for an extended period of time. Disability insurance planning for entrepreneurs and working professionals is often overlooked, but it is an important part of the income protection mix.
Group Insurance LTD – The need to know
As mentioned, pay attention to the Non-Evidence Maximum (NEM). This is the maximum amount of disability benefit you would be entitled to without medical proof. You may be eligible for higher coverage if you undergo a medical examination and complete an application as explained above.
Please note that LTD benefits are usually offset (reduced) by any disability benefits you receive from CPP/QPP or Workmen’s Compensation. Any benefits paid out of an auto insurance policy as a result of an accident can also reduce your LTD benefits.
If the LTD premium is paid by you personally, you will receive the distribution tax-free.
For groups where the employer pays the LTD premium, the benefit received is taxable. If this is the case, discuss with your employer or insurer what your options are for having disability taxes withheld, so that you are not faced with unpleasant surprises during the tax authorities.
As you can see, there are many options and details to consider when it comes to disability insurance planning for working professionals and business owners. It may be time to dig up and review your messaging to make sure you have a clear understanding of the definitions in your current program and what alternatives may be available.
A Guide – Disability Insurance Planning for Professional and Business Owners
World News,Next Big Thing in Public Knowledg
#Guide #Disability #Insurance #Planning #Professional #Business #Owners
