Episode 156: How Fast Can I Access Leverage? Utilizing The Cash Value From Whole Life Insurance

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How soon can you actually use your high early cash value participating whole life insurance policy to invest? Days, months or YEARS?

If you’re an ambitious real estate investor or incorporated business owner in Canada, you’ve likely heard about permanent insurance as a wealth-building tool. But the big question is: can you access your capital fast enough to make it worth it—especially when new opportunities are knocking? This episode unpacks that exact scenario and clears up one of the biggest misconceptions that might be keeping you on the sidelines.

Listen in to discover:

• Exactly how soon you can leverage high early cash value permanent insurance for investing
• How backdating your policy could double your cash value access right out of the gate
• The smart way to balance short-term opportunity with long-term wealth growth—even if you’re just starting

Hit play now to find out how to unlock capital quickly from your insurance policy—so you can stop missing opportunities and start multiplying your wealth.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
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• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
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Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

In this client case study, we explore how a Canadian business owner leveraged a high early cash value permanent insurance policy as part of their broader wealth building and financial planning strategy. By using corporate assets to fund a participating whole life insurance policy, the client was able to access a portion of the cash value within weeks, allowing them to reinvest in a real estate opportunity—demonstrating the powerful intersection of insurance policies, investment strategies, and tax efficiency. This approach highlights how business owners can optimize capital gains, build long-term financial security, and accelerate net worth growth through strategic leverage, all while protecting wealth and pursuing early retirement goals aligned with the F.I.R.E. movement. It’s a smart blend of corporate finance, personal finance, and financial education that fuels both short-term liquidity and long-term asset accumulation.

Transcript:

Hey there, Canadian wealth secret seekers. It’s Kyle here. And today we’re going to dig into a secret sauce episode where we are going to unpack a client question that comes in and it comes in quite often. And many of you have may have had this idea rolling around in your minds and it’s actually probably held you back from getting yourself started on your true wealth building journey, utilizing leverage against

one of the most foundational assets that you can add to your repertoire. So we’re gonna dig into that and talk about some of the opportunity costs that you might experience when you implement what we call the most foundational asset, permanent insurance. Here we go. All right, so in today’s episode, we are digging right in and we’re not gonna waste any time. We’ve got a question here from a client.

It’s actually a listener who has come in from Canada, of course, the other side of Canada, and we’ve had a couple of calls digging into their situation. So this client is a real estate investor. They actually have a primary residence they own personally with him and his spouse. They own and operate an incorporated business, and they have kind of done a little bit of house hacking.

and they intend to do it again. So they intend to purchase another property personally and house hack that while keeping the original home as a rental property. So they’re doing all the things, growing a business, growing the real estate portfolio. And at the same time, they’re trying to think about how can we do and optimize this in the most tax efficient way while also growing foundational assets at the same time.

So we’ve gone down the rabbit hole of permanent insurance, specifically high early cash value permanent life insurance through participating whole life insurance. And we’ve had a couple of calls and we’ve been looking at policies that have a max funding premium amount of about $100,000. That puts their minimum premium amount down to around 38,000 or so for these individuals.

And they are getting really eager to dig in. And this is the question that came in, which is not the first time that we’ve had this question. This one is it says, Hey, Kyle, we’ve really enjoyed the call with you this morning. The first call was just with the one spouse this morning with the second call with both spouses to bring them up to speed. They say, you know, I’m not going to say the name. Let me know that you are you help

bring them up to speed with the options and the way that we can do things to give us personally and as a business. thanks to you. We were wondering, here’s the key question. If we were to fund a new high early cash value policy as soon as possible with close to $100,000 of premium, how soon are we able to leverage it? The reason is we have an investment that we could make with that cash. It would be

it would work to about $45,000 all in. Curious to hear your thoughts, many thanks, and it’s signed by the specific client, as you can see up on the screen.

All right, so there you have it. We’ve got a great question here and the question is how soon can we leverage it? As many of you may or may not know, it’s not gonna be a one-to-one, especially if it’s a smaller policy. Of course, if it’s a larger policy size, we can get 100 % of cash value out with a third-party lender. We also have some secondary lenders for those who want 100 % premium to come out. Again, these would be on larger policies than just 100,000 of premium.

If that’s you, of course, reach out to us. We can work with you on that. But in this particular case, a policy of around 100,000, you’ve got two options. You can go directly to the insurer. And this is pretty much once the policy goes into force. All right. Now, if it goes in force today, you probably are not going to be able to get it today. I always like to say give yourself like a 30 day window just so that you’ve got some time, a little bit of breathing room here.

but assuming that any investment that you’re going to make that there’s a little bit of wiggle room here, there should be a good chunk of cash value available depending on the policy structure and also depending on how you choose to fund it. If we max fund a policy, we will have access to more cash value immediately. So what I’m gonna do is I’m gonna bring up on the screen an example because this particular policy was actually put in force

just earlier this week. So you’ll notice here I blocked off some information, some important information so that there’s no identifying information on the screen. Now this particular policy was a client who has a hundred thousand dollar premium maximum premium policy. That means they can put in as little as about 40,000 and as much as about a hundred thousand. They also

took the option to backdate this policy 364 days. Now some people would say like, why would you ever backdate a policy? Why would you want to pay for insurance for the year that’s already happened, especially when it’s life insurance and we’re still here, we’re still alive. Well, with a permanent policy, a high early cash value policy, what you’re doing is you’re getting two things you’re getting a cheaper cost of insurance because now on the record, it’s saying you’re a year younger when you’re putting it in force.

