Grow Your Wealth. Access Cash Tax-Free. Protect Your Legacy.
Discover the "Buy, Borrow, Die" framework—a strategy traditionally used by the ultra-wealthy, now accessible to Canadians looking to leverage life insurance to protect their assets from aggressive taxation.
What is the concept: "Buy, Borrow, Die"?
Coined by financial experts to describe how the ultra-wealthy hold onto their fortunes, "Buy, Borrow, Die" is a three-step financial strategy designed to grow wealth, access tax-free capital, and pass down an inheritance seamlessly.
Here is how the three phases work:
Buy: You purchase appreciating assets. In our framework, this means funding a high-cash-value permanent life insurance policy. As the policy matures, its cash value grows predictably and tax-sheltered.
Borrow: Instead of withdrawing funds (which can trigger taxes) or selling off your assets, you use your policy's cash value as collateral to secure a line of credit or loan. Because borrowed money is legally classified as debt, it is completely tax-free. You can use this money to live on, invest in real estate, or fund a business.
Die: When you pass away, your assets are passed on. The tax-free death benefit from your life insurance policy is used to pay off the outstanding loan balance, leaving the remaining wealth and assets free and clear for your heirs.
How Can Canadians Use It?
The "Buy, Borrow, Die" strategy is highly famous in the US, but in Canada, there is a critical catch: the
Canada Revenue Agency (CRA) does not forgive capital gains at death.
When a Canadian passes away, there is a "deemed disposition," meaning the government taxes your estate
as if you sold all your assets the day before you died.
This is exactly why life insurance is the missing puzzle piece for Canadians utilizing this strategy.
By using a permanent life insurance policy as your foundational asset:
For Canadian incorporated professionals and business owners, this strategy can be even more powerful
when structured within a corporation, allowing wealth to flow out to heirs tax-free through the Capital
Dividend Account (CDA).
Tax-Free Growth:
Your policy’s cash value grows without being subject to annual taxation.
Tax-Free Income
You can secure a third-party loan against the policy to fund your lifestyle, retirement, or business expansion without claiming it as taxable income.
Covering the Canadian Tax Bill:
Upon passing, the life insurance policy provides a massive, tax-free lump sum. This death benefit immediately pays off the loans you took out and covers the CRA’s capital gains tax bill on your other assets (like the family cottage or business shares). Your family inherits your wealth intact, rather than having to liquidate assets just to pay the government.
Who is it for?
While highly effective, "Buy, Borrow, Die" requires discipline, properly structured assets, and the right financial vehicle. It is ideal for:
High-Net-Worth Canadians
Individuals holding substantial assets (real estate, stocks, private businesses) who want to access liquidity without triggering massive capital gains taxes.
Incorporated Business Owners
Founders looking to pull money out of their corporation efficiently or ensure their business survives the tax hit of a succession transition.
Retirees Seeking Tax-Free Income
Those looking to fund an early or luxurious retirement using leverage rather than heavily taxed registered withdrawals (like RRSPs/RRIFs).
Generational Wealth Builders
Families who want to ensure their estate is passed down whole, without the CRA taking a massive portiaFamilies who want to ensure their estate is passed down whole, without the CRA taking a massive portion of their legacy.on of their legacy.
Is the "Buy, Borrow, Die" Strategy Right For You?
Executing this strategy in Canada requires careful planning, strict adherence to tax rules, and the right permanent life insurance structure.
At True North Life Insurance, we specialize in designing the exact policies needed to make this framework a reality for your family or business.