Turn the cash trapped in your corporation into tax-advantaged retirement income.
For owners with surplus cash in the corporation, an Insured Retirement Plan puts lightly-taxed dollars to work, grows them tax-sheltered, and gives you income in retirement, while still leaving a benefit for your family and estate.
It's a long-term strategy for profitable, established companies, not a short-term one. We'll tell you honestly whether it fits before you do anything.
Book a free intro callA tax-advantaged way for your corporation to build wealth
- Grows tax-sheltered, year after year
- Accessed in retirement through a loan, repaid from the death benefit
- Doubles as a life policy for your family and estate
- Not capped by RRSP or TFSA contribution room
A strategy, not a product. Suitability and any figures are confirmed in a personalized review, not on this page.
A Corporate Insured Retirement Plan lets an incorporated business owner turn retained earnings into tax-advantaged retirement income. The company buys exempt permanent life insurance, funds it with surplus, and the cash value grows tax-sheltered. Later, that cash value backs a loan for income, repaid from the death benefit. On death, insurance proceeds retire the loan and the net amount above the policy's adjusted cost basis flows to the Capital Dividend Account, paying shareholders' heirs tax-efficiently. It suits profitable companies with surplus, not a short-term plan.
RiskX Insurance Brokers Inc. is an independent, family-run Canadian insurance and benefits brokerage, founded in 1994 and licensed in Alberta and Ontario, serving business owners from offices in Calgary and Toronto.
Last updated: June 2026
How a Corporate Insured Retirement Plan works.
Think of it as a tax-advantaged way for your corporation to set money aside and draw on it later. It layers two things: an overfunded permanent policy that builds cash value, and a loan against that value in retirement.
Fund an exempt permanent policy
Your corporation buys a permanent life insurance policy (usually participating whole life) and funds it with surplus cash. Because the company uses lightly-taxed corporate dollars, less is sent to Ottawa than if you paid yourself first.
Cash value grows tax-sheltered
The policy's cash value grows without annual tax, within the Income Tax Act's exempt limits. Unlike an RRSP or TFSA, it isn't capped by contribution room, though tax rules do limit how much can go in while keeping its tax-sheltered status.
Access income through a loan, not a withdrawal
In retirement, you pledge the policy as collateral for a loan and draw income against it. Because it's a loan and not a withdrawal, it is generally not treated as taxable income under current tax rules. The loan is repaid later from the death benefit.
At death, the estate keeps the balance
The death benefit first repays the loan and interest. For a corporate policy, the amount above the policy's adjusted cost basis credits the Capital Dividend Account, so the balance can flow to your family tax-efficiently.
Why fund it with corporate dollars?
Once your corporation earns more than $50,000 of passive investment income in a year, it starts to lose access to the small-business tax rate on its first $500,000 of active income, and that benefit is fully gone by $150,000 of passive income. Ordinary investments inside the company can quietly trip that threshold.
Growth inside an exempt life insurance policy does not count as passive investment income, so it doesn't trigger that grind. That's a big part of why corporate-owned permanent insurance is used to hold surplus cash for the long term.
Sources: Department of Finance passive-income rules; BDO, corporate-owned life insurance. General information, not tax advice.
Independent means we'll tell you when it's the wrong answer.
We're a father-and-son brokerage, owned and operated in Calgary since 1994, and we don't manufacture the product, so we shop the market and recommend what fits you. An Insured Retirement Plan is powerful for the right situation and wrong for plenty of others. We start with an honest conversation, and when your situation calls for it, we bring in our estate-planning specialist, a chartered accountant with more than 20 years of experience, for the tax and structuring work.
Who it's for, and who it isn't.
The insurance need comes first; the financing is secondary. This strategy tends to suit owners who need permanent life insurance anyway and have long-term surplus cash they won't need for years.
Often a good fit
- Profitable, established companies with surplus cash
- Owners who have already used their RRSP and TFSA room
- A genuine long-term need for permanent life insurance
- A 15 to 25 year time horizon before drawing income
Usually not the answer
- You may need the cash for operations or in the near term
- You are close to retirement with no time to fund it
- Registered plans (RRSP, TFSA) are not yet maxed out
- You want a guaranteed, short-term, or liquid investment
- The retirement cash flow is a loan against the policy, not income and not a withdrawal. The loan plus interest is repaid from the death benefit, which reduces what your beneficiaries receive.
