Jayson Lowe and Sarbul answer questions about using whole life insurance to become your own banker in Canada. They cover who qualifies, how to convert RRSPs and TFSAs into policy premiums, and whether you can start small. The speakers stress working with tax and accounting professionals before moving forward.
Questions this video answers
14 years.
Saskatchewan.
Yes — they will eventually operate in the United States (pending completion of requirements after land borders opened).
Chapters
And we haven't had a single client call us once in 14 years and say that they were pissed off that their cash values kept rising every day. Even, even when dealing with a naysayer who says, you should really be upset about that.
That should really frustrate you. What a, what a, what a horrible idea.
The question is, what if I'm not insurable?
This is a legally binding contract that I can put a contract on anybody that I have an insurable interest in. And I personally own policies on my wife and my two kids. So I don't necessarily have to be the body if I'm not able to get insured to implement and practice the concept.
I think the other question that's coming up is do you have any representatives in Saskatoon? So maybe we can expand it not just to Saskatoon, but other provinces also. Because I'm sure someone may also be thinking in Toronto, how you guys work with folks in Toronto.
Well, actually, I'm happy to report that I just recently obtained a contract in, in the province of Saskatchewan. And I think the two gentlemen that I'm staring back at right now are licensed right across the country. And I know that Henry's coming to us from the Greater Toronto area, Gingin's out in Vancouver. So we have advisors all across the country. And thanks to all the great technology we can. I can connect with people in Ontario from the comfort of my home here in Calgary.
So absolutely, world is becoming too local. We don't have to be in Toronto or Calgary to make things happen for our family. I guess Zoom does it all for us. The other question coming up is, is it worth starting small? So what our suggestion would be, book your call with the advisor that's been assigned to you and determine what the next steps are going to be. Right now I cannot answer that question because we need more information. And as we shared in the boot camp, we have clients who put a couple hundred bucks per month into policies all the way to thousands of thousand dollars per year. So starting is a starting that's important. It's step toward progress. But the way we can answer the question, the correct way is to book your call so that we get an opportunity to really understand where you are in your life journey and where you need to go and see how we can use the process. Become your banker to get you to where you need to be. So that will be the next step for you.
The other question that's coming up is how does a retired person convert RRSPs, TFSA and pensions into becoming your own bankers?
We have to make sure that we get good guidance from a tax professional, especially if you're going to be accessing money from things like registered accounts. But at the end of the day, you're going to be drawing money out of those accounts at some point, either as income or you're going to do something with that money. So obviously, just like what Sarbul said, you want to get together with a good coach, we look at how you're structured financially. But we would, we would implement a process where we could systematically access that money. I'm speaking specifically about the registered accounts or I guess rsps, because the TFSA is tax free money. Right. We can access that, but we have to implement the money from the RSP into a policy system, if that made sense for you over time just to consider tax consequences and those sorts of things. But you can use that as a source of premium.
Yeah. And by doing it, you'll be moving your money from a forever tax instrument to a never tax instrument. But yeah, it has to be done strategically. And you know, we may have to engage your accountant in those conversations. But to answer your question, it is possible, it's just another strategy that we have to see how it can be done in most tax efficient way. So, Jason, and one, perhaps you can speak a bit about whole life, nay series and how it is often preferable to challenge the status quo. So.
Well, I guess what I would say to that is.
You know, any, when you're speaking about any option that's out there, someone out there or some people out there will always think that it's a bad idea. And that's why it's important to investigate something for yourself so that you can reach conclusions based on facts and not based on innuendo or opinions, but based purely on facts. And those are the types of folks that we most love to work with, people who make decisions based on fact and we supply all the facts. And then the onus is on you to decide what's best for you. But I will say that it's also important to know that one of the most frequently asked questions that we get is, hey, if this is so good, why isn't everybody doing it? Well, those who understand it are doing it. And there seems to be some notion out there that what everyone is doing just happens to be the best thing. Let me ask you this question. How many of you know somebody who knows how to use a computer better than you do? I do.
And so the computer is there. It's a piece of equipment. Somebody knows how to use it better than you do. And we just happen to know how to utilize money better than you do. And we've shown you today how to go about doing that. And how many of you can think of a time, for example, Excel, Microsoft Excel. For me, I can remember many times when somebody who knows how to use it better than me typed, you know, showed me a shortcut. Hey, if you're trying to do this, why do you take 14 steps to do it? Here's a quick little formula. You put it in and boof. And I was like, oh my God, you've just saved me so much time.
The tool was always there. Somebody just knows how to use it better. Dividend paying, participating. Whole life insurance has been around longer than any of the Anyone who naysays about it has been alive.
