As a physician starting your career, you may have insurance needs that are higher than those of other Canadians your age. After all, your ability to earn an income is one of your most valuable assets.
Whether it’s life insurance, living benefits or practice-related insurance, you can lessen the risk of financial stress and the impact on you and your family by getting the coverage you need, long before you need it.
Here are three types of insurance to consider:
If you have a spouse, children or other dependants, the main role of life insurance is to ensure their standard of living will be maintained if you pass away. This type of insurance can provide a source of income for your family, pay off your outstanding debts (such as a mortgage or line of credit), pay for your children’s post-secondary education and ensure there’s enough money to cover funeral expenses.
The two most common types of life insurance are term (typically owned for a 5-, 10- or 20-year term) and permanent, which is coverage that never expires and can be used for both income replacement and estate planning.
As the name suggests, these types of policies pay benefits while you are still alive.
Disability insurance is designed to replace part of your earnings (typically 60 to 70%) should you suffer an accident or illness that prevents you from working. Studies show that approximately one in three Canadians, on average, will be disabled for 90 days or longer at least once before age 65.1
If, like most physicians, you are self-employed with no paid sick leave, it’s a good idea to have alternative financial resources to replace the lost income.
Disability insurance contracts can be very complicated, so be sure to get expert advice.
Critical Illness Insurance
This type of insurance provides a lump-sum benefit payment (tax free) if you are diagnosed with one of many serious illnesses, including cancer, heart attack or stroke—even if you are still able to work.
It provides money that you might put toward taking extra time off or enhancing the care you receive.
Long-Term Care Insurance
As a physician, you will no doubt work hard and should build a solid financial plan. Long-term care insurance can help you protect your plan.
You might think of this kind of insurance as something for the elderly. But for some people, it will provide assistance with minor health problems; for others, it will help with an unexpected health event or accident. For many of us, it will provide assistance when dealing with chronic health problems that make day-to-day activities very difficult without help from a friend or family member.
If you become unable to perform some of the activities of daily living (for example, bathing, dressing and feeding), long-term care insurance benefits can support the cost of this care for you.
If you decide to set up your own practice, here are some other types of coverage to think about.
Practice Overhead Insurance
This type of insurance can complement your disability insurance and is often negotiated at the same time. If you’re self-employed and responsible for overhead expenses, practice overhead insurance helps to pay for rent, salaries and ongoing practice expenses if you become disabled.
Think of this as “home insurance” for your office. Medical office insurance provides coverage for fire, theft, loss of contents, and personal injury and liability. Remember to insure for the total cost of re-establishing all of your data: materials, staff time, and computer and communication systems.
Most Canadian physicians are protected by the Canadian Medical Protective Association (CMPA) for medical liability. In addition, every medical association or federation now shares a reimbursement agreement with its respective provincial and territorial government.
If you provide non-clinical professional services that are not protected by the CMPA, you should look into additional professional liability protection. The determination of adequacy must be based on the circumstances involved.
You can’t predict the unknown, whether that be financial losses or health problems. But a qualified insurance professional can help you protect yourself by assessing your needs and ensuring you have the right coverage for all stages of your life.
For more information about insurance or other financial planning topics, contact an MD Advisor. MD offers objective advice at every stage of your career—from medical school through retirement. Find an MD Advisor near you.