When did you last review your disability and professional expense insurance needs? It’s recommended that you review your coverage with a Doctors of BC insurance advisor 1 year after starting a practice and 2 years thereafter.

If you have the Guaranteed Insurability Benefit (GIB) rider on your Doctors of BC Professional Expense Insurance (PEI) or Disability INCOMEprotect for practising physicians, you may increase your coverage without medical questions each November.

Disability insurance

Disability insurance provides monthly tax-free income if you’re unable to work due to accident or illness. It’s important to maximize your disability coverage, as 1) you could be disabled for a long period and disability benefits may be your only source of income, 2) the medical costs associated with a disability can be unexpectedly high, and 3) some of your disability benefits should be designated for retirement savings, since benefits end at age 65.

Insurers limit the amount of tax-free disability coverage you can purchase based on your net income (gross earnings less business expenses, excluding personal salary, dividends, and income tax). These limits are designed to ensure that claimants are not earning more from benefits than they were earning while employed. Depending on your income, the insurer may offer maximum coverage of 30% to 40% of your net income.

The BC government–paid Physicians’ Disability Insurance (PDI) can help maximize the benefits available to a physician during a disability. PDI typically pays up to $6100 of monthly tax-free disability benefits for physicians earning eligible MSP income. PDI will reduce benefits if the claimant’s total disability benefits from all sources are greater than 60% of predisability net income (after expenses but before income or corporation tax). This is an important factor in determining how much additional disability you should have. For example, if you earn $250 000 net income and are eligible for $6100 of PDI, you should have up to $6400 of additional personally paid disability. In this example, any additional coverage beyond $6400 will reduce PDI benefits, dollar for dollar. Each situation is different; you are encouraged to speak with a Doctors of BC insurance advisor about your personal situation.

Professional expense insurance

As costs of managing your practice increase, ensure your PEI coverage increases as well. PEI provides reimbursement of professional and business clinic expenses, including membership dues, accounting fees, liability insurance, office rent, and staff salaries. Note that spousal salaries for income-splitting purposes are not considered a reimbursable expense. If your PEI amount is inadequate, you may have to use your personal savings or disability payments to help fund your professional expense obligations during a disability.

Speak with a licensed Doctors of BC insurance advisor to get a proper assessment of your insurance needs. Email insurance@doctorsofbc.ca or call 604 638-7914 for a complimentary appointment.
—Julie Kwan
Business Development Manager, Insurance