And so if they really believe it's such a bad thing, then why didn't it go by the wayside long before they came along on planet Earth?
It's something that you need to ask yourself. If the wealthy are not sitting down and asking any of us to talk to them about RRSPs or mutual funds and everyone else is going out and doing that, and the wealthy are saying, how much money can I put into these contracts? Because my first rule is not to lose money and my second rule is never break rule number one. So you got to ask yourself, what would you rather be doing with the majority do financially or what's been proven longer than the three of us guys have been alive combined.
To work extremely well? I know what we chose to do, and we haven't had a single client call us once in 14 years and say that they were pissed off that their cash values kept rising every day.
Even when dealing with a naysayer who says, you should really be upset about that.
That should really frustrate you.
What a horrible idea to have guaranteed cash value accumulation, to have tax free dollars that are sold to you at a discount, a deep discount, and that show up exactly when they're needed the most. Isn't that the definition of the best investment, One that returns the most when it's needed the most?
Jason, we got some folks from the US who have joined your bootcamp and they're asking, do you guys help people in the U.S. so the answer is we have great connections with the right people in the US So please connect with us. We're happy to make the introduction and you'll be in great hands.
We will be operating in the United States.
We had to wait until the land borders opened up to be able to complete all the remaining requirements. So we will eventually be operating in the United States. So thank you to our American attendees for being with us. Awesome to see you here. And yeah, if you want to be connected, like Sarbul said, we will make sure that you get connected with the right practitioner who's best suited to help you.
And there was a question regarding, hey, do you guys work with farmers? And they said, well, the process of becoming a banker when it comes to our team is not restricted to just one individual, one occupation or one business. We help people in every aspect of business or if they're T4 team members, it's not restricted. We all have the need for financing. Whether we are farmers, whether we physicians, we are doctors, we Cairos, we are engineers, we're lawyers, we're accountants. It works for everybody. And our team is equipped to help every individual. Jason, I think one question that is really important to address is who is the right fit for the process of becoming your own banker?
Oh goodness. Well, I would say that.
If you are spending less than what you're making now, that would apply personally and corporately. So in your own personal life, if you earn a dollar and you spend less than a dollar, then you would be in a position to get started somewhere with this process in your business. If your business earns a dol in gross revenue and the business spends less than a dollar, then your corporation is ready to start this process and to get underway. So that would be, you know, the simplest, I guess, way to look at that.
Yeah, there was a good one earlier on that when you went through the Dylan example, Jason, and it was just like, oh, so somebody is taking out money like that. So passive income, you know, from a corporation, what are the things they need to be aware of?
Well, firstly, they need to be aware of how to execute this properly. So there's two different tracks there. There's corporate borrowing and then there's shareholder borrowing. And that is why it is so important to work with somebody who knows how to do this properly when the shareholder is accessing that money and the money. So if you just follow the money, we have a corporate owned life insurance policy on and Dylan is the life that is insured and the corporation owns the contract and is using corporate money to pay the premium. When Dylan's in passive income time, Dylan wants to access money, he's a shareholder. So the money flows from the life insurance company to the corporation or from a commercial bank to the corporation. And we work with the corporate owner on how to collaterally assign the Policy with a commercial bank, the money comes in, and then to get that money into Dylan's hands, that has to come to him in the form of a dividend. Now, if Dylan said, well, hey, look, you know, I'm not really interested in dividends, I'd like to access the money without triggering a dividend, then the option there is for Dylan to pay the corporation what's called a guarantee fee. And that guarantee fee, now that ranges, it can range anywhere from 1 to as high as 2, 2.5% of whatever the loan balance is. However, Dylan needs to have other assets so that when he dies, the collateral assignment on that life insurance policy can be taken care of using all of the death benefit proceeds coming into the corporation first and then the corporation paying off the bank. If it didn't happen that way, then Dylan could find himself, his estate could find itself in a bad situation where all the money that he used ends up being added to his final tax return as income. So obviously, that would not be a situation that any, you know, shareholder would want to find their estate in if they passed away. So you've got to work with a professional on our team who knows how to do this properly. And we also have Frank Abate, Tim Dawson. So Frank's a chartered accountant. He's a trust and estate planner. He's a certified financial planner. Tim Dawson is a senior partner with M and B. And so these professionals work with our clients, accountants, and make sure that everybody's on the same page and that we know exactly what we're doing and that we're doing it all within and abiding by current tax laws. And so that's an excellent question. He can either get the money in the form of taxable dividends, or he can access the money and pay the corporation a shareholder guarantee fee. And he pays no tax on that while he's alive. And if structured properly, no taxable event when he dies, either.
