Life Insurance for Midwives in Canada
Do you need life insurance as a midwife in Canada? Here is everything you need to know.
12 Minute read
Published: July 22, 2024
Life Insurance for Midwives in Canada
Do you need life insurance as a midwife in Canada? Here is everything you need to know.
12 Minute read
Published: July 22, 2024
As a midwife in Canada, you dedicate your life to bringing new life into the world, providing care and support during one of the most critical times in your patients’ lives. But while you’re busy taking care of others, have you considered who will take care of your loved ones if something happens to you? Just as you create a birth plan for your clients, it’s essential to have a financial plan in place for your own family’s future.
In this comprehensive guide, we’ll explore why life insurance is a crucial consideration for midwives and how it can provide peace of mind and financial security for those you care about most.
In this article:
- Why Do Midwives Need Life Insurance in Canada
- What Type of Life Insurance is Available for Midwives in Canada
- Corporate Owned Life Insurance (COLI) for Midwives Who Their Own Clinic
- Life Insurance Through a Midwife Association in Canada
- Case Study Example: Life Insurance for a Midwife
- Frequently Asked Questions (FAQs) about Life Insurance for Midwives in Canada
Why Do Midwives Need Life Insurance in Canada
Life insurance is a type of insurance that pays out a death benefit in the event of the policyholder’s death. The policyholder selects a death benefit amount they believe will be sufficient for their needs and pays a monthly or annual premium to maintain this coverage. This makes life insurance an essential tool to ensure your family doesn’t face financial hardship if you were to pass away unexpectedly.
Considering the stressful and physically taxing nature of midwifery, having a plan in place to protect your family in case of critical illness, disability, or death is crucial. Life insurance can cover the income you would lose upon death, help manage planned financial obligations like a mortgage with your spouse, and even be used strategically to offset estate taxes if you plan to leave a property to your dependents or heirs.
Here are the 5 most common reasons why midwives need life insurance in Canada:
Final Expense Costs: The most common reason for any Canadian to get life insurance, is to cover final expense costs. This can cover the cost of a funeral and/or memorial.
Income Replacement: Research shows that the average midwife in Canada earns around $100,000 per year. In the event of an unexpected death, your family would no longer receive this expected income. A life insurance policy can provide financial stability during this challenging time, and ensure your family receives the financial support they depend on.
Future Financial Obligations: These obligations may include a mortgage, a car loan, education and care costs for children and dependents, and more. Life insurance can ensure these responsibilities are met, so your spouse or partner doesn’t have to shoulder the entire financial burden without support.
Owning a Clinic: If you own your own midwifery clinic, corporate owned life insurance can be a great tool in protecting your business from financial hardship if you or another key employee were to pass away. It can also be used as an investment vehicle for your business.
Offsetting Estate Taxes: If you own a property such as a family home or a cottage that you would like your loved ones to inherit, life insurance can be used to cover the expected estate taxes so the property doesn’t become a financial burden to inherit.
Types of Life Insurance for Midwives in Canada
There are various types of life insurance designed to cater to the diverse financial situations and needs of Canadians, including term life insurance, permanent life insurance, and no medical life insurance. The right choice for you depends on your unique financial situation and goals.
Before diving in, here is a quick overview of the three different types of life insurance available in Canada:
Term Life Insurance
Term life insurance is the most affordable and popular type of life insurance in Canada. It provides coverage for a specified term length, typically between 5-20 years. This type of life insurance can be beneficial for midwives looking for coverage that coincides with other financial obligations such as a mortgage or child care costs.
The pros of term life insurance for midwives include:
Flexibility: Term insurance can be adjusted to cover specified time periods, such as the years till retirement, throughout a mortgage, or until children reach financial independence. This flexibility enables midwives to balance their coverage with their financial obligations.
High Coverage Amounts: For a relatively low cost, term life insurance can provide significant coverage. This is ideal for midwives who require increased coverage.
Affordability: Term life insurance typically has lower premiums compared to permanent life insurance, making it an affordable option for midwives, particularly those who are still in school or early in their careers.
Convertibility: Many term policies have the option of converting to permanent life insurance without a medical exam. This option may be beneficial to midwives who expect their financial circumstances to change over the course of their careers.
What term life insurance costs:
Term life insurance is one of the most affordable types of life insurance, even for those seeking large amounts of coverage. 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.
Permanent Life Insurance
Permanent life insurance differs from term insurance in that it provides lifetime coverage as long as the policy is in effect. Additionally, permanent policies can build cash value over time, which can be invested to potentially lower premiums, borrowed against, or withdrawn from. This type of life insurance is ideal for midwives who can afford the higher premiums and are interested in coverage that doesn’t expire with age or changes in health status.
The Pros of Permanent Life Insurance for Midwives include:
Lifelong Coverage: Permanent life insurance provides coverage for the policyholder’s entire life, ensuring that beneficiaries receive a death benefit when the policyholder passes away.
Cash Value Accumulation: Many permanent life insurance policies build cash value over time, which can be borrowed against or withdrawn. This cash value can also be invested, potentially providing additional financial benefits beyond the death benefit.
Fixed Premiums: Permanent policies often offer fixed premiums that don’t increase with age or changes in health.
What permanent life insurance costs:
The cost of permanent life insurance can vary depending on the policy and the insurer, but it is generally more expensive than term life insurance. 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 in coverage.
