By Imran Choudhary, MBA, CFP®, CLU®
Rubach Wealth Advisor
Income Is Usually the Foundation
For most professionals and business owners, income is what makes everything else possible. It funds investments, services debt, supports family commitments, and keeps a business running smoothly.
We spend a great deal of time structuring portfolios, reviewing asset allocation, and monitoring markets. Far less often do we pause to examine the structure protecting the income that makes all of that possible.
According to Statistics Canada, 27% of Canadians aged 15 and over reported having one or more disabilities that limit daily activities in 2022.¹ Not every condition prevents someone from working, but the data is a reminder that interruptions to professional life are not rare.
The more practical question is whether the coverage in place reflects where you are today.
Most Coverage Starts Early and Stays There
Disability coverage is often arranged early in a career or provided through a workplace benefits plan. At that point, income is typically lower and financial obligations are more contained.
Group and early-career disability coverage are often structured to provide partial income replacement and may not fully reflect long-term earning capacity.
Workplace plans frequently replace a percentage of base salary and may include benefit caps. They often do not account fully for dividends, partnership distributions, or other forms of variable compensation. In addition, employer coverage is generally not portable.
As income grows and compensation structures evolve, coverage that once felt appropriate can become misaligned with present realities.
In our experience, the issue is rarely that someone has no insurance. More often, it is that the structure has not kept pace with professional and financial growth.
For Incorporated Professionals, Structure Matters
When income flows through a professional corporation or partnership, the conversation becomes more nuanced.
Many incorporated professionals receive income through a combination of salary and dividends. Depending on how a policy was structured, dividend income may not be treated the same way as salary for benefit purposes. Without careful review, the protection may not reflect how income is actually earned.
There is also the question of fixed corporate expenses, partnership obligations, and continuity planning. If a professional is temporarily unable to work, those responsibilities do not necessarily pause.
These policies form part of a broader risk management and financial planning framework and should be reviewed in coordination with tax, estate, and corporate considerations.
Definitions Matter More Than Most People Realize
Beyond benefit amounts, policy definitions can materially influence how coverage responds.
Some policies define disability based on the inability to perform the duties of one’s own occupation. Others transition after a defined period to a broader standard that considers the ability to work in any occupation for which the individual is reasonably suited. For highly specialized professionals, that distinction can be significant.
Elimination periods, residual disability provisions, and indexing features further shape how a policy responds in partial or prolonged interruptions. These structural elements are often established early and left unchanged, even as professional specialization and income evolve.
Most professionals would not allocate capital to an investment portfolio without understanding its underlying structure and assumptions. Yet disability coverage is frequently accepted at face value, without examining the assumptions built into compensation definitions, benefit calculations, and policy transitions.
The gap is rarely visible when everything is working as intended. It becomes visible when it is tested.
Where Critical Illness Insurance Fits
Disability insurance is designed to replace income over time. Critical illness insurance addresses liquidity at a specific moment.
Upon diagnosis of a covered condition as defined in the policy contract, critical illness insurance provides a lump sum benefit. That capital can create flexibility. It may reduce pressure on a business, allow debt reduction, or provide room to focus on recovery without immediate financial strain.
For business owners and partners, liquidity can intersect with shareholder agreements and succession planning. These decisions are most effective when integrated rather than addressed in isolation.
A Structural Conversation, Not a Product Discussion
When portfolios drift from their intended allocation, we rebalance them. When tax structures evolve, we adjust them. Income protection warrants the same level of structural discipline.
The question is not whether disability insurance exists. It is whether the assumptions embedded in that policy still reflect how income is earned, how a corporation operates, and how financial responsibilities are structured today.
For many established professionals, income has evolved more quickly than the protection surrounding it. That does not automatically require change. It does require examination.
At Rubach Wealth, this review is not approached as an insurance transaction. It is part of a broader capital structure conversation within comprehensive planning. Income continuity is not peripheral to wealth management. It is foundational to it.
Reference:
Statistics Canada. Canadian Survey on Disability, 2022. Released November 2023.
https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2023063-eng.htm
