Episode 141: Why This Asset is the Core of Safe and Flexible Wealth Building Strategies

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Are you missing out on one of the most powerful financial tools available to Canadian investors and business owners? Many dismiss whole life insurance as just another expense, but what if it could actually be the foundation of your wealth-building strategy?

If you’ve ever wondered how to build wealth while maintaining flexibility and security, this episode will change the way you think about financial planning. Many investors focus solely on stocks, real estate, or businesses—without realizing that properly structured whole life insurance can enhance all these strategies. The truth is, this asset class isn’t just about protection; it’s about leveraging, compounding, and optimizing your financial future.

In this episode, Kyle and Jon break down why whole life insurance is at the core of their wealth-building philosophy and why it should be on your radar too. They address common misconceptions, explain how this tool fits into a broader investment strategy, and reveal why so many of Canada’s wealthiest individuals and business owners use it to protect and accelerate their financial growth.

By tuning in, you’ll learn:

✅ Why whole life insurance isn’t an “either-or” choice but a strategic enhancer for your investment portfolio.
✅ How to leverage this asset class to safely compound your wealth while maintaining liquidity and flexibility.
✅ The game-changing tax advantages available to incorporated business owners that can help supercharge long-term financial success.

Don’t miss this chance to rethink your financial strategy—hit play now and discover why whole life insurance might be the missing piece in your wealth-building journey!

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.

Building wealth isn’t just about earning more—it’s about using the right financial tools to create a solid, long-term strategy. A properly structured whole life policy is more than insurance; it’s a reliable foundation for your financial planning, offering guaranteed growth, tax advantages, and cash value that’s accessible when needed. It stands the test of time (longevity), simplifies wealth-building (complexity), and provides flexibility (optionality) for everything from emergencies to investments and estate planning. By committing to a tool like this, you’re not just planning for today—you’re building a wealth strategy designed to thrive for generations.

Transcript:

Kyle Pearce: Hey there, Canadian wealth secret seekers. Today, Jon and I are gonna be digging in to chat about why permanent insurance, why this asset class? And some of you may be thinking it, we even saw a review recently on the podcast platform. Someone said all they talk about is insurance. And the reality is that that’s one of our main goals here is to actually help inform people.

as to why this asset class is so important. So in this episode, we’re actually gonna unpack why we talk about it so much and why it’s at the core of our investment philosophy and wealth building philosophy and journey and why we believe it should be in yours as well. And we’re gonna unpack some of the hairy truths, but also some of the things that I think are gonna maybe blow your mind a little bit as to why this particular asset class is.

so unique and so helpful in helping us get past those early stages or phases of wealth building and to get into that third and fourth stage where we’re actually looking to protect that pile. So here we go.

Jon Orr: Kyle, let’s get into this because when we first got that message…into the life insurance world. And I think where this came from is we have our masterclass on how to create cash flow inside your corporation that was essentially tax free and how to structure that. And that was one of our goals to create. And this is where we went down the pathway, is how to tax efficiencies so that our business could flourish and our personal lives could flourish.

and we came across this structure and we put it into place and now we’re helping other people put this into place as well. And I think when I saw that message, it was kind of like, I think we’re getting caught up in the, you’re missing the point of like where you’re trying to get to. It’s like, do you want to get to the place where you’re financially free and you’ve created a structure that allows you to do many things and not kind of.

pigeon you a hole into one thing or one thing only. And I think we people think that that’s what it’s happening. It’s like, oh, I have this bad image of life insurance, but tell me if it’s because in a way, it’s like, want to get to this destination, which is like, not having to worry about where my financial future is and financially free. And I want to be able to do this. And I want to be able to do this. And I want to be able to invest in this type of asset class. And I want to do this. And it’s like, tell me another structure, because I’ll go there.

tell me another structure that it does the things that it does so that we can achieve our goals, then I will go over there. Because it’s like, I’m trying, you the way that this person is envisioning it is like, I wanna get to this destination. Like I wanna travel across the country. It’s a long trip to get over there. But I don’t wanna drive in that car, because I don’t like that car. Instead of going like, you’re, right, it’s like, it’s a bad car. And saying, I’m not gonna ride in that car.