No Medical Life Insurance
No-medical life insurance is a great option for those who are difficult to insure due to medical conditions, high risk hobbies, and other reasons. This type of policy does not require applicants to undergo a medical exam, submit an attending physician’s statement (APS), or provide fluids. Most insurers will either not ask, or ask very limited, medical questions. However, no medical life insurance tends to be more expensive to reflect the increased risk to the insurer. This option is ideal for midwives who struggle with medical conditions or disabilities such as mental health conditions, diabetes, sleep apnea, and more.
The Pros of No Medical Life Insurance for Midwives include:
Accessibility: No medical life insurance is accessible to those who might be declined for traditional insurance due to pre-existing conditions. This ensures that midwives are still able to secure coverage, despite any potential health concerns.
Quick Approval: These policies typically offer faster approval times as they don’t need medical underwriting. Certain policies also offer instant approval with guaranteed acceptance.
Simplified Application Process: The application process is often simpler and less invasive, typically requiring only a basic health questionnaire.
What no medical life insurance costs:
No medical life insurance is typically more expensive with lower maximum coverage amounts. 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 $500,000 coverage.
Corporate Owned Life Insurance (COLI) for Midwives Who Their Own Clinic
If you own your own midwifery practice, your business can benefit from a corporate owned life insurance (COLI) policy. This type of policy is owned by a business and covers the life of a key employee. In the case of a midwifery clinic, this often means covering the lives of the practitioners of the clinic.
The practice pays the premiums for the policy and is also the beneficiary. If an insured practitioner were to pass away, the clinic would receive the tax-free death benefit. This death benefit can be used to mitigate any financial loss caused by the death of a key employee and can be put towards hiring and training a replacement.
Additionally, COLI policies typically come with a cash value amount that grows at a fixed rate. This cash value can be utilized in several ways. The business can use it to fund retirement benefits for the practitioners. Alternatively, the business can access this cash value for various purposes, such as reinvesting in the practice, covering operational expenses, or supporting business growth initiatives, depending on how much the cash value grows.
The Benefits of COLI for a Midwifery Clinic Include:
COLI can mitigate the financial impact of losing an essential employee, such as a practitioner, and be put towards the hiring and training costs for a replacement.
COLI policies accumulate cash value over time, which typically grows at a fixed rate. This cash value can be used to fund retirement benefits, reinvest in the practice, cover operational costs, support business growth initiatives, and more.
The death benefit received by the clinic through a COLI policy will be tax-free. Additionally, the cash value component will grow tax-deferred.
Life Insurance Through a Midwife Association in Canada
Another option available to midwives is life insurance through a midwife association. For example, the Association of Ontario Midwives (AOM) offers group life insurance until age 70 with a maximum coverage amount of a maximum of $250,000. The Midwives Association of British Columbia (MABC) also offers group life insurance until age 70, however the maximum coverage amount is only $75,000.
While group benefit plans can be useful for midwives seeking basic coverage, they are often less flexible and may not always be the best option for your situation. For example, you might need more coverage than what is offered through your midwifery association, prefer a term policy that aligns with your mortgage, or want permanent life insurance that extends beyond the age of 70. In many cases, a personal life insurance policy can be a better choice so it’s important to carefully consider your options.
Need help determining what policy is right for you?
Consider reaching out to one of our licensed financial advisors for insurance advice specific to your situation. Calls are free and typically only take 15 minutes of your time.
Case Study Example: Life Insurance for a Midwife
Emily is a 55-year-old midwife working at an independent midwifery clinic. She is interested in permanent life insurance to avoid concerns about rising premiums or the increased likelihood of policy denial as she gets older.
To determine her coverage needs, Emily considers the following factors:
- Emily earns $120,000 annually as an experienced midwife and wants to ensure her family has sufficient funds to replace her income in the event of her death.
- Emily anticipates her funeral costs will be around $10,000.
- Emily has two children and wants to leave them a financial legacy to support their future needs and would like to allocate $70,000 to do so.
Based on these considerations, Emily determines she will need a total of $200,000 in life insurance coverage to achieve her financial goals.
Next, Emily discusses her situation with a licensed financial advisor. They compare different coverage options and permanent life insurance policies available to her. Since she is in good health and lives a low risk lifestyle she is able qualify for a permanent life insurance policy with $200,000 in coverage and favorable premiums. The premiums are also fixed and will never increase with age or new health concerns.
Frequently Asked Questions (FAQs) about Life Insurance for Midwives in Canada
The amount of coverage you need will depend on various factors, including your income, shared debts, living expenses, and future financial goals. If you aren’t sure how much coverage you need, or are worried about how much it will cost, you can always discuss your situation with one of our expert financial advisors by contacting us today for free advice.
Yes, it’s possible to get life insurance with pre-existing health conditions. However, the premiums might be higher, and you may need to undergo a medical exam. No medical life insurance is also an option for those with health concerns since it does not require any medical underwriting.
Yes, you can name your midwifery practice as a beneficiary of a life insurance policy. This can help ensure your practice continues to operate smoothly in the event of your death. Another option is to purchase a corporate-owned life insurance (COLI) policy. This allows you to cover multiple key employees under one policy and includes a cash value component that can be used as an investment vehicle or for retirement funds.
Find a solution that’s right for you.
If you are interested in life insurance and would like advice specific to your situation, you should consider reaching out to one of our expert financial advisors. At Protect Your Wealth we’ve been helping clients find affordable and comprehensive life insurance coverage since 2007. Reach out to us today or call us at 1-877-654-6119 and we can help you find the right policy in no time.
We’re proudly based out of Hamilton, and service clients anywhere in Ontario, Alberta, Manitoba, and British Columbia, including areas such as Oakville, Abbotsford, Steinbach, and Grande Prairie.
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