Wealth Defence · Corporate-Owned Life Insurance
A tax-free savings tool inside your corporation.
50.17%
tax on passive income in your corp
$1
that can do two jobs at once
0%
tax on transfer at death via the CDA
The Problem
Money parked in your corporation is working against you.
Retained earnings and investments inside a corporation are exposed to passive income tax every year — at rates that can approach 50% in Ontario — and taxed again when they come out.
Most owners don’t realize there’s a more efficient home for some of that capital.
The Strategy
One tool that works at every stage.
This isn’t a product you buy and forget. It’s a savings strategy that keeps delivering — while it grows, during your working years, in retirement, and through your estate.
01
Now
Funded with lower-taxed corporate dollars, the cash value compounds tax-free inside the policy — a growing asset on your balance sheet, sheltered from the yearly passive income tax drag.
02
In retirement
Draw on the accumulated value tax-efficiently to supplement income — moving corporate wealth into your personal hands on your terms.
03
In your estate
What remains transfers to your family tax-free through the Capital Dividend Account — the final, efficient hand-off.
Whether this fits depends on your structure and a current illustration. “Tax-free” refers to the growth inside an exempt policy and the CDA transfer at death; living access is structured to be tax-efficient. Confirm the specifics with your CPA.
Why It Matters Now
It builds value you can use — not just leave behind.
This isn’t a policy you buy and forget. The cash value grows tax-advantaged inside the corporation and can be accessed tax-efficiently to supplement retirement — a living strategy, not just an estate one.
Taxable investment
~$951K
$100,000 a year for 10 years inside the corporation, exposed to passive income tax — roughly $951,000 to beneficiaries after 25 years.
Tax-exempt insurance
~$2.2M
The same deposits into a tax-exempt policy — roughly $2.2 million to beneficiaries after 25 years, an equivalent return of about 10.7%.
Illustrative figures drawn from a planning illustration (Holdco, $100K/yr × 10 years, 4% comparison return). Insurance values are based on a current dividend scale and are not guaranteed. A complete illustration and your CPA’s review are required — these numbers depend on your situation.
The tax-free piece is the bonus — not the whole reason.
At death, the proceeds — less the policy’s adjusted cost basis — pass to your beneficiaries tax-free through the corporation’s Capital Dividend Account (CDA). That sits on top of the living value the asset already built.
What a Plan Does
A structure, not a product pitch.
Use lower-taxed corporate dollars
Fund the asset with corporate capital instead of highly-taxed personal income.
Grow cash value tax-advantaged
Value compounds inside the policy, sheltered from the passive income tax drag.
Draw on the cash value to supplement retirement, on your terms.
Transfer tax-free at death via the CDA
Proceeds, less adjusted cost basis, pass to beneficiaries tax-free — the bonus.
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More Areas of Focus
Estate Planning
Corporate Insurance
Living Benefits
Charity
