Where Should You Buy Your Doctor Disability Insurance?

A main question doctors in Ontario have about disability insurance is not if but WHERE to buy it. This guide compares RBC Professional Series vs the OMA Association Plan. Disability insurance is a critical component of a comprehensive financial plan for doctors who rely heavily on their ability to work and generate income. This article provides a detailed comparison between two popular disability insurance plans for doctors in Ontario: the RBC Professional Series and the Ontario Medical Association (OMA) Plan.

Both plans offer unique features and benefits, and understanding these in detail can help doctors make an informed decision about which plan best suits their needs. This article delves into the specifics of each plan, including coverage details, policy terms, premiums, and more.

Understanding Disability Insurance

Disability insurance is a type of insurance that provides income replacement in the event that the insured individual becomes disabled and is unable to work. This is particularly important for doctors, who often have high earning potential and significant financial obligations. A disability can significantly impact a doctor's ability to earn income, making disability insurance a crucial safety net.

Key Features to Look for in Disability Insurance Coverage

When selecting disability insurance, it is important to review key policy features, including:

Definition of Disability

The definition of disability can vary between insurance plans. Some plans define disability as the inability to perform the duties of one's own occupation, while others define it as the inability to perform the duties of any occupation. The former is generally more favorable for doctors, as it provides coverage if they are unable to perform their specific medical specialty.

Both the RBC Professional Series and the OMA Plan use the "own occupation" definition of disability, meaning they provide coverage if the insured doctor is unable to perform the duties of their specific medical specialty. This is an important feature for doctors, as it ensures they will receive benefits even if they are able to work in a different occupation.

1. Benefit Amount

Before deciding on coverage, consider:

• The duration of benefit payments

• Whether the policy integrates with other disability programs

• Inflation protection (indexing for inflation)

The amount of coverage, or the monthly benefit, is the amount of income replacement the insurance plan provides in the event of a disability. This is typically a percentage of the insured individual's pre-disability income. The RBC Professional Series and the OMA Plan both offer a maximum monthly benefit of $25,000, although the actual amount of coverage will depend on the individual's income and other insurance coverage. For instance the RBC Professional Series can get you as much as $35,000 depending on your income qualification.

It's important for doctors to ensure they have adequate coverage to meet their financial needs in the event of a disability. This includes not only their day-to-day living expenses, but also any ongoing financial obligations such as mortgage payments, student loan repayments, and retirement savings contributions.

2. Benefit Period

This refers to how long benefits will be paid. Ideally, coverage should last until retirement age, ensuring financial stability if a long-term disability occurs. 

The RBC Professional Series offers a choice of benefit periods, ranging from 2 years to age 65. The OMA Plan offers a fixed benefit period until age 65. The choice of benefit period can impact the cost of the insurance plan, with longer benefit periods generally resulting in higher premiums.

Doctors should consider their financial needs and retirement plans when choosing a benefit period. For example, a doctor who plans to retire at age 60 may not need a benefit period extending to age 65.

3. Causes of Disability

A comprehensive policy should cover both illness and injury, ensuring protection against a wide range of medical conditions.

4. Elimination Period (Waiting Period)

The elimination period is the time you must wait before receiving benefits. Common options include 30, 60, or 90 days. A longer elimination period lowers the cost of coverage. 

The RBC Professional Series offers a choice of waiting periods, ranging from 30 days to 2 years. The OMA Plan also offers a choice of waiting periods, ranging from 30 days to 1 year. The choice of waiting period can impact the cost of the insurance plan, with shorter waiting periods generally resulting in higher premiums.

Doctors should consider their financial resources and ability to manage without income when choosing a waiting period. For example, a doctor with significant savings may be able to manage a longer waiting period, which could result in lower insurance premiums.

Why Do Doctors Often Choose a 90-Day Elimination Period?

• Lower Premiums: A 90-day waiting period significantly reduces monthly premium costs compared to shorter waiting periods.

• Emergency Savings: Many physicians have savings or other resources to cover expenses for the first three months of disability.

• Long-Term Security: Most disabilities lasting beyond 90 days tend to be more severe and require extended time off, making long-term coverage more valuable.

5. Policy Restrictions

Review any policy exclusions or limitations. Some disability plans restrict coverage for pre-existing conditions or specific circumstances, such as injuries resulting from high-risk activities. 

Policy terms and conditions are another important consideration when choosing a disability insurance plan. These include the waiting period, the benefit period, and any exclusions or limitations on coverage.