And the second thing you’re getting to do is you’re actually getting to fund two full years right away. So you get to update or you get to fund the full premium of the year that’s already passed and you get to fund the full year of this year’s premium. Normally you’re just funding the first year. Now you’re funding essentially the first two years of the policy, which means you’re going to have even more cash value available. So this individual actually took

$200,000, they backdated the policy, they fully funded it with $200,000, which gives them a total cash surrender value of about 175, it says here on the screen. But you’ll notice the loan available is not exactly, and it’s actually less than 90 % of the cash surrender value. Now, if we went to a third-party lender,

Okay, which would require underwriting and you know they’d have to actually agree to do this lending for you in most cases it’s it you know if you’re able to be approved for the policy do your cash flows in your assets you’re usually going to be okay on this side as well. You could get the full cash surrender value this is representing what it will be worth that by the end of this year so that would be great however if we just want the easy loan like we just need this money fast we don’t want any additional underwriting.

we can ask the insurer to send us this loan by hitting the loan request button or request a loan button here. Now, because the policy’s brand new, they’re actually only giving you or this individual access to $125,000 of the 200 that they put in. 125 of 200, as you’ll see on the screen, about 62 and a half percent.

of the premium that this individual just put in earlier this week is available through a policy loan through the insurance company. All right. So that’s this is one insurer. Every insurer is a little bit different. But I wanted to give you an example. In this particular case with these clients, this would be the insurer that we would be going with or I’d be suggesting that they go with because they do want to have that immediate availability of those funds.

But they also want to have a policy that’s going to grow at a high level. So it has a high scale, dividend scale. And they’re actually a mutual company for those who have done a little bit of digging. they understand that a mutual company is actually not publicly traded, which means there’s no other shareholders that we have to actually give profits to. So these are things and some of the reasons why we would pick this particular insurer in this particular case.

But the moral of this story is if these clients are putting in $100,000 into this policy today within the next couple of weeks, once this policy settles and all the dust settles, there will be a loan request button there for a loan available. And I would argue on a hundred thousand, you would likely be able to achieve.

at least 50%. I don’t want to promise you 62 and a half percent here or 60 at 62.5 % or immediately specifically unless you’re going to also be doing two years worth of funding because there is a little bit of an impact there that’s going to release more cash value immediately. However, the $45,000 that they are looking for if they were to take 100,000 of premium and go ahead and put that that 100,000 in

they should have no problem in getting this 45 out immediately to reinvest. Now, the other nuance is that throughout the year, the cash value and the loan available is going to continue growing all the way up until the end of the year. So when we look at illustrations, we’re typically looking by year end at what we see in the chart. We don’t really know exactly what’s going to happen in the in-betweens there, but what we can say is that

the longer we hold this policy. So next month, the month after, the month after that, we’re gonna see that the loan available to us will continue to grow as well as the actual cash value continues to grow over time as well. So the easy answer to this question is in this particular case, they were already looking at taking retained earnings from their incorporated business and putting it into a high early cash value permanent policy to create this foundational asset.

which is going to give them a large death benefit, which will pay out at some point down the road and will provide a lot of tax-free dividends to come out through the capital dividend account through the death benefit down the road. They also have the leverage ability so that they can continue doing the investing they were planning to do while keeping some of that dry powder in there growing and accumulating tax-free.

as cash value, the living benefit of this particular policy. So in today’s episode, I hope you found and learned a little bit about the fact that if we are starting a permanent life insurance policy, whether you’re on the personal side looking to do something like infinite banking, or for me, I always like to look at it as an investment tool in the shorter term and a cashflow tool in the longer term.

with a massive tax efficiency all along the way with that large death benefit paying out in the end. It doesn’t matter who you are, but knowing that there is a little bit of opportunity cost if you’re going to start a high early cash value policy. However, it’s not a high enough opportunity cost to restrict you from actually doing it because you can still be investing while you do some of this work. And I would argue that

for the vast majority of the population out there. Very few people are willing to take all of their dry powder, the capital they have available to them, and put it into a long-term asset all at once. Typically, you wanna keep some of that protected and safe. Well, in doing something like this, you’re getting a bit of both worlds. You’re gonna get something that you can put into the risk on asset. In their case, it’s gonna be real estate. And each and every day, you’re growing more and more of that liquid cash value

to sit alongside here in case of a business shortcoming, you know, that cash flow crunch or potentially that next investment opportunity down the road. So my friends, if you found this useful, do us a huge favor, hit the subscribe button, hit the like button and the bell if you’re on YouTube with us. And of course, ratings and reviews help to go a long way. If you are interested in getting your wealth plan organized and get some feedback,

head on over to Canadianwealthsecrets.com forward slash discovery. There you’ll be able to take a short quiz to determine what phase of the wealth building journey are you at and what next steps should you be taking? If you’re ready to take the next step with us, you’ll have the opportunity to book a call over on the discovery call page, Canadianwealthsecrets.com forward slash discovery. And if you’re an incorporated business owner, hop into our incorporated business owners

masterclass where you can learn more about these types of strategies and more over at Canadian wealth secrets.com forward slash masterclass. And as a reminder, all Canadian wealth secrets seekers, this is for informational purposes only. You should not construe any such information as educational, financial, accounting, or legal tax advice.

But a reminder that I am a licensed life and accident and sickness insurance agent and you can reach out to me over at the Pan Corp team which includes corporate advisors and Pan Financial.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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