The Strategy: Insurance as a Corporate Asset
Most investors view life insurance purely as a cost—something you buy to pay off a mortgage or replace income. For a corporation with surplus cash, however, permanent life insurance is a recognized alternative asset class.
Why? Because the tax rules for corporate investments are harsh (approx. 50% tax on passive income), while the tax rules for exempt life insurance policies are favorable.
- Tax-Sheltered Growth: Cash value inside a policy grows without triggering annual tax.
- No Passive Income Grind: Growth inside a policy does not count toward the $50,000 passive income threshold that reduces your Small Business Deduction.
- Tax-Free Extraction: Upon death, the death benefit (minus the adjusted cost base) creates a credit to your Capital Dividend Account (CDA), allowing millions of dollars to flow out of the corporation to your family tax-free.
Our Services
1. Corporate Estate Bonds
For business owners with surplus cash invested in taxable fixed-income assets (GICs, bonds), we model "Corporate Estate Bond" strategies. This involves reallocating a portion of that taxable portfolio into a permanent insurance policy. The result is often a significantly higher after-tax estate value compared to traditional investments, with lower volatility.
2. Buy-Sell Funding
If you have business partners, a Buy-Sell Agreement is essential. But an agreement without funding is just a piece of paper. If a partner dies, where will the surviving shareholders find the cash to buy out the family? We structure corporate-owned insurance to provide immediate, tax-efficient liquidity exactly when it is needed, protecting both the business continuity and the deceased partner's family.
3. Key Person Protection
Your business relies on key revenue generators. If they die or become critically ill, revenue stops but expenses continue. Key person insurance provides an injection of cash to cover lost revenue, find a replacement, or pay off debts, stabilizing the company during a crisis.
4. Immediate Financing Arrangements (IFA)
For high-net-worth owners who want insurance protection but do not want to tie up capital in premiums, we structure Immediate Financing Arrangements. This involves purchasing a policy and assigning it as collateral to a bank to borrow back the cash value for reinvestment in the business. This advanced strategy can provide protection while maintaining liquidity, but requires careful risk management.
Independent Market Access
We are independent brokers. We do not work for an insurance company; we work for you. We survey the entire Canadian market—including major carriers like Manulife, Canada Life, Sun Life, Equitable Life, Desjardins, and others—to find the product that offers the best combination of:
- Contractual guarantees
- Dividend performance history
- Cash value growth potential
- Underwriting flexibility
Common Questions
"Is this just for when I die?"
While the death benefit is the ultimate payout, permanent policies build Cash Surrender Value (CSV) that appears on your corporate balance sheet. This cash value can be accessed during your lifetime through policy loans or collateral assignments to fund business opportunities or retirement income.
"Why not just invest the money?"
We often compare insurance against a traditional investment portfolio. In a taxable corporate environment, investments face a "double tax" problem (tax on growth + tax on extraction). Insurance bypasses both. For the portion of your wealth destined for your estate, insurance often mathematically outperforms taxable investments on a net-after-tax basis.
"What if I sell the business?"
Corporate-owned policies are portable. If you sell the shares of your operating company, you can often transfer the policy to a Holding Company first, keeping the asset (and the cash value) within your control. This requires careful planning before a sale.
Important Notes
Insurance products are provided through iAssure Inc. Services related to the insurance of persons and group insurance are offered through iAssure Inc., an independent firm. These activities are neither the business nor the responsibility of WhiteHaven Securities Inc.
This is educational content only. Insurance strategies require professional advice. Strategies involving tax, investments, and insurance must be coordinated with your CPA, lawyer, and qualified advisors. Always review your plan as rules and circumstances change.