Episode 173: How an Ontario Chiropractor Secured a $750K Building—Without Losing Access to Liquidity Using Whole Life Insurance

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If you’re a Canadian business owner juggling retained earnings, long-term growth, and real estate goals, this episode unpacks a real-world strategy you can’t afford to miss. Discover how a Ontario chiropractor used a corporately owned whole life insurance policy not just for protection—but to fast-track a major real estate purchase ahead of schedule.

Here’s what you’ll take away:

• How to build and leverage a corporate wealth reservoir to fund opportunities like property ownership.
• Why maintaining liquidity can keep your business flexible during emergencies and unexpected investments.
• A smart structure for blending policy loans and mortgages to optimize tax efficiency and long-term returns.

Press play now to learn how a proactive wealth strategy can help you stay ready for opportunity—and never caught off guard.

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. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• 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
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

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 today’s evolving financial landscape, Canadian entrepreneurs—especially professionals like those in the chiropractic business—are increasingly leveraging whole life insurance as a cornerstone of corporate wealth planning. This powerful tool helps build a corporate wealth reservoir that enhances liquidity, enabling strategic moves such as real estate investing Canada-style, all while maintaining tax efficiency. By integrating this approach into a broader Canadian wealth plan, business owners can optimize financial buckets, implement retirement planning tools, and align personal vs corporate tax planning for long-term success. Whether you’re focused on capital gains strategy, RRSP optimization, or corporate structure optimization, the right investment strategy can support financial freedom Canada, a modest lifestyle wealth outlook, and legacy planning Canada. With a clear financial vision setting and a commitment to tax-efficient investing, business owners can unlock wealth building strategies Canada tailored to early retirement, passive income planning, and estate planning Canada. This kind of financial diversification Canada ensures that professionals not only achieve independence but also protect and grow their wealth for generations.

Transcript:

Jon Orr: In this episode, we’re going to talk about a client of ours, a chiropractor who is leveraging his policy, his whole life insurance policy in the right way, the smart way. We’re going to unpack his story. We’re going to also unpack some of the nuances in the story and how to use this particular structure and how it’s actually going to allow him to achieve his goals faster than he actually anticipated.

So let’s get into that Kyle Phyllis in specifically. You know, this this chiropractor client of ours has a whole life policy, but where did that story begin? Like, let’s start there and then let’s unpack how he’s using his policy today to buy the building. He originally came to us to help structure around and how that’s actually going to help. And then also, what are some of those next steps? We’ll get into that we gave him as a here. Here, these are the things you might want to consider. while using this policy to help you kind of go forward.

Kyle Pearce: Yeah, absolutely. This particular client was originally a listener of this podcast. So they probably are going to recognize this story a little bit. ultimately, they came back. it was, we actually started discussing and strategizing back in the spring of 2024. things that are really important for people to note is that it does take some time to actually craft and create a holistic plan.

that is going to help you not only with your corporate wealth management strategy, but also personal wealth management strategy as well. So it did take some time and then by about November of 2024, a policy was put in place. And initially, the thought was that there were plans to buy the building. Now, this isn’t like a new idea. We actually in the very last episode, we talked about a medical doctor.

who actually sold the building they were operating in when they were winding up the company and they were ready to kind of move on and do, you know, non work things in their life, that thing we call retirement. Well, with this individual, they’ve been leasing the building and over time they have had some conversations with the owners of the building. There were some severing issues with the property. They needed to get some, you know, zoning things taken care of. And it was actually thought.

that it was going to be a number of years before they were able to purchase this property. It’s one of the greatest assets that you can purchase. First of all, you know the tenant. It’s you and your business, right? You get some exposure to real estate. You get that physical aspect. And

you feel like you’re taking some of that flywheel cash flow that you’ve been building in your operating business. And now you’re able to sort of start the investment side of things while it’s still helping your business. Cause guess what? You’re the owner. You get to set the rates and we can be strategic about how we set things up and how we do those things so that you’re not triggering unnecessary taxes and you can minimize things. And of course,

benefit from the growth of real estate as an asset class in general. that was the game plan. However, we did a check-in call recently. And now we’re talking spring 2025, so only about a half year later. And all of a sudden, it was like, shoot.