Kyle Pearce: Or I’ve been told it’s a bad car, you know?

Jon Orr: but I still wanna go over there, but this car over here is the better car. It’s like, you’re missing the point. Like, do you wanna get to the destination or not? And have say the right experiences along the way so that you get there faster, you get there stronger. Like that’s why we choose this. So tell me a different car and I’ll go in that car. But right now there’s not a different car that I’m looking at because I can’t find a better.

Kyle Pearce: 100%. And I’ll be honest, as the resident fact finder here, folks know this. And if you go back to our, Don’t Work Against Your Instincts episode way back in 2023, we recorded that. I am the type of person that wants to go and overturn every stone in order to really understand what’s happening and how we can do things better.

You know, the straight up answer is someone who’s coming in and they think it’s like insurance instead of investing in X, Y, or Z. It’s the wrong approach. Like, of course, they are absolutely correct. That is not why we’re utilizing insurance in this regard. We’re utilizing it as an enhancer, as an optimizer. you know, looking at, you know, stocks being the easy one, you’re going to get better returns on equities, you know? So if you go equities,

or you go insurance, and that is the big debate that you’re having, not a good move. Now, mind you, if you’re going, well, listen, I have a fixed income portion of my portfolio, and I don’t want it to potentially go down, because bonds are very volatile. If you do the research and you actually had 100 % bond portfolio, they’re actually much more volatile because of interest rates and inflation environments than even a stock portfolio, right? Not only do they give you poor returns, but they also go up and down quite dramatically over

time. So, you know, when we’re looking at what it is we’re trying to achieve, really, you know, we need to end the learning if it’s an either or mentality. But for those people are looking for, hey, I want to build a base, a foundation that I could utilize as a leaping pad or a launching pad to do other types of investing.

Right? So where this is most attractive for most people is those real estate, you know, seekers, right? Those people they know leverage is important. It’s very helpful. So for real estate investors, this is becomes very no brainer for them because there’s this home base. And the beautiful part is, is that you could do it with any investment class. If you’re confident in what it is that you’re trying to achieve, right? Whether you’re going to use ETFs in the stock market or

whether you’re going to open a business or whether you’re going to do any of those things. If you’re going to do more than just putting in a small amount into some random investment that the bankers going to do for you, if you want more than that, that’s where this journey comes into play. And of course, for those who have done our incorporated business owners masterclass, you’ll know that it’s mind blowing how much better it is inside of a corporate structure as well. So

We’re speaking to both sides here. We’re talking to people that are looking to do really, really interesting and creative things on the wealth building journey personally, but then also for anyone who’s incorporated specifically those incorporated active business owners, those people who are earning at that low income tax rate inside the corporate structure. There’s so many things that we can do inside of the corporation to supercharge your net worth, but also

your estate value over time. And here’s the nuance, though. I’m telling you, we can do a lot of the same things with other assets. We talk about conservative leverage. The problem is that it doesn’t end well for most of these other assets, which is why this is essentially the perfect tool for the conservative leverage strategies that we suggest people consider in all of our past episodes.

Jon Orr: Yeah.Right, it’s not, you said it clearly, it’s not an or asset, like do this or this, it’s an and asset. And if you are truly trying to compound your wealth, then you do need to consider what and asset you’re using to do that, because that’s how compound effects work. So for example, if you’re not going to use life insurance and you’re going to use another asset class to try to compound your wealth,

and use the leverage on those other assets to say invest in the stock market. for example, let’s say I own a number of real estate properties and I’ve got equity in those properties. And I’m gonna be like, how do I compound my wealth now? Like I know that this is operating like a machine and I’m building some equity up over here, but how do I not use, like how do I make use of the debt equity that’s sitting over there?

you know, like personally, we would say like, let’s, let’s make, let’s leverage that debt equity to do something with. So technically you could say like, I’m going to compound the and asset there and use my equity to take that and now use the leverage against that, right? You’re not selling the properties you’re leveraging against those properties to now go invest in another asset. This is how people use their debt equity to buy more assets in that same class. But let’s say you didn’t want to use that.

