How Business Owners Can Secure a $1 Million Line of Credit Using a Whole Life Insurance Policy

As you know, it can be hard to secure a line of credit for your business.

In this video, we walk you through how Canadian business owners can secure a $1 million line of credit for their company using their participating whole life insurance policy as collateral security.

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The best way to secure a line of credit is with security. In this case we are using a participating whole life insurance policy. For a more detailed explanation of how to leverage these policies, see the link to our previous video.

This type of life insurance is a great form of collateral. Other forms of collateral simply do not offer such high loan to value rates. You can use other forms like cash, securities or properties, but these will generally get you 50% or 60% or 70% or 80% loan to value.

With your whole life policy you can get 80% or 90% or 100% loan to value at competitive Prime or Prime plus rates. This is a great method not only because of the great rate, but because it means you don’t have to deal with finding renters or changing toilets if you own rental properties or taking risk in a stock market portfolio.

Another benefit of whole life insurance policies is the dividend. Because of this dividend, your underlying collateral asset – the insurance policy – that you are using for the loan grows with the dividend, which today in 2021 is between 5.5% – 6.5% depending on the insurance company you work with.

Annual Deposits

To secure your $1,000,000 line of credit, you need to deposit $1,000,000 over time into the insurance policy. This number doesn’t have to be $1,000,000 it can be $2,000,000 or $10,000,000 or whatever you need. We use $1 million as an example for this video.

The amount you deposit each year will depend on how quickly you want to secure your line of credit. And it will depend on your company cash flow and retained earnings that you are saving every year.

For example, if you want to do this in 10 years, you deposit $100,000 per year. If you want to hit $1,000,000 in a 4 year horizon, you need to put in $250 k per year. At Safe Pacific, one thing we do is work with you to figure out what yearly deposit is best for your situation.

The benefit of this is that you can use your corporate funds – usually the funds used to secure the insurance are from your retained earnings held in your holding company.

The funds you deposit are invested in the insurance company’s participating account, which this year generates a dividend scale interest rate of between 5.5% – 6.5% depending on the insurance company we are working with. Over the past 40 years the average has been around 9% – it’s low today because we’re in a very low interest rate environment.

Now, you have a secure line of credit that you can use to run your business, invest, or both.


In summary, to reach that $1,000,000 dollar line of credit, you deposit into your whole life insurance policy and then use that as collateral. Each year you make your premium deposit, you build up the line of credit with the bank. This line of credit might be for your business, or for investing or it might be to fund your retirement. Usually the reason will change over time and we build in tons of flexibility to achieve your different goals at different life stages.

Setting this up is not as simple as walking in to the bank and talking to a teller or branch manager. They won’t have any idea what you are talking about. There are only a few people in Canada that you can talk to to get this done – and we know who they are.

Contact & More Questions

If you would like to set up a strategy like this please contact us here and someone will get back to you during business hours.

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