things are moving along really, really well. The owner of the building had called and said like, we might be able to get this thing closed by you know, maybe December 2024 might be a little bit aggressive, early 2026, which is vastly different than what we were actually planning for when we had set things up. However, because of how we set this plan up,

He’s in a position where he can leverage the liquidity of the cash value of this corporate owned life insurance policy properly structured to assist in the purchase of this building.

Jon Orr: So in the Wayback Machine, he originally came to us knowing that he wanted to make use of this type of structure, knowing that he was going to buy that building and wanted to use, say, the retained earnings that was inside his business every single year. It’s like, let’s put it to good use. Let’s start building cash value inside the corporately owned insurance policy with the purpose of leveraging against that cash value for the purchase of this business at some point.

And so he’s got two years because he backdated this policy, he’s got two years of cash value before this year. That’s now say accumulated where where it’s now sitting, you know, at this point where now it’s all of a sudden, this is upon him where I now have to decide, do I buy the building? Or do I not buy the building? It looks like when he peeks into the cash value of this policy, he’s got enough, say to buy it because he he was proactive, right? He was he was thinking in advance of making use of this structure for this exact

purpose, which was great for him to like set himself up this way. This is like he’s established his corporate reservoir, right? He’s built this over the course of two years or a year and a half of cash value so that it is his opportunity fund. It’s his wealth fund where he can go and buy this building or an asset that it now is going to add to his wealth. And that’s where he is. And part of it is, you know, that corporate wealth reservoir is what we call stage two.

of a healthy wealth planning system and this person, this client was really proactive in establishing that, which in order, he had to also get clear on what stage one is, which is what does he want to, where does this vision go? He had this very clear pathway of I’m gonna be buying this business, he’s gonna do this and then he’s gonna do this and so we helped him clear there, but then it helped him establish the corporate reservoir so that when time came, he could buy it and that’s where we are today. Now, here’s.

Here’s some wondering here specifically, because I know that the conversation was, right, Kyle, help me leverage the cash value of my policy so I can go and buy the building. And I think you said, wait a minute, let’s talk some options here.

Kyle Pearce: Mm hmm. Absolutely. So you know, it’s interesting to I think worth noting is that before the policy had been, you know, crafted, created and put in force back at the fall of 2024, the dollars that were utilized were actually being invested at the time in a GIC. So something worth noting is like, there was not only a conservative sort of, I’ll call it

you know, we’ll, call it hesitation to put funds into anything to risk on simply because there was a plan in place. The plan is I do want to eventually buy this building. The building is going to be the risk on asset. And in the interim, just like anyone who’s starting out in the investment space, when they’re doing real estate, usually you don’t take your seed fund and put it into

you know, the stock market, you know, as equities, because when you go to buy that perfect property, if the market’s down, like things don’t work out so hot. So had it in GIC, so it was earning a pretty conservative rate of return, but then losing half of it to passive income taxes. So that rate there was like a big loss. The longer we do that, the more we’re compounding this, you know, half the interest amount, the obviously the less growth he will have in the interim, but he still wanted that safety. So

the policy provided that. However, what we weren’t anticipating is requiring that liquidity so soon. And I think the lesson to be learned here for everyone is that actually, as soon as we set up that policy, there is some cash value available that can be leveraged either through the insurance company or from a third party lender. Now, third party lenders aren’t going to really want to get involved unless there’s a significant amount of cash value, right? Big banks are going to be looking like

you know, 250 and up and you know, some private capital firms might do a little less than that. So, you know, relying on the insurance company for short term needs is probably going to be the easiest mode because it is contractually guaranteed that they will offer this policy loan, which is great. And basically what ended up happening here, and, know, because there was so much money in these GICs, we offered the idea of

backdating the policy a full year. Now, John, you had mentioned like a year and a half of compounding growth. It’s like you almost get fake time happening when we backdate a policy, right? Because what we’re doing is we’re saying today, like we’re recording this June 17th, we’re saying June 17 2025, I’m going to put this policy in force, but I’m actually going to let you pay for last year’s policy. So we’re going to say like the policy went in force.