You wanted to all of a sudden go over here to a different class. It’s like, can I leverage that and go into the stock market? All right, I could. It is an and asset in that case. But then let’s consider what happens if I do that. Kyle, what are some of the, you know, the worries there about going like, let me just borrow against my property to go into the stock market to make sure I’m compounding here. And how is that different than say using that foundational strategy that uses life insurance?

Kyle Pearce: 100%. So if we’re comparing straight up, let’s say I put $1 into real estate and I want to leverage that dollar versus putting $1 into a permanent insurance policy, very, very specifically structured to have a high cash value, of course, when we compare them, let’s talk about real estate for a minute. Well, first of all, you will never be able to get all of the dollars from the real estate. Now, one benefit, right? And I say never. You could, of course, go to private lending.

Jon Orr: What do mean by that? What do you mean by all the dollars?

Kyle Pearce: If I go to a typical lender, right? And if you own that property personally, let’s talk personally for a second, it’s a little easier to go this route. You can go and request a mortgage or a line of credit on that investment property. And if all the numbers, you know, check out and everything’s good, then they might give you up to say 80%, maybe less depending on what the cashflow numbers of that real estate look like. Now,

There’s a reason why they do that and they do it because of market volatility, even though real estate generally goes up, even though the stock market generally goes up. The reality is like what we saw in the past couple of years, especially in the GTA and in Vancouver and other big cities, you see that sometimes you think your assets worth one thing and then suddenly it’s not anymore, right? Now it doesn’t mean it’s never gonna be worth that again or it’s never gonna grow again.

but it puts you in a tough spot. So they give you a certain amount of the value that you can then go and put into whatever it is you want. You can put it into the stock market. You can buy other real estate. A lot of people do this with real estate. They take equity and then they roll it into the next property, right? But there are risks there. There’s inherent risks. And I’m not suggesting not to do that, because Matt and I, we just refinanced two duplexes. This was back in November, right?

We haven’t bought any properties with that money yet, but it’s ready to go. But something we did is we actually funneled it through a policy first before we’re going to put it into the next business activity. But here’s what could go wrong. Let’s say I take that dollar from that real estate property and I put it in the next investment. Let’s say it’s the stock market. I put it in there. That’s fine. But as we see, sometimes the markets can

be volatile. And that means that not only can the property go down in value, but also the market might go down in value at the very same time. So this could be very problematic. Whereas if we take that dollar from the insurance contract and we leverage that dollar, we like to call that conservative leverage because it is backed by an asset that will not go down in value.

So if I got a dollar, and let’s pretend that dollar was 100 % of what that policy’s worth today, I got 100 % of its value, the cash value we call it, and I invested in the market, the market might still go down, but I know that my policy has not. That is one thing that we’re getting. That’s why we call that more of a foundational asset. We’re not suggesting that we don’t leverage real estate to buy other assets or we don’t, you know,

I’m not going to say it on the stock portfolio because I don’t think I would leverage my stock portfolio to go buy more stock or to go buy more real estate just because of the volatility. Not to mention that if it was the stock market or the stock portfolio, you’re probably going to get significantly less cash value or loan value or loan to value on that asset. Then you would say a permanent insurance contract. Now,

We’re just talking about getting the money and the volatility of these things, but it doesn’t end there where the risk sort of, you know, sticks around when we leverage certain assets in order to buy other assets, because it definitely can get even worse.

Jon Orr: You’re clearly leading into something, but I don’t know what you’re leading into.

Kyle Pearce: I thought you were going to take the ball and run. So this is where if we were to pass on or when we pass on or when we sell, to mean that there are potentially capital gains. So I’ll let you set it up and then I can give it a specific example.

