Life Insurance for Dentists in Canada

As a dentist, you’re well aware that regular check-ups are key to preventing serious issues for your patients. But have you considered applying this preventative approach to your own financial health? In this blog, we’ll explore why life insurance is an essential tool for dentists in Canada, ensuring both your practice and personal finances are well-protected for the long term.

In this article:

• Why Get Life Insurance as a Dentist
• Types of Life Insurance for Dentists in Canada
  • Term Life Insurance
  • Whole Life Insurance
  • Universal Life Insurance
  • No Medical Life Insurance
• Life Insurance Through Workplace Benefits or Dentists Association
• Corporate Owned Life Insurance for a Dental Practice
• Case Study Example
• Frequently Asked Questions (FAQs) about Life Insurance for Dentists in Canada

Why Get Life Insurance as a Dentist

Dentists need life insurance for a variety of reasons. Many dentists face significant debt due to the costs of obtaining an education, managing a dental practice, and purchasing dental equipment. In addition, many dentists have dependents or spouses that rely on their income. Life insurance can ensure that, in the event of an untimely death, these financial obligations are met and can provide funds to cover your family’s needs, estate taxes, business obligations, and more. The main reasons dentist purchase life insurance in Canada include:

Types of Life Insurance for Dentists in Canada

There are four options available to you if you’re interested in life insurance for dentists in Canada. Your coverage requirements and financial objectives will determine which policy is ideal for you, as each type of policy has specific benefits and features. The following are the main policy types you can choose from:

Term Life Insurance

Term life insurance may be the most suitable option if you’re looking for a flexible policy that provides coverage for a predetermined amount of time. This is an excellent option for dentists who have a temporary financial obligation, such as a mortgage, or who are still developing their career and anticipate their financial circumstances changing in the coming years. Typically, policies have terms of 10, 20, or 30 years. When a term expires, policyholders have three options: they can renew their policy, convert it to permanent coverage, or buy a new one entirely.

Term life insurance has the following benefits:

• Term life insurance is the most affordable option when it comes to Canadian life insurance.
• This type of policy offers great flexibility as it allows policy holders to reassess their coverage needs after each term.
• Terms can coincide with life events such as a new child, shared debt like a mortgage, etc.

Here is a look at the monthly premium rates for males and females aged 40-45 for a 10-year term life insurance plan with $1,000,000 in coverage.

Whole Life Insurance

For Canadian dentists seeking reliable investment options along with permanent life insurance coverage, whole life insurance is a great choice. Whole life insurance policies, as opposed to term life insurance, offer coverage for the duration of the policyholder’s life. Another unique feature is the cash value amount that grows at a fixed rate. Policyholders can borrow against or withdraw any money accumulated over the course of the policy with this reasonably safe investment.

Whole life insurance has the following benefits:

• Permanent coverage allows you to lock in a premium rate for life which can facilitate savings in the long term as your premiums won’t increase with age.
• Whole life insurance policies allow you to build cash value at a fixed rate, making it a safe investment vehicle.
• If the investment option does well you may receive dividends which can be put towards your life insurance premiums.

Here is a look at the monthly premium rates for males and females aged 40-45 for a whole life insurance plan with $1,000,000 in coverage.

Universal Life Insurance

Since universal life insurance also provides permanent life insurance coverage, it’s comparable to whole life insurance; the main difference is the investment option. The cash value investment in universal life insurance is left up to the policyholder and does not grow at a guaranteed rate. Policyholders can borrow against or withdraw from the cash amount, or have minimum funding in the account meaning it will be structured similar to term life insurance.

Universal life insurance has the following benefits:

• Permanent coverage that offers lifelong coverage even as you age or your health status changes.
• Universal life insurance offers a hand-on cash value that may provide higher yields than whole life insurance.
• Policyholders have the option to provide minimum funding, making the policy more straightforward without the need to manage an investment component.

Here is a look at the monthly premium rates for males and females aged 40-45 for a minimum-funded universal life insurance plan with $1,000,000 coverage.