June 17th, 2024. And therefore, you’re going to get two years of premium in. And therefore, you’re sort of supercharging the cash value growth and what you have available and accessible to you. So this policy was fairly significant for this particular business owner specifically around having an opportunity fund this corporate wealth management bucket or this corporate wealth reservoir as we like to call it.

so that he can then make other investments. And let’s not forget, every operating business needs emergency cash flow. We need it for capital expenditures, we need it for improvements, we need it for dry times in terms of the actual operating income being low within a given season, for example. So there’s a lot of that aspect here as well in keeping liquid cash. Now,

We were supposed to have more than enough cash in the cash value available to purchase this building in a few years time. However, when we look now, go, know, this building, which I believe the purchase price is going to be somewhere around 750, and we’re going to need that money by, you know, early 2026. We are now looking at cash value and we’re saying like we’re actually almost at the 750 mark.

just based on the first two years worth of premium. It’s going to be a little short. However, come November when he pays his third year premium, he will have more than enough cash value there that he could literally just say to the insurance company, I want a policy loan for 750 or 750 plus closing costs or whatever it is that it ends up being in order to slap that money down on this building. And he owns this building, this property outright, which feels pretty good.

but it’s not really necessarily the most efficient or optimal way for this particular business owner to go about it.

Jon Orr: Right, right. Because in a way, in investment purposes, what you’re saying is like, even though I do have say liquid or capital available to leverage, I’m going to borrow it all and all of a sudden that’s where this is going to come from. it’s like, now what you’re now thinking about, and this is where I was thinking about, is like, if I borrow everything from that, does that pull all of my liquidity away?

Like do I have enough for, where is my reservoir now? Like is it, like the whole point of establish, it’s dry, right, exactly. It’s like the whole point of the policy was to have the reservoir for emergencies but also for investments. And so in his case, if he pulls most of it, even with his third year policy premium payment, he’s going to top up.

and take out the loan to say put down on this property. you own 100 % of the building, which is great. you could start to get, where’s my reservoir? Is my reservoir completely dry on the policy side? Or now do I have equity in the building? is that now going to be my reservoir? And if so, am I gonna like…

borrow from the building’s equity to do something when an emergency comes up. And then my wonder is like, is that too complicated? Like I’m borrowing from one lender to buy another asset. But then if I need to, I’ll borrow from that new lender over on this side. So now, now I’m wondering is like, is there a way for this client to go, I have my liquidity over here, maybe I want to use some of it and not own 100 % of the building.

and maybe I wanna go get a mortgage on this building and use other people’s money to start doing that type of thing instead of losing all of my liquidity in the process.

Kyle Pearce: Yeah, 100%. And, know, I just want to make it very explicit for those who are listening. I’m understanding like John, when you’re saying like to own 100 % of the building, like you’re talking about having like 100 % equity in the building, you know, like there’s no other lender. We always like to sort of exactly. It’s like, guess what? When we do have a mortgage, the reality is, like, you don’t own the whole building, even though your name’s on title. It’s like that bank, you know, you’re a business partner with that lender.

Jon Orr: Right. Well, you’ve got the lender over there that you borrowed the money against.

But here’s the nice thing, though, is like there is no lien on the building, right? Like you didn’t register a mortgage to the building to so so technically you own it, you just have a loan over here. So your net, you know, your net worth is no change. But I mean, you still owe that money to the lender of your policy. But but you had the liquidity there to like do that if you needed to.