Jon Orr: Yeah, now here’s the other, another thing about comparing those two assets is if you think about leveraging against your real estate portfolio and, you know, let’s say you hold this real estate portfolio because it’s your foundational asset that you’re using to leverage against to grow this other asset and maybe you’re gonna live off the proceeds of the other asset and say into your twilight years, you know, but what,

What’s happening is because you’re leveraging, okay, yeah, you’ve got some interest there to pay for. And all of a sudden, you’re counting for the fact that the equity in the homes, the value of those homes have gone up enough to cover, say, that leverage. These are great strategies when you have that foundational asset. But let’s say your plan is that, say, when we need to liquidate our assets, that will cover, say, any loans against, you know, we’ll…

know, sell the asset will pay off the loan and that boom, we’ve got we got the other asset over here. Great. Great. And maybe we do that at death or maybe we do that when we when we pass on or when we pass on or maybe we do that when we just start liquidating. But what’s going to happen right is like, even if let’s say I liquidate, you know, in a few years, it’s because of your let’s let’s not even think about market volatility for a sec. Well, what’s going to happen is the the day you go to sell that property, it’s going to

like your portfolio is going to decrease because you got to sell it. There’s fees associated with selling it. But then all of a sudden now you’ve got you could be underwater and it appreciated over that time. Like you could still be underwater just on the sale of that. And you got taxes to pay because of capital gains taxes. Like you still could be underwater the day you sell it because you’ve been leveraged against it to buy this other asset. Now, when you

I was going to say, like, let’s say you don’t sell it and you and when you pass on, then maybe you’re at your your state forces the sale and then that you’re still underwater. And all of sudden now there’s probate and all that kind of stuff has to like decrease that value. But in the other side, if you use the foundational asset of life insurance to leverage and do the same things you were going to do with your debt equity and your in your real estate portfolio so that you can compound your your wealth, then when you pass on

that asset explodes in value because of the contract you’ve set up. So like all of sudden it’s not worth less, it’s worth way more. And that worth way more is more than enough to pay off any sort of loan balance. So you’re never going to be under, like you’re never going to be underwater.

Kyle Pearce: 100%, 100%. Now, I want to give you an example here, and we’ll use some numbers, because this is possible. I explained that Matt and I just did a refinance on two duplexes. And we’ve already done a refinance once on both of those properties as well. So this is the second time we’ve done it. So we bought the property for a certain amount.

And of course, it has gone up in value. And we also had mortgage pay down from the actual renter paying the actual rent every month. And that’s paying down principal. So we have this money that is debt equity that we want to pull out of that property. So we did exactly that. Now, these aren’t the actual numbers. But I want to make them very, very clear for you. What would happen if, let’s say, the property is worth $1 million?

All right, it’s worth a million dollars. And we were able, let’s say, to get 80 % loan to value. So we’re able to get $800,000 out of that property. All right? And let’s assume, though, that the capital gain is something massive. And I’m going to pretend I wouldn’t have bought this for $1, of course. But let’s pretend the capital gain on this property is a million in this case, even though it could be a little less. I just want to keep the math easier.

If we have to pay about 25 % in tax on the capital gains, this property, if I sold it, would put about $750 in my pocket. And yet, I owe $800 on the property. So we’re doing very simple math here. We’re rounding a little bit here as well. But this can happen, where if we’re doing this sort of refinance, get the debt equity out, and then putting it into whatever

else we want to do or even just using it for lifestyle because that’s a lot what a lot of people have in mind, right? They go, well, I could either sell property, which means I’m losing capital gains. I’m realizing those gains and losing it now. Or I can refinance pay a small amount of interest, keep the properties, let the tenants continue to pay things down over time and I can live and everything’s going to be great. But guess what? When I sell or when I pass on my net worth goes down.

and the estate value goes down because of that. And it’s possible that we actually don’t have enough money. Now, of course, if you’re responsible, you probably are gonna have enough money, but there probably need to be some additional actual sales in order to address those challenges. Whereas, had we used something like an insurance, I say something like, it’s the only thing that we can do this with. That’s why we talk about this asset class.