The waiting period, or elimination period, is the amount of time the insured individual must be disabled before benefits begin. The benefit period is the maximum length of time benefits will be paid for a single period of disability. Exclusions and limitations are specific conditions or circumstances under which the insurance plan will not provide coverage.

6. Guaranteed Renewability

A guaranteed renewable policy ensures that coverage can be renewed, though premiums may increase over time.

7. Non-Cancellable Policies

A non-cancellable policy guarantees that coverage and premium rates will not change as long as premiums continue to be paid.

8. Partial or Residual Disability Benefits

If you do not meet the criteria for total disability but experience a loss of income due to partial disability, some policies provide reduced benefits. 

Residual disability benefits provide a partial benefit in the event the insured individual is able to return to work part-time or with reduced duties. This can be an important feature for doctors, who may be able to return to work in a limited capacity following a disability.

The RBC Professional Series offers residual disability benefits, providing a partial benefit based on the percentage of income loss. The OMA Plan also offers residual disability benefits, although the specifics of the benefit calculation may vary.

9. Refund of Premium Option

Some policies offer a partial refund of premiums if no claims are made within a specified period.

10. Tax Treatment of Benefits

In most cases, disability benefits are non-taxable if premiums are paid using after-tax income.

There are many factors to consider when choosing a disability insurance plan, including the definition of disability, the amount of coverage, the waiting period before benefits begin, and the duration of benefits. These factors can significantly impact the effectiveness and cost of a disability insurance plan.

Additional Features and Benefits

What Is a Disability Insurance Rider?

Insurance riders are optional add-ons that enhance a disability insurance policy. Although they increase premium costs, they can provide valuable additional protection. Common riders include:

• Cost-of-Living Adjustment (COLA): Ensures benefits keep pace with inflation after a disability occurs. 
  Cost of living adjustments (COLA) increase the monthly benefit over time to keep pace with inflation. This can be an important feature for long-term disabilities, as the cost of living can increase significantly over time.
  The RBC Professional Series offers a COLA option, which increases the monthly benefit each year based on the Consumer Price Index. The OMA Plan also offers a COLA option, although the specifics of the adjustment calculation may vary.
• Future Income Option: Allows policyholders to increase coverage as their income grows, without requiring additional medical underwriting.
• Own-Occupation Coverage: Ensures that if a physician can no longer perform their specialized medical duties due to disability, they will still receive full benefits—even if they take on another job outside of their specialty.

Many disability insurance plans offer additional features and benefits beyond the basic coverage and benefits. These can include features like residual disability benefits, cost of living adjustments, and future increase options.

The RBC Professional Series and the OMA Plan both offer a range of additional features and benefits, although the specifics can vary between the two plans. These features can add value to the insurance plan, but they can also increase the cost of premiums.

Policy Premiums

Policy premiums are the cost of the insurance plan, typically paid on a monthly or annual basis. The cost of disability insurance can vary significantly based on the individual's age, health, occupation, and the specific terms and conditions of the policy.

The RBC Professional Series and the OMA Plan both offer competitive premiums, although the actual cost will depend on the individual's specific circumstances. It's important for doctors to compare premiums between different plans, but also to consider the value and coverage provided by each plan.

Factors Affecting Premiums

Several factors can affect the cost of disability insurance premiums. Age is a significant factor, with older individuals generally paying higher premiums. Health is another important factor, with individuals with pre-existing health conditions often paying higher premiums. Occupation can also impact premiums, with higher-risk occupations generally resulting in higher premiums.

The specific terms and conditions of the policy can also impact premiums. For example, policies with shorter waiting periods, longer benefit periods, and higher coverage amounts generally have higher premiums. Additionally, policies with more comprehensive definitions of disability and fewer exclusions or limitations can also result in higher premiums.

• Age & Health: Younger and healthier doctors pay lower premiums.
• Medical Specialty: High-risk specialties like surgeons and anesthesiologists typically pay higher premiums than general practitioners due to the physical demands of their work.
• Coverage Amount: The higher the monthly benefit payout, the higher the premium.
• Elimination Period: Policies with longer waiting periods before benefits begin have lower premiums.
• Policy Riders: Additional features like COLA and future income protection increase costs.

