When we talk about leveraging life insurance, we talk a lot about business owners and why this type of strategy is useful for them.

Today we’re going to provide an example of how one business owner that we worked with used this strategy to help fund three different projects in his life.

We’re going to cover how he used his Whole Life Insurance Policy to fund upgrades to his business, renovations to his new home, and his retirement.

When we’re talking about business owners holding this type of permanent insurance in their company, what they’re doing is growing their money inside of the policy and then they’re leveraging the value of the cash in their policy from the bank or the insurance company.

What they use this money for, will probably change over time, so you might be doing ABC in 5 years and then you might be doing DEF in 20 years.

Upgrading the Business

Our example is of a client who has multiple policies with us and he owns a machine shop.

He puts roughly 100 thousand a year into his various policies and has been doing this for a while now, he also already has a line of credit set up at the bank.

He has a manufacturing facility where they build specialized things out of metal, and he was able to use his policy to take out a loan to rebuild his entire shop.

What he was able to do is finance the whole thing himself without really asking anybody for permission, without getting a credit check, and without having to prove anything.

Because with these policies we do all the work upfront, it’s simple and easy when it comes time to access that money.

Renovations to a New Home

This business owner also moved a few years ago, and he moved into a nice, but older house and needed a couple hundred grand to complete the renovations.

Tt the time the Vancouver Real estate market had huge highs, so he had already leveraged himself about as much as any mortgage would give him to purchase the home.

So, there wasn’t any extra money for the renovations that he wanted so he said, “That’s fine, I have this insurance policy and I have a line-of-credit already set up” and he funded a couple hundred thousand dollars of renovations on the house.

Also, when you’re lending against your insurance policy, you’re usually doing it through private or commercial banking, you’re not doing it at a teller level, your doing it at a higher level.

When you’re dealing with a different level of the bank, they have way more flexibility on how they give you the loans, how they structure them, and the amount you’re able to get.

Usually this means bigger numbers and that’s because with private or commercial banking they’re able to consider your entire picture.

They can see well these are your assets, you have this money in savings, you have this life insurance policy, but maybe you’re a business owner so you don’t have a huge income.

You could if you wanted to, but most business owners don’t have a giant T4 or T1 so traditional mortgage brokers or bankers won’t be able to get you a loan because you don’t claim enough.

Whereas if you’re working with private or commercial bankers, they look at your whole picture and they see, obviously you could carry the debt.

Funding Retirement

The last thing our client was able to do was fund his Retirement.

He was an older guy, not very old, but he’s looking at retirement and when it comes around, he will have probably paid off all the loans he’s taken out against his policies.

He has a portfolio that’s going to generate his standard retirement savings and then he’s going to supplement his retirement by taking loans against his policy.

What’s even more beneficial is if these loans are done correctly they should be mostly tax free.

Contact & More Info

If you want to learn more about how this strategy might work in your situation, fill out the contact form below and we will get back to you within 24hrs on business days.