Immediate Finance Arrangement

Immediate Finance Arrangement

Need

Shareholder of a private corporation who needs life insurance protection. Not averse to leverage. Receptive to long-term
planning and investment strategies. If required, corporation has additional liquid assets available to secure debt. Corporation has steady cash flow. Corporation has sufficient taxable income to use deductions. Income tax at high corporate rate. Willing to seek professional advice.

Structure

Corporation maximum funds a tax-exempt life insurance policy to create significant, immediate cash values. Assign policy as collateral for bank loan. Borrow funds to invest in a business or property to produce income. At death, insurance proceeds repay debt and excess is paid to corporation.

Comparative Analysis

Show how cash values of corporate owned life insurance can be used to secure an investment leverage strategy, preserve cash flow and provide estate benefits.

Benefits

Provides life insurance protection and preserves cash flow for investment. Cash values grow tax deferred. Loan interest and insurance premiums may be deductible. Loan repayment deferred until death. Timing and amount of loans are flexible.
Borrowed funds received tax free. Established lending relationship with Manulife Bank. Proceeds generate credit to Capital Dividend Account.

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