Corporate Insured Retirement Income

These corporate policies are exempt from the passive investment income tax rules. This is the greatest exemption that exists in the tax code today is.

There'S no greater exemption in the tax code.

Now, let's talk about business owners for a moment. This gentleman that you see here, Tim Dawson. So he's a senior partner, chartered accountant with Myers Norris Penney, Canada's largest accounting firm nationwide. And Tim was in a position years ago where he had no knowledge of this process. He didn't know what becoming your own banker meant. He didn't understand the infinite banking concept. He didn't understand life insurance. And so he spent some time, a few hours with me, talking to me about it, gaining a better understanding. He not only began to implement this process in his own life, but he began introducing clients and talking to them about the advantage of embracing this process for their business, for their family. And it's just been an amazing relationship. And the reason I'm sharing this with you is because most accountants do not understand life insurance, let alone the process of becoming your own banker. Because most accountants think in terms of the tax code, they don't think in terms of capital. And so it's so important, if you're working with a chartered accountant, to make sure that when you get connected with the right person on my team, give that person on my team the opportunity to connect with and talk to your accountant, because we can bring him or her up to speed to make sure that they have a thorough understanding of exactly what you're going to be implementing and the logic as to support why you're doing that. We're going to talk about Dylan. Now, Dylan is 45 years young. He owns a company and his objective was to have an additional 41,000 of net supplemental retirement income to supplement his household retirement income from age 65 to age 90. Now, here's what's interesting. When we talked to Dylan, I said, dylan, let me ask you this question. Does anybody in your company make $136 a day? And he said, actually, we have people in our company that make more than double that. And so I asked him, I said, listen, if you add another employee to your company, is that going to bend or break your business? And he said, no, not at all. We could easily afford to hire another employee and pay that employee 50,000 a year. And I said, well, great, put me on your payroll. I need you to put 50,000 a year into a corporate owned policy and put me on your payroll for $136.96 a day. Now, this policy is never going to call in sick. It's never going to request time off. It's never going to stop working. It's only going to work for the corporation and for you, Dylan, every single day for the rest of your lifetime. And we don't have to use your personal income. We have to use corporate capital. And if we use corporate capital, that's less money available to the taxpayer. So Dylan said, sounds good, let's do it. If it helps me achieve my objective, let's do it. So the corporation puts in a half a million bucks. The corporate tax on the daily cash value growth inside the policy is zero. The passive investment income tax is zero. These corporate policies are exempt from the passive investment income tax rules. This is the greatest exemption that exists in the tax code today is dividend paying participating whole life insurance. There's no greater exemption in the tax code. From age 65 to age 90, Dylan accesses $41,005 per year after tax. He's using the money personally, so he is triggering a taxable event. But he achieved his objective of $41,005 per year after tax. Total out is 1,066,130. Now Dylan passes away, also at age 91. The net death benefit that is received by the corporation is $806,717. But here's what happens upon Dylan's death. His death gives rise to what's called the capital dividend account inside the corporation. This is a notional account that receives a credit for the total death benefit of the policy. And, and what Dylan's heirs and surviving shareholders are able to do is they have a capital dividend account credit of 3,506,000 so they can extract out of the corporation in the form of tax free capital dividends, assets that are valued at 3.506 million. So even though the life insurance company wrote a check to the corporation for 800 6000, because remember, he spent a lot of money in retirement and he borrowed against the policy to do that, the corporation still receives a credit to the capital dividend account for the entire death benefit amount, even though the actual amount that was received by the corporation from the life insurance company was less. So this presents a significant advantage to the surviving shareholders and to the surviving heirs. If the corporation has other assets that are in there that need to come out and we don't want to trigger a taxable event. Capital dividends are always paid out of the corporation on a tax free basis. So understanding that your wealth must reside somewhere, did this policy take away any of Dylan's options. Give me a yes or a no in the chat window. Vern, what are we getting? Lots of no's coming in, Jason. Okay, good. Now let me share this. With a drop of ink and a piece of paper and a few pennies, we created instantly what Dylan hoped to accumulate eventually. If he would have passed away a day after the policy was put into force, what he had hoped to accumulate eventually would have shown up instantly. We asked Dillon's corporation to give the life insurance company pennies. And they'll give him dollars. They put those dollars in task grow and put his name on them. And when something happens, we just trade places.

And we've guaranteed tax free dollars at a significant discount. Not to mention, Dylan knew that there were plenty of other products out there. Mutual funds, stocks, crypto. All designed to go the way that the economy goes, up, down, or both. But ups and downs are not the kind of foundation that Dylan wanted for himself, for his family, for the people counting on him in his business. He wanted to be sure that when he's gone, there's something there, a real foundation.