Preparing for a Disability While You are Healthy

July 25, 2013

Imagine you suffer a heart attack, stroke or disabling back injury. Now, instead of treating patients, you have become the patient. Disability can happen in an instant. There’s about a 50%  chance1 you could be disabled for an extended period during your working life.

Disability Insurance to Protect Your Income

If you’re like many dentists, you may have purchased Long Term Disability (LTD) insurance to help replace your income in case an illness or injury prevents you from working. It’s equally important to review your LTD coverage annually to ensure that you have the highest amount of coverage available for your income level, so you can maintain your standard of living during a disability.

Let’s take a look at the hypothetical example of Dr. Smith who has an annual earned income of $200,000. She has purchased additional LTD coverage in recent years and currently has a monthly benefit amount of $5,000. However, based on her income, she may be able to qualify for a monthly LTD benefit amount of up to $7,400. Her eligibility for an increase in coverage will depend on factors, such as her health, at the time she applies.

Table 1: LTD Worksheet for Dr. Smith

Type of Personal Expense Monthly Costs ($)
Mortgage and Property Taxes 2,350
Utilities 500
Loan Repayment 450
Groceries 600
Personal Care (clothing, fitness, etc.) 1,000
Transportation 800
Medical Expenses 400
Childcare 850
Miscellaneous 450
Total Expenses 7,400
Existing LTD Monthly Benefit (non-taxable) 5,000
Amount of Top-up LTD Coverage Desirable (non-taxable) 2,400

Dr. Smith examines her family’s lifestyle and household expenses. She decides that the monthly benefit amount of $5,000 may not allow her household to maintain its standard of living if she was unable to work due to a disability. The worksheet (Table 1) shows Dr. Smith’s calculations that helped her determine that she should top up her monthly LTD benefit amount by an additional $2,400 (based on her annual income) to protect herself and her family.

Addressing any shortfall that you discover in your coverage in a timely manner is vital. As we age, we may develop medical conditions—such as heart disease or diabetes—that can affect our ability to qualify medically for disability insurance. This is one reason why it’s recommended that you purchase as much coverage available for your income level while you’re young and healthy.

Disability Insurance to Cover Practice Expenses

If you’re a dental practice owner, your contingency plan may include having several colleagues or a locum fill in during your disability leave. However, since your replacement may not generate sufficient revenue to cover all of your overhead costs, you should also obtain Office Overhead Expense (OOE) insurance to help cover ongoing office expenses during a disability (excluding the locum’s salary).

When you have OOE insurance, you won’t have to use your LTD benefits, which are meant for personal expenses, to keep your practice running. Your OOE insurance should be kept up-to-date as your share of office expenses (e.g., rent and utilities) increase.

Table 2: Dr. Smith’s Practice Expenses

The chart below illustrates some typical expenses for a small dental practice.

Type of Expense Monthly Costs ($)
Rent 1,650
Equipment Lease 800
Loan Interest 115
Depreciation of Office Equipment 393
Utilities 145
Accounting 172
Membership Dues 120
Bank Charges 494
Telephone and Internet 306
Business Taxes 350
Insurance 180
Repairs and Maintenance 765
Staff Salaries and Benefits 10,280
Total 15,770

Source: Manulife Financial

If necessary, you can apply to top up your coverage at very economical rates. Proof of good health and financial information, such as your recent personal income or corporation tax returns, are required to apply. For an overview of the types of expenses that may be covered by OOE insurance, take a look at the overhead expenses for our hypothetical dentist, Dr. Smith, who has a small dental practice (Table 2).

Some Disability Insurance Options to Consider

  • Adding the Future Insurance Guarantee (FIG) Option to your LTD and OOE insurance will allow you to increase your coverage at specific points in your life without having to provide additional evidence of good health. However, there are limits to the amount of coverage you can purchase with this option so it’s still important to keep your coverage up-to-date.
  • Since a disability can last for several years, you may consider selecting the Cost of Living Adjustment Option while you’re healthy to safeguard your purchasing power during a disability. This option increases your LTD benefit each year after you have been disabled for 12 months by the increase in the Consumer Price Index, up to 8% annually (compounding).
  • Making contributions to your retirement savings plan may be challenging while you’re disabled. By adding the Retirement Protection Option to your LTD insurance, the insurer will establish a trust account and make a monthly contribution for your retirement if you are totally disabled and receiving LTD benefits.

Remember, the best time to prepare for the possibility of a disability is while you are healthy. For assistance determining the maximum LTD and OOE coverage amount available to you, so you can maintain your standard of living during a disability, contact an insurance advisor at CDSPI Advisory Services Inc. at 1-877-293-9455, ext. 5002.



Susan Roberts, BA, FLMI, ACS, AIAA, CHS™, is the vice-president of Insurance Advisory Services and deputy principal broker at CDSPI Advisory Services Inc.

The Long Term Disability Insurance and Office Overhead Expense Insurance plans are underwritten by The Manufacturers Life Insurance Company (Manulife Financial).


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

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