Key takeaway
Canadian lawyers typically combine personal term life for family protection with key person or buy-sell coverage for practice continuity. Corporate-owned policies can leverage the capital dividend account for tax-efficient succession.
Why lawyers need both personal and practice coverage
Personal term life replaces income for your family, covers mortgage and debts, and protects children's education. Most lawyers need a base layer of 10–15 times income, especially when they are the primary earner.
Practice-level coverage protects the firm. Key person insurance pays the firm when a critical lawyer dies, funding recruitment and transition. Buy-sell insurance funds partnership or shareholder agreements so surviving partners can purchase the deceased's interest without forced fire sales or borrowing.
Professional corporations and corporate-owned life insurance
Many Canadian lawyers hold their practice inside a professional corporation (PC). Corporate-owned life insurance can be used to fund buy-sell agreements, key person loss, or succession. Death benefits credited to the capital dividend account (CDA) can be distributed to shareholders tax-free, subject to adjusted cost basis rules.
Structure and ownership should be aligned with your accountant and a licensed advisor. Ownership (person vs corporation), beneficiary designations, and premium payment source all affect tax and estate outcomes.
How much coverage do lawyers typically carry?
For personal needs, a common range is $1M–$3M or higher for high earners with large mortgages and long-term family obligations. For key person or buy-sell needs, coverage often reflects the economic value of the lawyer's practice share or the cost to replace their revenue.
Coverage should be reviewed when partnership status changes, when income rises significantly, or when firm succession plans are updated.
Underwriting and health for lawyers
Law is not treated as a high-risk occupation; underwriters focus on health, age, and lifestyle. Long hours and stress do not automatically mean higher premiums, but conditions such as hypertension or anxiety should be disclosed and documented.
Applying while you are young and healthy locks in lower rates. Many lawyers add or increase coverage at partnership admission, marriage, or the birth of children.
Frequently asked questions
Should my professional corporation own my life insurance?
It can, especially when the policy is used for buy-sell, key person, or succession. Corporate ownership allows death benefits to flow through the CDA. The right choice depends on your firm structure and tax advice.
How much key person coverage does a law firm need?
A common approach is to insure a multiple of the key person's annual billings or a negotiated buy-sell value. The firm is the owner and beneficiary; proceeds fund transition and recruitment.
Can I get life insurance if I have a history of anxiety or stress?
Yes. Many lawyers with treated anxiety or stress-related conditions qualify for standard or near-standard rates. Full disclosure and current physician support improve underwriting outcomes.
When should I review my coverage as a lawyer?
Review when you become partner, when income or family obligations change, when you add or leave a firm, or when succession plans are updated. At least every three to five years is a good habit.