the only asset class that I can leverage 100 % of today’s value from some lenders. Some might even allow you to do more, right? If you collateralize other things as well. But let’s just assume 100 % of the cash value. I put a dollar in and I’m able to leverage that and put it into these other assets. What I get down the road is something very different. It’s the only asset that is worth more when I pass on than it was when

I was alive. Every other asset is probably going to be worth even if it’s a little less like your primary residence is going to be worth a little less. Why? Because you got to sell it. You got to pay those costs. You know, there’s no tax, but you’re still going to to sell this thing. If you do the same thing with your tax free savings account, if you sell everything, sure, there’s like brokerage costs and so forth. It’s probably going to be worth fairly similar to what it’s worth the day before you pass on, but it doesn’t get bigger.

And this is where we call this conservative leverage because this is our home base. This is our foundation where we can put dollars in. We can utilize those dollars while we’re in the accumulation phase, while we’re trying to grow the pile. We are going to put those dollars to use elsewhere. We are not going to just leave those dollars here and let them do their thing unless you’re a really conservative investor. Like if you were going to do GICs anyway, then sure have adder.

But for most people listening to this, you’re looking to do more optimizing into your portfolio. This is the only reason why we are utilizing insurance. And it’s the only reason why we decided to start doing this and helping others to do the same thing, because it took you and I, John, over 10 years in order for us to get confident enough to know what it was that we were doing, to make sure it was the right move. Because just like that email that you mentioned at the top of the episode,

That was the same email I was sending to people early in my journey, right? Because you know me, I’m as cheap as they come. I am not willing to put money into something unless I fully understand it. And that’s really why we work so hard to try to educate the Canadian Well Secrets community so that they know that exactly what this tool is, when it’s helpful and when it’s not.

Like you said, if it’s an ore asset for you, it’s probably not that helpful for you. But if you are gonna be doing some of this other type of wealth creation, if you are looking to optimize, then it is, it will become a no-brainer for you. And for those who are owning businesses, if you’re willing to do the learning, you will learn that this is a no-brainer specifically for you on the corporate side.

Jon Orr: Now you’ve clearly pointed out a few things that we take into account when we’re looking for this type of compounding growth with. So as we talked about, you know, this nice balance between growth and safety, you talked about this asset class grows every day and it does not go backwards, which adds to the safety aspect for us. This is why we choose this asset to leverage against versus other assets. The leveraging component helps us with the other component of what we look for, which is liquidity. How do we stay liquid so that we can invest when we need to invest?

How do we, how do we, when we ready to buy, you know, this particular real estate deal, because there’s a good value, we can move when there’s value. Liquidity is important to us so that we can do the things we need to do to grow and be safe at the same time. If we want to grow our business, we want to be liquid enough to be able to invest in say, this move over here or this move over here so the business can grow. So liquidity, growth, safety, extremely important to us when we’re say thinking about our strategies.

Now the other component here is flexibility, which kind of goes hand in hand with liquidity. If you’re going to be having liquid funds, if you’re going to do the compounding effect, you have to use leverage. And so if you don’t use leverage because you want liquidity and you’re going to use your stocks, you’re interrupting your compounding period, right? Like, I’m going to sell stocks to go buy this other thing over here. Now all of a sudden you’ve decreased your portfolio to move it over here. You’ve interrupted the compounding growth of your asset.

If you sell properties to do that, you’ve done the exact same thing. you’ve missed on some of the compounding effect, which is why we focus in on liquidity and the leverage. But when you think about if you’re going to leverage, then also you want flexibility in your leverage. So if I’m going to leverage against my existing properties, you painted a nice picture, Kyle, of saying going to the lender and asking permission.

to borrow your money, right? Like they are like, let’s look to see if you can pay us back. Let’s look to make sure that you can do this. Like let’s send me everything under the sun to see if we’ll approve you to lend your money back to you. This is what lenders do. if you were gonna do that against your, let’s say you’re gonna do the reverse and you were going to use your investment portfolio to do that and you found a lender to lend against that, they’re gonna do that even more.

