Episode 190: Turning Idle Cash into a Wealth Engine with Infinite Banking

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What do you do when you’re doing everything “right” financially for your Canadian retirement—yet something still feels off?

Ryan is a disciplined, high-earning young professional who’s bought real estate, maxed investment accounts, and avoided lifestyle creep—yet he’s starting to wonder if his current approach is really setting him up for long-term financial flexibility and freedom. Like many Canadians, he’s wrestling with hidden inefficiencies, unclear next steps, and questions about how to truly optimize what he’s already built. Whether it’s poor product design, overexposure to equities, or cash sitting idle, this episode uncovers where even smart strategies can fall short.

You’ll discover:

• How to rethink emergency funds and idle capital as tools for opportunity, not just security
• Why portfolio structure—not just growth—matters for future retirement planning flexibility and tax efficiency
• What makes a high early cash value life insurance policy a powerful wealth planning asset (and how to avoid poor designs)

If you’ve been curious about high early cash value participating whole life insurance, this episode breaks down how it can function as both a safety net and a strategic asset. We also explore how infinite banking whole life insurance can be layered into a broader retirement plan, complementing traditional vehicles like RRSPs—especially for those with growing incomes and defined contribution pensions. It’s all about balancing liquidity, tax efficiency, and future opportunity.

Press play to learn how to fine-tune your financial foundation into a system that’s resilient, accessible, and built for the long haul.

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 financial freedom in Canada isn’t just about saving—it’s about structuring your wealth to work harder. In this episode, we explore how high-earning professionals and real estate investors can transform idle cash into a powerful, tax-efficient asset using infinite banking whole life insurance and high early cash value participating whole life policies. Whether you’re maxing your RRSP, building equity, or sitting on unused savings, we’ll show you how to align your retirement plan with long-term flexibility and liquidity. Discover how to use insurance as an “opportunity fund,” support future real estate moves, and avoid common pitfalls in policy design. This is about making your money accessible, resilient, and ready when it matters most.

Transcript:

Hey, hey there, Canadian wealth secret seekers. Today’s story is all about a young professional who’s doing so much right. This person’s approaching 30, already owns their own home, even picked up a rental property only a few years after picking up that primary residence, and has been investing consistently since they were in their early 20s. Their income?

between about $130,000 and $200,000, depending on overtime and extra projects. And on paper, that looks like a dream start. Now, here’s the catch. Even when you’re disciplined, motivated, and earning a strong income, you can still hit roadblocks along the way.

Maybe it’s locking money into vehicles that don’t give you the flexibility you thought they would. Maybe it’s sitting on cash because you’re not sure where to put it. Or maybe it’s realizing your portfolio is tilted way too far in one direction. And those are the kinds of things that Ryan, we’re going to call them Ryan on this episode anyway, is wrestling with currently. They’ve been diligent with saving through workplace programs, a defined contribution program.

into their RRSP’s and other investments. But now he’s asking a bigger question. How do I actually optimize what I built so far so that it supports me into the future and will really give them the financial future that they’re after? And that’s the part that really stood out to us in this conversation. It’s not about starting from scratch. It’s about fine tuning.

taking what’s already working, recognizing the gaps and then adjusting so your money is not only growing, but also accessible and resilient when life throws its curve balls. So in this episode, we’re going to unpack Ryan’s journey, the challenges he’s uncovered along the way and the steps we explored together to help him move from just doing all the right things, quote unquote, to actually building a wealth system that works.

So if you’ve ever wondered whether the strategies you’re using today are the ones that will carry you through tomorrow, you’re gonna wanna stick around for this one. So let’s dig in. So as mentioned here, we’ve got Ryan approaching 30, has been doing a lot of amazing things. And actually Ryan reached out to us because he wanted to sort of get a sense as to what he should be doing next. As I’ve already mentioned,

contributing to a defined contribution plan through work, which essentially is partially forced. They also have like a match plan in their RRSP and the more they put into their own RRSP is the more they’re going to match it. And they even have a bit of a stock program through the employer, which is fantastic. His portfolio is very equity heavy, which is great, especially at this particular age, right? Is approaching 30 is actually single. So

you know, no partner currently, no dependence as well, and has a long time horizon before he’s really thinking about, you know, pulling retirement income of any sort. Now, you know, I think on the call, he didn’t explicitly say this, but ultimately, I think we’ve all would like to sooner than later get to that place where we can feel as though we have financial freedom.