- Leverage increases risk. Loan rates can rise, and if the policy underperforms or rates climb, a lender can ask for more collateral or repayment.
- Policy cash-value growth, dividend or interest scales, and future loan availability are not guaranteed and will vary.
- Tax treatment depends on current tax law and the policy keeping its exempt status. Rules can change, and the Canada Revenue Agency actively reviews leveraged-insurance arrangements.
- It suits people who need permanent life insurance anyway and have long-term surplus cash. The insurance need comes first; the financing is secondary. It is not for everyone.
How an IRP compares to the alternatives.
| Strategy | Best for | How it works |
|---|---|---|
| Insured Retirement Plan (IRP) | Tax-advantaged retirement income | Borrow against a permanent policy's cash value in retirement; repaid from the death benefit. |
| Immediate Financing Arrangement (IFA) | While still working | Borrow back the money used to fund the policy to keep it working in the business; may allow an interest deduction. |
| RRSP / registered plans | Personal retirement savings | Tax-deductible contributions within annual limits; withdrawals are taxable income. |
An IRP is one piece of a bigger estate plan.
The same corporate-owned insurance that funds your retirement income can also credit your Capital Dividend Account and help your family pay the tax at death without selling the business. See how the whole picture fits together.
Explore corporate estate planningInsured Retirement Plan questions owners ask us.
What is an Insured Retirement Plan?
An IRP funds a tax-exempt permanent life insurance policy, then uses its cash value as collateral for a loan that provides retirement income, with the death benefit repaying the loan at death.
What is a Corporate Insured Retirement Plan (CIRP)?
It is an IRP owned by your company, funding an exempt policy with corporate surplus so retained earnings become tax-advantaged retirement income.
Who is an IRP best suited for?
Profitable, established businesses and high-income owners who have already maximized their RRSPs and TFSAs and have surplus cash they will not need for many years.
What type of insurance is used?
Usually participating whole life, sometimes universal life, because the policy must be a permanent, exempt policy that builds cash value.
Why isn't the retirement income taxed?
You do not withdraw from the policy; you borrow using its cash value as collateral, and loan advances are generally not treated as taxable income under current tax rules. Tax treatment can change.
What happens at death?
The death benefit first repays the outstanding loan and interest. For a corporate policy, the net amount above the policy's adjusted cost basis credits the Capital Dividend Account for tax-efficient distribution.
What are the main risks of an IRP?
It is a long-term, leveraged strategy. Loan rates can rise, policy growth and dividends are not guaranteed, a lender can call the loan, and tax rules can change. The insurance need must come first.
How is an IRP different from an Immediate Financing Arrangement (IFA)?
An IFA lets you borrow to reinvest in the business while working and may allow interest deductions; an IRP provides personal retirement income later and generally does not.
Do my beneficiaries still get a death benefit?
Yes. The loan is repaid from the death benefit, and any remaining amount goes to your beneficiaries or, for a corporate policy, to the estate through the Capital Dividend Account.
Are the premiums tax-deductible?
Generally no, except for a limited collateral insurance deduction when the policy is required as security for a business loan. Confirm with your accountant.
Does IRP income affect Old Age Security?
For a personal IRP, because loan advances are not taxable income, they generally do not count toward the OAS clawback. Your own situation should be reviewed with an advisor.
This page is general information about insurance and financial-planning strategies. It is not insurance, tax, legal, or investment advice, and it is not a recommendation or an offer of a specific product. Any strategy must be assessed for your own situation before you act on it. Please obtain independent tax and legal advice. Any examples are hypothetical, not guaranteed, and not a projection of results. A personalized illustration prepared for you may show different, including less favourable, results. RiskX Insurance Brokers Inc. is a licensed insurance brokerage, licensed in Alberta and Ontario. Information current as of 2026 and subject to change.
See whether an IRP fits your situation.
Book a free intro call. We'll gauge where you're at and whether an IRP is worth exploring. If it is, we'll bring in our estate-planning specialist, a chartered accountant with more than 20 years of experience, and prepare a personalized illustration.
Book a free intro call