Kyle Pearce: Exactly, exactly. 100 % so you know and I think you’ve you’ve highlighted exactly where my head goes is I always look at things and you know a quote I don’t know who it’s attributed to but I’ve heard it a number of times being said and it really sticks with me is that you know lenders are amazing at offering you money when you don’t need it but they’re really really bad at lending you money when you do and that is exactly what we don’t want to happen here which brings us back to the idea as to why a

corporate wealth reservoir is so important. You know, this is true personally as well, like our financial wealth and health system is applicable, both corporately and personally, right? Like, personally, it’s like an emergency fund, right? The same would be true if I was buying this and I was an unincorporated individual. I want to keep that liquidity there. I have the same amount of quote unquote debt, but my net worth is the same for now. However,

There’s some other benefits here that we can talk about as to why I might recommend us leveraging the building with a traditional mortgage and only leveraging the policy for the down payment, closing costs and all of those things. And it really is exactly what you’ve alluded to, which is guess what? Where can I get the money from easiest? And the reality is it’s gonna be against your policy because I do have

the actual insurance company that I can go to and say I would like to borrow up to 90 % of the available cash value right now if I’ve already have a policy loan out I can’t take 90 % of what’s already gone so that portion I’ve already you know accounted for I’ve already lent and borrowed but I do have more left over which is really really important because once again why did we have money in GICs in the first time in the first place why did we have money in a

low interest or we’ll call it a high interest savings account, but let’s be honest, they’re all low interest bearing savings accounts. Why is it under the corporate mattress? As we like to say, it’s because we want to have just in case funds. And when I own a building outright, the money is trapped in the walls. And until I get fully underwritten, I will not see that money. And it’s like when cashflow is tight, that’s when they’re going to underrate you. And that’s when they’re going to say, guess what?

it’s not really going to work because you’re too tight because of X, Y or Z. So keeping that liquidity is so key. One other thing that I think is really helpful here is by having that mortgage and I’m going to assume let’s say a 70 % loan to value mortgage. It doesn’t have to be though. It could be 50 % if he wants to keep it lower. It could be any number, but typically 70 % loan to value with at least a 25 year.

amortization on that mortgage. So paying it back over 25 years. By doing so, what you can also do if we buy this building and say a real estate holding company or just the holding company that this individual may have, what we can do is actually have the operating company, lending, not lending, sorry, renting or leasing the building from the holding company. And the part that I like about this is that we can decide on an appropriate lease

and triple net sort of paying for the expenses and all of those details to try to net out, meaning we can have an expense on the operating side because we’re going to pay for all the expenses in the holding company. We’re going to send that over. We’re going to pay the mortgage. We’re going to pay the utilities. We’re going to pay for the insurance and the property tax, all that fun stuff. But we’re actually not going to try to have any profit in that holding company. Why?

because we’re gonna lose 50 % of it to passive income taxes. So we’re really looking for sort of like nice net benefit. We’re gonna get a write-off over here. We’re gonna get no passive income taxes over here. And we also have the interest on that loan that’s easy to write off over in that holding company. Keeping that third party lender there just makes the interest so much more, what we’ll call it trackable and easy to book keep for accounting.

that we know that that interest was attributed to that specific building, is an investment. And therefore, we can actually write off that interest and not have to pay as much in taxation across the operating and the holding company. And we still keep more money in the corporate wealth reservoir for the next investment, for the roof that needs repair, for the air conditioner that goes or

for something in the operating company that we might need as well due to maybe revenue being down or other unexpected expenses that we might run into along the way. I love that strategy and I love that it keeps things going and growing without triggering any unnecessary taxation along.

Jon Orr: Yeah, yeah, I, I do love that that component of of the wealth reservoir and thinking about, you know, utilizing utilizing it to to grow on that on the tech tech side of things, because where I want it what I wanted to comment on was I’m pause here because I had this thought and then it just jumped out as you were finishing your statement. But basically,

Kyle Pearce: I just use the marker button. I don’t know how that works, but.

Jon Orr: You did?I don’t know either. Just give me a sec. Basically what I was going to comment on. was the liquidity. Hmm, like the rent, like, like there was a something about like, the rent, you’re, you’re paying.