But it doesn’t sound like there’s any sort of rush to get out of working. Seems to enjoy what he does and really is enjoying investing along the way. As I mentioned, they also picked up a rental property, which is great. So we see diversification here across the board. We see diversification across buckets. So there’s the RRSP. He’s done a great job with tax-free savings as well. I don’t think I’ve mentioned that yet.

Also has unregistered, an unregistered account as well. So he’s doing an awesome job whenever he’s picking up that extra money each and every year. As I mentioned, he’s got kind of like a base salary in the 130s and he can make all the way up to around 200,000. It’s not letting lifestyle creep sort of come in and sort of take that money and then essentially just let it fly out the window. He’s doing a lot of great things here. Now.

He did ask specifically about whether it’s worth it for him to consider adding in a high cash value whole life policy. Interestingly enough, before buying that primary residence back in the early 20s, when he was in his early 20s, he actually wanted to get some insurance so that there was no issue with paying off the mortgage at that time. And at the time, he had actually taken kind of like a hybrid insurance plan.

We do a lot of these, especially for younger folks that are starting out that do want to have some term insurance and need term insurance, but also want to start building up cash value at the same time. I like to call a hybrid cash value policy or plan for those who are younger, those who are maybe single or have no dependents and aren’t really like hugely concerned about death benefit at this time, but they do know that down the road they might have a partner, they might have kids.

and they just think to themselves that if I’m gonna be putting money into term insurance, it’d be great if I know that I’m gonna get this money back or maybe even more. We can do hybrid plans that will actually take term and it’ll kind of marry it with a high early cash value policy. And basically we kind of turn the knob so that essentially you can almost create a term policy that you…

are going to pay. You’re going to pay a little bit more upfront for this, but you know that this money is coming back to you through cash value. Now, for folks who are just starting out and are in a cash flow crunch, we’re not going to recommend that for someone. So for example, if they’re finding it difficult to pay for just a simple term policy, let’s say they’re looking for $500,000 of death benefit, and let’s say it’s $40 a month because they’re really young. And it might even be cheaper, to be honest. It might be cheaper than that.

depending on the age and they’re finding that to be like kind of a crunch on the budget, doing a hybrid high cash value plan’s not gonna be a good move. Well, what ended up happening here for Ryan is that actually the agent that he was working with didn’t recognize that there was an opportunity here for him to do a hybrid that wouldn’t just get him a permanent death benefit down the road, but actually would get them high cash value. So what they actually did is,

sort of one of these hybrid plans that I’m discussing, they married them and that gave him permanent insurance, which is nice. But the problem is, is that it was a 20 pay policy that he’s now in year seven of, and the cash value is still only at about a quarter of what he’s put in. So to me, that’s not a great policy design. And especially for someone who is young, who is single and has no dependence, that’s not really the right design. Now,

You know, we both agreed, Ryan agreed that maybe he wasn’t clear at the time as to what his real goals were. And obviously this is where I think the advisor should be asking more questions about this. And they should be knowledgeable to know that there’s some other ways that we can do this. At that time, I would have probably just suggested term for Ryan at the time or doing some sort of hybrid that would get him high early cash value sooner.

because again, he did have a little bit of extra money in this budget and it wasn’t gonna restrict him from investing in other assets like he’s done today. So at the end of the day, he’s still got this policy. He’s sort of wondering if he should cancel this thing. You we’ve discussed it. If he does, there’s kind of the sunk cost issue. He’s in year seven, he’s contributed, I’m gonna call it around $7,000 into this policy and it’s only worth about like $3,000. So like there’s gonna be a loss there. However,

He’s still got like another 13 years on this policy to pay into. Now you will get the permanent insurance. It will eventually at a break even point, but again, it’s just not a great design is actually started in a really rough spot here. Had we caught this early enough, we might’ve been able to just like cut ties real quick and design something a little bit better. Now at this stage, because he’s got his diversified buckets, Ryan was asking whether it’s worth it for him to consider getting a

actual high early cash value policy designed. to be honest, at the onset of the conversation, sort of I asked a lot of questions because I was leaning towards actually saying like, you know what, you don’t really need it. And you don’t really, you know, need to take any of this additional cash and put it towards something that’s going to act like a fixed income type asset or bucket in your portfolio. It’s pretty much all equities in the stock market.

