A Costly Canadian Retirement Planning Myth & How To Avoid It

What if you could get one dollar growing in two places at once while creating an income tax write-off just like the Smith Maneuver, but also get a life insurance death benefit for free?

In this episode, we explore how Canadian investors can use a Smith Maneuver-like strategy on a high early cash value participating whole life insurance policy to leverage for investments, while creating a tax-deductible interest expense. By funding a specifically designed participating whole life insurance policy and borrowing against the cash value to invest in the same assets they would have originally chosen—stocks, real estate, or other investment opportunities—the Canadian investor not only creates a valuable tax write-off from the loan interest, but also benefits from a free death benefit that will pay out upon death of the insured person. While this strategy can be supercharged when the policy is purchased inside of a Canadian corporation, today we will focus on what this strategy would look like for the unincorporated Canadian investor with part 2 of this episode coming soon for our Canadian incorporated business owner listeners.

This Immediate Financing Arrangement (IFA) leveraged permanent insurance strategy shares similarities with the Smith Maneuver, with some subtle differences. The main value-add for using the Smith Maneuver is converting non-tax deductible interest on your home mortgage to tax deductible interest, while this leveraged insurance strategy creates tax deductible interest with a free permanent insurance death benefit as a bonus. While this strategy can be used as a second leveraged investment strategy alongside the Smith Maneuver, the leveraged participating whole life insurance strategy can be seen by some as more conservative as you are not leveraging against your primary residence and instead only leveraging against an insurance policy. If you’re a Canadian investor looking to create multiple wealth-building streams without sacrificing one goal for another, this strategy offers the best of both worlds: growing your investments while securing a legacy.

What you’ll learn:

• Learn how funding a participating whole life insurance policy can enable you to achieve tax-deductible interest and estate protection while investing in the same assets you had planned to invest in.
• Discover how this leveraged participating whole life insurance strategy provides free insurance for your estate, effectively combining legacy planning while continuing your original investment growth plans.
• Understand the long-term benefits of using an Immediate Financing Arrangement (IFA) to create multiple growing financial buckets, one for investments and one for legacy, without restricting your investing potential.

Tune in now to discover how this conservative permanent insurance leverage strategy commonly known as an Immediate Financing Arrangement (IFA) can supercharge your wealth-building strategy while offering invaluable tax benefits and legacy planning simultaneously.

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Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.