All right, say it again. Remind, say some of the words you were saying earlier. It’ll maybe it’ll just jump, it’ll jump back in my mind. Cause I thought it was, it’s going to be important.

Kyle Pearce: I’m gonna say some of the words. Yeah, so I think, what was I saying? So I was just talking about how leasing the space in the building, we could try to keep the lease amount kind of.

similar to what’s being paid to try to limit or minimize passive income taxes while still having liquidity inside the corporate wealth reservoir, which could be used to repair the roof on the building, which could be for the air conditioner, or it could be used for unexpected operating expenses inside the actual business or lower revenues or anything along those lines.

Jon Orr: Hmm. yeah, I think I got it. Okay, here we go. You know, what I think one of the benefits here is that we always talk about like two uses for the same dollar. So because you’re trying to optimize for making, say, a net zero and out of fact on your holding company by kind of making sure those expenses and revenue you’re pulling between the two businesses balance.

you know, I feel like and then also making use of say a third party lender, keeping more money in say the reservoir to, to, you know, optimize maybe, like you said before, another asset or, or your emergency fund, but specifically, like maybe there are other assets that won’t gain or won’t have the same investment return that this one has, like you’re buying the building because you kind of need it. But it’s also, you know, there’s a good investment there. But

part of your strategy might be I want to use a chunk of my reservoir to invest in other assets that are specifically higher return type assets because really when you are you’re buying the building that you’re now going to try to balance out the return on because you’re not going to you know you’re getting some of that so that mortgage pay down so you get some of that you know that that benefit you’re going to get appreciation on the policy but you’re not getting any cash flow inside the business to like balance it because you’re

you’re the tenant. So the return on that investment, especially if you went 100%, like you took all of that reservoir and put it down on the property and said, I don’t need a third party lender. And I’ve used up my whole reservoir, but now I’ve used up my whole reservoir to do other things with like buy other assets with better returns. Like if you went with a 70 % loan to value, all of a sudden the amount that you’ve

you put down on this property might give you a better return against your appreciation long term. But if you went 100 % then, you know, or like 0%, you know, all of a sudden it’s like, your return is not going to be as great. So now you have this reservoir that you could say like, I’m going to use 25 % of the reservoir to do this with now. And I’m going to get two uses of that dollar because I can leverage against that and get a better return than what I was getting on my building.

Kyle Pearce: 100%. I love it. And you know, it’s funny because we, you know, we have a different client, not the same one we’re talking about today, who back in, it was in April, beginning of April, he in the middle of March, he requested a policy loan and I can see that, you know, so when it comes through, it comes through and I, checked in on him because I knew what he wanted to do and he wanted to invest a good chunk of money in just index funds, S and P the cues for NASDAQ.

potentially some Bitcoin when there was a significant drop. And if anyone recalls first quarter of 2025, what we had was a nice big drop of about 20%. And so basically he took this policy loan on this policy that he had that he had been funding for, you know, from the previous year prior, this was also a newer policy. And he took that policy loan to dump it in the market. Now, when I saw him take the policy loan, I did reach out to him and I just said, Hey,

You know, the VIX, which is like the volatility index, is like really high right now. And I just said, you know, just keep an eye on that, you know, and you might want to wait till it starts trending down, but just a perspective, not advice. And you know what? He was like, nah, don’t care, doing it anyway. And he’s like, this is my plan. This is what I plan to do. So we took a chunk, not the whole reservoir, by the way.

And he flopped it down on the S &P. I’m pulling it up on my screen here. If I look at about where he got that policy loan, assuming he pushed it all in that day, he is now up about 22 % on that investment. And we’re talking, we’re recording this in June. So in two months, he’s up 22%. Now, once again, not advice here, not recommendation, nothing here. I’m not suggesting you do that. But to your point, John,

is that if we took our entire corporate wealth reservoir and we utilize the whole thing to buy a building out full cash, I’ve now essentially put myself in a spot where I cannot take advantage of that particular opportunity, which this other entrepreneur actually did. Now, again, he set his corporate wealth reservoir to be there just in case, but also to take advantage of dips. I was like his plan. Love it.