2. RBC Professional Series Cost Examples Based on Specialty

Below are estimated monthly premiums for a $10,000 monthly benefit with a 90-day elimination period and own-occupation coverage (keep in mind your age could increase or decrease the amount in this example):

• General Practitioner (GP): $150 - $250
• Surgeon: $300 - $500
• Anesthesiologist: $350 - $550
• Dentist: $250 - $400
• Psychiatrist: $200 - $300

Discounts for Medical Professionals

RBC and other insurers offer special discounts for physicians, medical residents, and specialists. These discounts can include:

• Association Discounts: Reduced premiums for members of medical associations like the Canadian Medical Association (CMA) or provincial medical organizations.
• Group Rate Discounts: Lower rates for physicians who purchase insurance as part of a hospital or clinic network.
• Residency Discounts: Reduced premiums for medical residents and fellows, making it more affordable to secure coverage early in their careers.

RBC Medical Student Offer: Disability Insurance

The RBC Medical Student Offer is a specialized disability insurance program designed specifically for medical students and doctors. It offers comprehensive coverage that is tailored to the unique needs and circumstances of medical professionals.

This program provides a number of key benefits, including a simplified application process, competitive rates, and flexible coverage options. It also offers a number of additional features and benefits designed to support medical professionals throughout their careers.

• Simplified Application Process
• Competitive Rates
• Flexible Coverage Options

Key Features of RBC Medical Student Offer Disability Insurance

• No Medical Underwriting Required: Simplified application process with no medical exam necessary for certain discounts.
• Exclusive Discounts:
  • 10% discount with no medical exam required.
  • 25% discount available with medical underwriting.
• Own-Occupation Definition of Disability: Ensures coverage if you cannot perform your specific medical specialty.
• Cost of Living Adjustment (COLA): Protects benefits from inflation over time.
• Future Income Option: Allows coverage to increase up to $25,000/month as income grows.
• Coverage for HIV, Hepatitis B & C: Ensures protection in the event of occupational exposure.
• Conversion to Long-Term Care Coverage: Option to convert coverage for long-term care needs later in life.
• Critical Illness Insurance: Includes $100,000 in critical illness insurance as secondary protection.
• Easy Enrollment: Simple one-page application form.

Disability Insurance Coverage by Year of Study

The monthly disability benefit a medical student qualifies for depends on their year of study:

• Years 1-2: $2,000/month
• Year 3: $3,000/month
• Year 4: $4,500/month
• Up to 12 months of free coverage available.

Discounts and Free Coverage Periods

• No Medical Exam Required:
  • 10% discount
  • Up to 12 months of free coverage
• With Medical Underwriting:
  • 25% discount
  • Up to 5 months of free coverage

Disability Insurance for Residents and Fellows

• Residents: Eligible for up to $4,500/month in disability benefits.
• Fellows: Eligible for up to $8,500/month in disability benefits.
• Residents and fellows receive up to 5 months of free coverage.

Cost-Benefit Analysis

When comparing disability insurance plans, it's important for doctors to conduct a cost-benefit analysis. This involves comparing the cost of the insurance premiums with the potential benefits provided by the plan. While a plan with lower premiums may be tempting, it's important to ensure it provides adequate coverage and benefits.

The RBC Professional Series and the OMA Plan both offer comprehensive coverage and benefits, making them attractive options for doctors. However, the specific cost and value of each plan will depend on the individual's specific circumstances and needs.

Choosing the Right Plan

Choosing the right disability insurance plan is a critical decision for doctors. It's important to consider all aspects of the insurance plan, including the coverage and benefits, policy terms and conditions, premiums, and additional features and benefits.

Both the RBC Professional Series and the OMA Plan offer comprehensive disability insurance plans designed specifically for doctors. However, the best plan for any individual doctor will depend on their specific needs, circumstances, and financial situation.

Personal Needs and Circumstances

Every doctor has unique needs and circumstances that can impact their choice of disability insurance plan. For example, a doctor with a high income and significant financial obligations may need a plan with a high coverage amount. Similarly, a doctor with a high-risk medical specialty may need a plan with a comprehensive definition of disability and few exclusions or limitations.

It's important for doctors to assess their personal needs and circumstances when choosing a disability insurance plan. This includes considering their income, financial obligations, health, age, and occupation.

Financial Situation

A doctor's financial situation can also impact their choice of disability insurance plan. For example, a doctor with significant savings may be able to afford a plan with a longer waiting period and lower premiums. Similarly, a doctor with a high income may be able to afford a plan with a high coverage amount and comprehensive features and benefits.

It's important for doctors to consider their financial situation when choosing a disability insurance plan. This includes considering their income, savings, financial obligations, and retirement plans.