Infinite Banking with Corporate Owned Life Insurance in Canada

Myles Olson
June 27, 2023
Whole Life Insurance, Coli, Corporate Owned Life Insurance
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Unlocking Financial Flexibility and Growth

Infinite Banking, coupled with Corporate Owned Life Insurance (COLI), is a financial strategy that offers significant advantages to businesses in Canada. By leveraging the unique features of a properly designed Whole Life policy owned by the corporation, businesses can establish a powerful cash reserve and access tax-efficient funds for various financial needs. In this blog post, we will explore the benefits of Infinite Banking with COLI in Canada and how it can provide businesses with financial flexibility and long-term growth opportunities.

1. Cash Reserve and Liquidity:

One of the primary benefits of Infinite Banking with COLI is the establishment of a cash reserve. By establishing COLI policies, businesses can accumulate cash values over time, which can be accessed tax-free through policy loans. This cash reserve provides businesses with a readily available source of capital, enabling them to seize investment opportunities, fund expansion plans, or navigate challenging financial circumstances without relying on traditional borrowing methods.

2. Tax Efficiency:

Properly designed COLI policies offer tax advantages that can significantly benefit businesses. In Canada, the cash value growth within COLI policies is tax-sheltered, meaning it accumulates tax-free. Additionally, policy loans from COLI can be withdrawn without triggering taxable events, providing businesses with a tax-efficient source of funds. This tax optimization allows businesses to retain more of their profits and allocate them strategically for growth and wealth creation.

3. Risk Mitigation:

Infinite Banking with COLI serves as a risk mitigation tool for businesses. By building cash values within the COLI policies, businesses create a safety net that can be used to address unexpected financial challenges or disruptions. Whether it’s covering emergency expenses, managing cash flow gaps, or weathering economic downturns, the cash reserve from Infinite Banking provides businesses with a buffer and peace of mind.

4. Legacy Planning and Succession:

COLI policies play a vital role in business continuity and succession planning. The death benefit provided by COLI can be used to fund buy-sell agreements, ensuring a smooth transition of business ownership in the event of a key person’s passing. This eliminates the need for businesses to scramble for financing or sell assets to facilitate succession, preserving the company’s value and securing the financial future of stakeholders.

5. Flexibility and Control:

Infinite Banking with COLI grants businesses greater financial flexibility and control. Unlike traditional loans or lines of credit, businesses can access policy loans from their COLI policies without the need for credit checks or lengthy approval processes. This quick and easy access to funds empowers businesses to respond swiftly to opportunities or challenges, without being beholden to external lenders or market conditions.

6. Asset Protection:

COLI policies offer an additional layer of asset protection for businesses. In many cases, the cash value within COLI policies is protected from creditors and lawsuits, safeguarding the accumulated wealth against potential risks. This protection helps businesses preserve their financial resources and shields them from unforeseen legal or financial liabilities.

Infinite Banking with Corporate Owned Life Insurance presents businesses in Canada with a unique and advantageous financial strategy. By establishing a cash reserve, leveraging tax-efficient funds, mitigating risks, and facilitating legacy planning, businesses can enjoy enhanced financial flexibility, growth opportunities, and asset protection. The combination of Infinite Banking and COLI empowers businesses to control their financial destiny, unlocking the potential for long-term prosperity and wealth creation. As businesses in Canada explore this powerful financial strategy, they can position themselves for success in an ever-changing economic landscape.

Myles Olson is a Senior Agent at infineo group, helping business owners & families with capital preservation & cashflow management using whole life insurance.

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