Right, so when you think about your flexibility, if you use your foundational asset class and let’s say you use the policy loan, you go to the policy loan holder and say, send me some money. And they say, no problem, here you go. Right, and it’s like, allows us to stay flexible so that we can use that liquidity in the ways that we want to balance between growth and safety.

Kyle Pearce: 100 % and you know the part I want people to do like it’s hard to see this especially when you’re earlier in the journey or maybe you’re like halfway up that mountain right and it seems like a big mountain the the wealth building mountain that you’re on and for most people let’s be honest when we are working to build up this pile and you know I’m picturing you climb in this mountain and you get sort of you know to the top of that mountain

Now that’s probably financial independence for a lot of people, right? Doesn’t matter what the number is. It’s like, whatever that is for you, where you get to this place where you go, man, I worked hard to get to the top of this mountain. I have a lot to show for it. The one thing that a lot of people do when they get to that place is they start to think about how can I work less? And when I say work less, I’m talking about like the thinking that you’re doing. It means,

You’ve actually accomplished this massive goal. You’ve built your pile and you’re more in instead of just saying like I’m now just going to spend this pile because most people don’t want that. Nobody wants to get to the top of the mountain and go man. I can’t wait to see this pile turn into nothing by the time I leave this place. Usually what they want to do is they’re like how can I enjoy where I am without seeing the pile like disappear in huge chunks all at once?

So what people tend to do is they start to get a little less risk on and they become more risk off. And when you have this foundation in place already, you are able to then take some of the risk on that you have, because you have this big pile and you can find different ways to go, you know what, I’m gonna leave more of this money in the risk off pile. That’s the foundational asset that might be paying back.

some of these loans against your insurance that you had utilized to help you grow this big policy or this big pile, I should say. Now you have this large policy. This policy is going to continue to grow conservatively for the remainder of your life. And it really gives you more of a license to spend more while you’re here because you know that down the road, this big old foundational asset is going to pay out and it’s going to pay out a large sum of money, which will

ensure that your estate or your legacy can be maintained. I have yet to meet a client, John. Last year alone, I met with over 1,000 clients throughout the year. We’ve been on calls a lot. And not once have I heard someone say, I want to legit have no money when I leave. They might say that the estate doesn’t matter to them. I’ve heard people say that.

but very rarely do you find someone who’s like, want to make sure I leave here with nothing less, like with nothing left. I would argue that that’s probably a person out there is, is, is thinking that. And they’re like, yep, I’m all all in. It’s probably a very, very, very small percentage of the population. The rest of people would rather know that they’re good and they’d love to see that pile either stay consistent or actually slowly increase over time as well.

They don’t like to see the pile go up and down and up and down and up and down and feel like one year I’m here, one year I’m there. What they tend to do as we get older, whether you like it or not, we get more conservative. And that’s why all the research suggests that as we get older, people start to do more risk off things. These aren’t financial advisors telling them to do it. It’s them saying, I don’t want to wake up stressed out anymore. And that…

is something that you gain when you design this wealth building journey, as we’re describing that you cannot get from any other asset class, even though your real estate portfolio could be massive, that’s still not going to solve the problems that you will run into inevitably as you get older. And therefore we advocate that this is truly a massive, massive win for you.

your family, your portfolio, ultimately your legacy, whether you like legacy or not, that is why insurance is the fundamental asset for us that we leverage in order to get us more and closer to our wealth building goals. So friends, if you haven’t yet, head on over to canadianwealthsecrets.com forward slash discovery. If you’re interested in hopping on a discovery call to talk to us about how this may

suit you in your investment journey? Hey, just so you know, some of you, it might not match your investment journey if you are not gonna use leverage. But for those who are, awesome. If you’re an incorporated business owner, note that you definitely want to learn more at minimum about what corporate owned life insurance can do for you, your business and your family, as well as creating tax optimization. Head on over to Canadianwealthsecrets.com forward slash masterclass to take the free masterclass. today.

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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