Canada: Do (Slightly) Sweat The Small Stuff

Pop quiz: what's your biggest investment? Some may say their home, their health, their family. All excellent answers. But (as your oddly severe 10^th grade chemistry teacher might have said), all wrong. So long as you've got plenty of working days ahead of you, then—financially speaking, at least—your biggest investment is your career.

The average Canadian lawyer invests seven years and more than $86,000 dollars in their post-secondary education¹, another nine months articling², and untold hours engaged in all the heads-down, late-night, early-morning work that goes into a building a career. It follows that you should protect that investment with insurance that will work for you when you can't.

We talked to BC-based Lawyers Financial advisor, Ryan Graham, about the importance of protecting your income, and why it's often the little things that catch us unprepared.

Q. WHAT'S YOUR BACKGROUND SELLING INSURANCE AND HOW DID YOU GET INTO THE INDUSTRY?

A. I've been in the industry for 20 years and have been working with Lawyers Financial for the past six. For me, the work is meaningful because I want to make sure that families are taken care of if something goes wrong. My father passed away from cancer when he was 59. He had disability coverage and a small amount of life insurance through his employer, and no critical illness insurance. A better insurance plan wouldn't have helped him live any longer, but it certainly would have helped my stepmother afterwards.

Q. MOST PEOPLE ARE MORE FAMILIAR WITH LIFE INSURANCE THAN DISABILITY INSURANCE. CAN YOU EXPLAIN WHY DISABILITY COVERAGE IS SO IMPORTANT?

A. I think protecting your income is the most important thing you can do as a working professional. Of course, life insurance is important, too, but there are solid advantages to getting disability coverage.

For example, there's a much greater likelihood that you'll become disabled during your working years than that you'll pass away.

Another thing that often surprises people is how vast the difference between group and individual disability coverage can be. People might have some coverage under a group policy and not realize that individual plans offer a lot more protection.

Q. WHAT ARE THE MOST COMMON DISABILITY CLAIMS FOR THE LAWYERS YOU WORK WITH?

A. I've helped my clients through the claims process for all kinds of things. It's often relatively short-term situations, which can be another surprise for people. Most people are worried about catastrophic things happening, but realistically, it's the less dramatic stuff that's a lot more common.

More and more people have been talking about mental health issues in the legal community, and it's true that a lot of lawyers suffer from stress and burnout.

This can get tricky, though, because if a client has sought help from a mental health professional in the past, it can lead to this type of coverage being excluded by the insurance provider. (When it comes to disability insurance, you might be covered for chronic pain, for example, but not for the type of mental health issue you've sought help for in the past). This is often really disappointing for people, but I encourage all my clients to approach the application process with an open mind. Not every condition will be excluded and there have been times when even I've been surprised by what the insurance company will approve. Recently, we've seen improvement in how insurers are handling applications where there may be a history of mental health treatment, and I'm optimistic that they'll continue to do so. If exclusions arise, then my client and I can work through those together.

Q. WHAT'S THE NEXT STEP IF A CLIENT DOES FIND THEMSELVES FACING AN EXCLUSION?

A. It's really an issue that's better to deal with one on one. In some cases, I'd say, sure, you have X condition excluded, but look at all the other things the policy covers. So, in that case it's still worth going forward. We can also look at getting the exclusion removed. It doesn't happen all that often, but I've done it. We can also ask for a re-assessment or something called a reconsideration period, which means that if the client goes, for example, two years without treatment for the issue being excluded, the insurer may remove the exclusion.

That's where the value of working with an advisor comes in, because I'm ready to negotiate with insurance companies on behalf of my clients. If you're just going online yourself and picking out a policy, you won't have that option. As advisors, we understand the application process, and can act as a go-between with the client and insurance company in a way that a private individual just wouldn't have access to.

Q. SOUNDS LIKE THIS IS AN AREA WHERE AN EXPERIENCED ADVISOR CAN BRING A LOT OF VALUE. WHEN IT COMES TO PROTECTING INCOME, ARE THERE OTHER NUANCES THAT ARE SPECIFIC TO THE LEGAL COMMUNITY?

A. Lawyers, particularly partners, often have several layers of income (partnership income, personal law corp. income, personal income that they pay themselves, they may have investments that they own either personally or through their law corporations and may have retained earnings in their personal law corporations).

The maximum disability insurance that a lawyer can qualify for is based on their income, so understanding how lawyers generally structure their business allows us to help them determine what types of income are eligible for disability insurance coverage.

Footnotes

1. Canadian Lawyer Magazine, "Canada's legal tuition fees are among highest in the world." This estimate—$86,000—comprises law school tuition, but doesn't include the cost of an undergraduate degree, bar exams, licensing, or living expenses.

2. Canadian Lawyer Magazine, "A roadmap to studying law in Canada," November 2023.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.