A smart way to boost your retirement income without triggering unnecessary taxes
The Insured Retirement Plan is a financial strategy that uses a participating whole life insurance policy to create a tax-efficient stream of income during retirement. The idea is simple. You build up cash value inside the policy during your working years. Then, instead of withdrawing it and paying taxes, you borrow against it through a secured line of credit from a bank or lender. This gives you access to money without triggering income tax. When the time comes, the death benefit from the policy pays off the loan, and your family receives any remaining balance.
Here is how I typically guide clients through this strategy:
Step 1: Set up a permanent life insurance policy
I work with you to select a participating whole life insurance policy with a reputable Canadian insurer. The policy is designed to grow in value over time while also providing lifelong coverage.
Step 2: Fund the policy efficiently
You make consistent premium payments, and the policy starts to build cash value. Over time, this cash value grows tax-deferred and becomes a reliable financial asset.
Step 3: Use the policy as collateral
When you approach retirement, you can use the cash value as collateral to secure a line of credit or bank loan. This gives you access to funds without having to sell investments or trigger capital gains.
Step 4: Draw retirement income
You use the borrowed funds to support your retirement lifestyle. Since this is a loan, it is not considered taxable income. The policy remains intact and continues to grow.
Step 5: Repayment and estate benefit
Upon your passing, the death benefit from the policy is used to repay the outstanding loan. Any remaining funds are paid out to your beneficiaries, tax free.
This strategy works best for:
Incorporated professionals and business owners with retained earnings
High-income earners who have already maxed out their RRSP and TFSA
People who can commit to funding the policy with at least $50,000 per year over several years
Those who want to access funds during retirement while still leaving something behind for their loved ones
Tax-efficient growth – Cash value inside the policy grows without yearly tax reporting
Access to capital – Borrow funds from a lender without triggering income tax
No out-of-pocket loan payments – Interest is typically capitalized and paid later
Estate preservation – Your beneficiaries still receive a portion of the death benefit
Predictable structure – Policy values and loan mechanics are structured in advance, so you know what to expect
Before moving forward with this strategy, it is important to consider:
A long-term funding commitment is required to build meaningful value
Loan interest accumulates and is paid off later from the policy
If you cancel the policy early, you may face surrender charges or tax consequences
Tax rules and lending requirements may change, which could affect how the strategy works in the future
I provide clear, personalized guidance to help you structure your policy properly and coordinate with lenders who understand this strategy. My goal is to help you secure more retirement income, pay less in taxes, and leave a strong financial legacy for your loved ones.
