Corporate-Owned Life Insurance in Canada for Healthcare Business Owners

Corporate-owned life insurance planning for healthcare clinic owners in Canada

Explore How Corporate-Owned Life Insurance May Fit Your Practice

If you own an incorporated chiropractic, physiotherapy, or RMT clinic in BC or Ontario, corporate-owned life insurance may be worth exploring as part of your overall financial plan. Depending on your corporate structure, a corporate-owned policy could help manage the tax treatment of retained earnings and support your long-term estate planning goals. We help healthcare professionals across Canada evaluate whether this approach is appropriate for their situation.

This information is for general educational purposes only and does not constitute tax, legal, or individualized financial advice. Tax treatment can change and depends on your personal situation. Consult a professional accountant or advisor before acting.

Book a Complimentary Corporate Insurance Review

Are Your Corporation's Retained Earnings Working as Efficiently as They Could?

Many incorporated healthcare professionals in Ontario and British Columbia accumulate surplus cash inside their corporation without a clear long-term plan. Those earnings may be subject to corporate investment tax rates, and passive investment income above $50,000 can reduce access to the Small Business Deduction.

Corporate-owned life insurance is one strategy that some incorporated professionals use to address these concerns. The policy's cash value may grow on a tax-deferred basis within the corporation, and a portion of the death benefit may be credited to your Capital Dividend Account, which could allow for a tax-free distribution to shareholders. However, this approach involves costs, long time horizons, and trade-offs that vary based on your specific corporate structure and financial goals. That is why we begin with a no-obligation review of your situation before recommending any strategy.

Healthcare professional reviewing corporate life insurance options

How Corporate-Owned Life Insurance May Apply to
Healthcare Clinic Owners in Canada

At Athena Financial, we help incorporated healthcare professionals evaluate whether corporate-owned life insurance is a suitable fit for their financial plan. We work with you and your existing professional team to review the potential benefits, costs, and trade-offs before any recommendations are made.

Topics We Help Incorporated Clinic Owners Evaluate:

Capital Dividend Account (CDA) Planning: When a corporation owns a life insurance policy and the insured passes away, a portion of the death benefit (less the policy's adjusted cost basis) may be credited to the corporation's CDA. This could allow the corporation to pay a tax-free capital dividend to shareholders. We help you understand how this mechanism works and whether it applies to your corporate structure.

Small Business Deduction (SBD) Considerations: Passive income above $50,000 can reduce access to the lower corporate tax rate. Certain corporate-owned life insurance structures may help manage that threshold, depending on the policy type and how it is held. We walk you through how this may apply to your situation in Ontario, BC, or elsewhere in Canada.

Corporate Wealth Transfer Planning: Corporate-owned life insurance is one approach some professionals use to move retained earnings into a tax-sheltered environment. This may reduce the overall tax burden on your estate compared to leaving surplus cash exposed to corporate tax rates. The suitability of this approach depends on factors including your age, health, premium commitments, and time horizon.

Coordination with Your Accountant and Legal Team: A corporate life insurance strategy should be evaluated in the context of your full financial picture. We work alongside your accountant, lawyer, and any existing advisors to review the policy structure, ownership, and beneficiary designations before any decisions are made.

Athena Financial advisor helping with corporate-owned life insurance planning in Ontario and BC

Why Healthcare Professionals in BC and Ontario Work with Athena Financial

We focus on working with chiropractors, physiotherapists, and RMTs who own incorporated practices. Ken Feng and the Athena Financial team are familiar with the corporate structures, tax considerations, and financial planning needs that clinic owners commonly face. Whether you practice in Ontario, British Columbia, or both provinces, we tailor our corporate-owned life insurance analysis to your specific situation and coordinate with your existing professional team.

Athena Financial Inc. is licensed to advise clients in British Columbia and Ontario.

"Athena Financial helped me restructure my multi-location clinics using a holding company and family trust. The process was thorough, and I now have a clear succession plan in place."

Dr. David Lee, Clinic Owner, Surrey, BC

Corporate-Owned Life Insurance: Common Questions

Who may benefit from corporate-owned life insurance in Canada?
Corporate-owned life insurance is most commonly explored by incorporated healthcare professionals in Ontario and BC who have accumulated retained earnings in their corporation and are looking at options for estate planning and long-term wealth management. It is not suitable for everyone. The costs, premium commitments, and time horizons involved mean it should only be considered after a thorough review of your corporate structure, cash flow, and broader financial plan.
Does corporate life insurance replace personal life insurance?
Not necessarily. Corporate-owned and personal policies typically serve different purposes. A personal policy generally addresses your family's income replacement and debt coverage needs. A corporate-owned policy is more commonly used for corporate surplus management and estate planning. During our consultation, we review your existing coverage to help you understand how the two may work together in your situation.
How does a corporate-owned life insurance policy interact with the Capital Dividend Account?
When a corporation is the owner and beneficiary of a life insurance policy in Canada, the death benefit (less the policy's adjusted cost basis) may be credited to the corporation's Capital Dividend Account. This could allow the corporation to pay a tax-free capital dividend to shareholders. The specific mechanics depend on your corporate structure, the policy type, and current tax rules. We work with your accountant to model how this may apply to your particular situation.

Considering Whether Corporate-Owned
Life Insurance Belongs in Your Plan?

Book a complimentary, no-obligation review with our team. In approximately 30 minutes, we will review your corporate structure, discuss how corporate-owned life insurance works in Canada, and help you determine whether it warrants a closer look for your practice in Ontario or BC. There is no cost and no pressure to proceed.

Schedule Your Complimentary Consultation