He does have a rental property though. And that’s where I kind of went and I said, you know, is there a possibility that you might want to buy more real estate over the next handful of years? Like, is that something you might consider? He’s definitely said, yes. So having access to capital could make sense here. Now we could look at other options, right? You know, whether he has a home equity line of credit he might be willing to borrow against or something like that.

So I was still sort of on the fence here going, OK, let’s dig a little bit deeper. And as we went down the rabbit hole in his unregistered account, the part that he never shared with me is whether he had an emergency fund or not. So I had asked him straight up, Ryan, do you have any sort of money sitting on the sidelines for emergencies? And he said, actually, yes, I do. In his unregistered account, or non-registered account, I should say.

He has a essentially an ETF that acts much like a high interest savings account. He said it has been doing pretty much a whole bunch of nothing. Once again, since it’s in a non registered account as well, he’d actually has to pay tax on any of the interest that he’s actually earning as well. So he’s sorta, you know, feeling like it’s sitting there. He doesn’t like the idea of just sitting there, but he has been really looking towards the idea of high early cash value policies for the leverage ability for the tax free growth.

and for the opportunity to use it as an opportunity bucket. So this is where my wheels started turning with Ryan. So the biggest thing for Ryan, I didn’t want to see him redirecting funds that he’s already contributing to his RSPs, his tax-free savings, and the defined contribution pension plan. Now, the defined contribution pension plan, can’t really do anything about it anyway. part of, it comes off as paycheck anyway.

But right now, he’d been paying around or putting around 15 % of his annual income into his RRSP because he had some room from prior years when he wasn’t using it. And I really like that idea, especially for someone like his self. However, he was concerned. He’s like, if he does get or grow over time too much RRSP, a portfolio that’s too large,

He was concerned about the potential risk down the road of potentially income taxes going up and really getting hammered, taking money out, especially when he already has a defined contribution pension plan. So our wheels got turning. We looked to this emergency fund, which he had about $30,000 there in this high interest ETF, essentially sitting there, not really doing a whole lot. I said, you know what, there’s an opportunity here.

for you over the next five or so years. It doesn’t have to be exactly five, but we used five as an example to slowly shift in and create a policy that’s high early cash value, meaning it’s going to have optional premium that we can overfund to take some of that money and put it into a policy over. And we were looking at a five year runway. The reason I picked a five year runway is with a lot of insurers out there, the earliest offset point

based on the current dividend scale that they’re paying is around five years. So what this would allow him to do, since he has about $30,000 over there sitting in an emergency fund for these just in case scenarios, he would over five years take about $6,000 per year. We could always backdate the policy as well if he wants to get more in upfront and so on and so forth, but we’re gonna take $6,000, put it.

into a policy that’s essentially just going to shift his emergency fund from this ETF into essentially a tax-free version of the same thing that he can leverage if an emergency does happen. So we want to suggest that an emergency isn’t likely to happen, right? Just like when we buy term insurance, it’s unlikely we’re going to pass away. Now, it’s probably a higher chance that an emergency, a financial emergency, will come than, say, dying earlier than the average age.

However, by shifting this over, it allows him to kind of hit two birds with one stone without sacrificing any of those additional dollars that he’s contributing to his RRSP, to his tax-free savings, and to the unregistered account to go into equities. And it also creates this opportunity that after five years, he’s gonna have essentially all $30,000 over here in the policy.

By year five, he will at least be at the breakeven point on cash value, meaning he’s now in kind of the same boat. However, every dollar from that point on that he chooses to put into this policy is going to give him more than a dollar back of cash value that he can leverage for emergencies or by about year five, assuming he still only needs around 30,000. I would argue he probably wants to have more on the side as you get older and as you continue to.

to grow your salary goes up and all of these things happen in the world, you’re probably gonna want to build up that emergency fund to be a little bit, you know, a little bit more so than that 30,000. He can then utilize that policy and every dollar he puts in it, he can slowly transfer it over to an opportunity fund to leverage for down payments on real estate or to even back up the truck when the market has a big dip.

maybe the market hits another 20 % dip like we saw earlier in this year. This is 2025 as I record this. He could then leverage that, put it on if they hit a 20 % decline and he wants to do something like that. So all kinds of options that are available to him plus down the road, he can then start utilizing it as a of a volatility buffer or a potential.