We don’t do a whole lot of that, but I put it in my back pocket as an idea. The next time we see like, what’s the number? Is it 12 % or more dip that you’re willing to leverage a policy, toss it in? Is it 20 %? What’s your number? It’s totally up to you. But the key is you have to have access to that liquidity in order to be able to take advantage of it. And of course, when you do put it in, you can’t expect that you’re going to be up 20 % in the next two months.

it might be the next year or the next two years is still a pretty good return on those funds. So just another example of how keeping the liquidity is so key for the Justin case and the opportunities that maybe you didn’t know were coming your way.

Jon Orr: Yeah, yeah. Some key takeaways here, specifically in for this, this, this scenario, and what we want you to kind of walk away with is, is that this client, you know, had a clear vision, you know, their, their vision of their, their wealth plan was, was clear. We helped that clarity as well, so that we could establish the stage two component, which is your corporate wealth reservoir. And, and we proactively installed this.

for this client so that they could have access to this capital, which give them flexibility. It gave him flexibility in making this decision earlier than what was anticipated because we had access there. Then we kind of strategically guided how to best use that corporate reservoir to make appropriate decisions, which is really stage three, which is really optimizing your structures. I have now this really important structure, whole life, corporately owned whole life policy that we’ve

outlined many, many benefits on previous episodes, specifically here today too, allowed this client to be flexible in deciding I could go over here for this type of loan, I could do this this way, I could use it this way. You’ve created, this is the nice thing about this type of structure and tool for your corporate owned reservoir, your wealth reservoir is that it gives you a ton of flexibility.

And so then those three stages of a healthy wealth planning system, this client is utilizing, making use of, and it’s because they had that vision early on that process. Kyle, any other big takeaways you want our listener here to walk away with from this case study?

Kyle Pearce: I think one of the big pieces is it’s really easy specifically for really busy individuals. The more successful you are, whether you’re a T4 employee, high income earner, whether you’re an incorporated business owner, there’s these phases in life where you get into plan mode. But unfortunately, it can be very, very quick, and it can be fleeting. And with this particular individual,

You’ll notice it’s like we started these conversations back in early 2024. We had planned this out. Plans change and sometimes they change quickly. It’s being nimble and it’s having a team on your side. And it doesn’t have to be us. It could be other people that you’re working with, but you have to find folks that you know, like you trust and…

You have to have a plan. can’t just be one phone call or one meeting and sort of set off to the races and we’ll come back to it five or 10 years from now. You’re sure to have changes along the way that are going to impact and influence things. This is a learning journey. And I think the part that I think is so critical and key for this particular client is that they haven’t sort of arrived, you know, they haven’t sort of gone like, okay, I’ve done what I need to do. And now I’m done doing the thinking about this work.

This is part of the work. Part of the work in a business is to continue growing, planning, and building that business. The same is true in our wealth planning. We have to be coming back to it and we have to be utilizing and sharing those changes with those you’re working with so that we can help craft and modify plans as we go so that you have the best chance of reaching success, whatever success looks like for you.

Jon Orr: If you want to structure, set up, get guidance around your wealth reservoir specifically, reach out to us at canadianwealthsecrets.com forward slash discovery. That’s canadianwealthsecrets.com forward slash discovery. We’ll hop on a quick discovery call and discovery meeting to assess, you know, where you are on your financial planning journey. And then we’re going to talk about that structure, that corporate wealth structure as a pivotal tool that you can be using.

to keep yourself nimble and keep yourself flexible. Also, if you want to learn more about those four stages of your wealth planning journey, then head on over to CanadianWealthSecrets.com.

Kyle Pearce: Just as a reminder, Kyle is a licensed life and accident and sickness agent with Canadian Wealth Secrets Incorporated. And a reminder, this is not investment advice. It is not legal tax, accounting, financial, or any other advice. is for entertainment and education purposes only.

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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