No Medical Life Insurance

Unlike standard life insurance plans, no medical life insurance allows Canadians to apply for a policy without having to undergo medical underwriting. This kind of policy is suitable for dentists with disabilities or medical conditions that could impact their life insurance eligibility or rates. This can include mental health issues, history of heart attack or stroke, back issues, and other frequent health concerns among dentists. You won’t have to submit an attending physician’s statement, give fluids, or go through a physical health examination if you choose to get no medical life insurance. However, a limited number of health-related questions might be requested of you for certain policies. Due to the higher risk to the insurer, however, no medical life insurance is usually more expensive than fully underwritten life insurance.

No medical life insurance has the following benefits:

• No medical life insurance is available to all Canadians, even those with pre-existing health conditions who have previously faced policy denial.
• Applications are approved much faster and some insurers even offer instant approval.
• You won’t have to undergo a medical exam, provide any fluids, and will at most be asked limited medical questions.

No medical life insurance is available either as term or permanent life insurance coverage. Here is a look at the monthly no medical life insurance rates for males and females aged 40-45 for a 20-year term with $500K in coverage.

Life Insurance Through Workplace Benefits or Dentists Associations

Many Canadian dentist associations offer affordable life insurance solutions. For example, the Canadian Dental Service Plans Inc (CDSPI) is a dental association that offers permanent life insurance solutions for dentists in Canada. If you are employed as a dentist you may also be able to purchase life insurance through an employer benefit plan as well.

However, it’s important to know that plans offered through an association or workplace benefits are often less flexible, have set minimum and maximum coverage amounts, and are only offered through a specified provider. By selecting an individual policy you can be more selective and get the chance to compare premium costs, perks, and coverage options between any of the top Canadian life insurance providers. This will allow you to choose the plan that best meets your particular needs.

Corporate Owned Life Insurance for a Dental Practice

If you own a dental practice, a corporate-owned life insurance (COLI) policy can provide significant benefits to your business. This type of policy is owned by the business and covers the life of a key employee, often the dentists who work for the practice.

Your practice pays the premiums for the policy and is listed as the beneficiary. If a covered individual passes away, your business will receive a tax-free death benefit. This benefit can be used to mitigate any financial loss caused by the death of the key employee and to cover the costs of hiring and training a replacement.

Additionally, COLI policies come with a cash value component that grows at a fixed rate. The cash value can be used to fund retirement benefits for key employees. Your practice can access this cash value for various purposes, such as investing, covering operational expenses, or supporting business growth initiatives.

Benefits of COLI for Dental Practice:

Case Study Example

Jordan Monroe is a dentist who owns his own dental practice in Cambridge, Ontario. His practice also employs one other dentist named Maya Smith. If either dentist were to pass away their practice would face significant financial challenges, including loss of revenue, recruitment and training costs for a new dentist, and potential disruption to operations. In order to safeguard their practice against the financial risk of the death of either key employee, Jordan and Maya decide to look into corporate-owned life insurance (COLI).

They considers the following factors to determine their coverage needs:

• The cost to recruit and train a replacement would cost $30,000.
• Temporary staffing after the loss of either dentist will cost approximately $20,000.
• The practice will need $30,000 to offset revenue losses.
• An additional $20,000 will be needed to continue normal operations and offer support to staff members.

With these factors in mind, the team decides a policy with $100,000 in coverage is the best option. After coordinating with a knowledgeable financial advisor, they find a COLI policy with $100,000 in coverage and a cash value that grows at a fixed interest rate of 3% per year, which can be put towards a retirement fund for Jordan and Maya. The monthly premiums for this policy would be approximately $500 per employee.

Frequently Asked Questions (FAQs) about Life Insurance for Dentists in Canada

Find a solution that’s right for you.

With so many great options for dentists, it can be daunting trying to figure out which option is the best for you and your family. That’s why we’re here to help! Here at Protect Your Wealth we work with you to find the best life insurance policy tailored to your specific needs. We have been providing expert life insurance solutions since 2007, and have helped many clients achieve financial security for their families.

Contact us today or call us at 1-877-654-6119 to talk to one of our expert advisors! We’re proudly based out of Hamilton, and service clients anywhere in Alberta, British Columbia, Manitoba, and Ontario, including areas such as Dundas, Burnaby,  Lethbridge, Vaughan.