additional cash flow source without triggering any additional taxes by leveraging against the policy. So there’s a lot of things that he can do here in order to help him continue to diversify his his assets. Noting that right now he’s single, he has no dependence, but he doesn’t know maybe he will eventually have a partner maybe he will eventually have dependence and he will now have this policy that was serving one purpose, but

continues to grow towards serving another purpose, which might be legacy or estate planning. So he’s thinking ahead here without sacrificing what he’s already doing to grow his net worth with the other assets like his real estate and his equities. The other piece that I think is really important for us to think about as well is the fact that even though he is all equity now, as we age, we tend to start wanting to

preserve the pile. So it’s about protecting the pile, not always about getting maximum growth with every dollar that we put into our portfolio. This is really important for us to understand, even though the math suggests that any dollar that’s in the stock market, as long as you don’t plan on touching it in the short or medium term, as long as it’s long term, it should be in equities. that’s basically, we know that that is a good thing.

And if the pile’s large enough, you could stay 100 % equities and still not worry about pulling money out when the market is down and so forth. But the problem is, that as we age, we tend to want to, I’m gonna call it like take hoarder mentality over, right? And we actually want to see that pile continue to grow, maybe not as aggressively, but we don’t like to see the pile shrink. Even though in our mind, we can know that over time that pile will grow again, it doesn’t make us feel good. We lose sleep.

And this is why a lot of older Canadians tend to be very conservative, probably too conservative with their portfolios. So this is really important. And if you understand behavioral economics and behavioral psychology, you can essentially front run how you might feel down the road by setting yourself up now with some of these tools that are going to allow you to kind of get the win-win, just like Ryan’s exploring here today.

So while Ryan has still not made a decision, we just had a conversation, this was actually about a week ago as I’m recording this, Ryan hasn’t made a decision yet. He’s got a lot of key takeaways here. So a few decisions he’s gonna have to think about is whether he wants to keep that original policy. Now, it’s not a huge amount of money, it’s not gonna break the bank for him. So my thought is, I would probably keep going with it simply because I hate losing money.

especially like, you know, cutting the cord. However, some other people look at that and say, you know what, if I redirect the same hundred dollars a month or so that he was putting into that policy into say the market or into this other high cash value policy, he will eventually overtake that old policy. It will take a little bit of time, but he will eventually make up the difference there. So he might choose to cancel that policy completely.

He has another decision to make as to whether he wants to sort of keep those emergency funds sitting on the sideline or whether he wants to design a policy with us in order to slowly shift those dollars over. My vote would be to definitely get that policy going, but not to take any of the other dollars that he’s putting towards his RRSPs, tax-free savings, or his non-registered accounts.

but that money that’s just sitting there kind of doing, I’m gonna call it nothing. It’s important money to have that emergency fund. I’m gonna say getting it into a policy is going to provide them with way more optionality and let’s knock on wood that they’ll never need that emergency fund. Well, if five or 10 years from now, that money’s still sitting just in a little savings account doing really nothing, that’s not a really great tool to have. So being able to create a much better tool

that has all kinds of other options that it can kind of morph into, I think is gonna be the better play for that $30,000 that’s sitting there. So what are you thinking, my friend? Has any of this resonated with you? If it has, do us a favor, respond to us on social media, reach out to us, give us a rating and review over on Apple podcasts or on Spotify, it goes a long way. And if you’re interested in getting your financial health assessment,

you should head on over to Canadianwealthsecrets.com forward slash pathways. That’s Canadianwealthsecrets.com forward slash pathways where we’ll take you through the four stages of wealth building and we’ll show you what you’re doing well and where there’s some gaps for optimization. And finally, if you’re ready to reach out to us because maybe you’re an incorporated business owner and you’re looking for the next steps, you’ve.

maybe maxed out your RSPs or your tax-free savings accounts and you’re looking for that next step in this journey, that’s what we specialize in doing. So reach on out to us over at CanadianWealthSecrets.com forward slash discovery and book yourself a free discovery call here today. We so appreciate you and we look forward to chatting with you in the next episode.

And just as a reminder, this is not investment advice. It’s for entertainment purposes and education purposes only. You should not construe any such information or other material as legal tax investment, accounting, financial or tax advice. And as a reminder, Kyle is a life licensed and accident and sickness insurance agent and the president of Canadian Wealth Secrets, Incorporated.

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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