Corporate IRP

What is it?

• The accumulated value in a corporate-owned life insurance policy provides a cash flow at a point in the future by serving as collateral for a bank loan.
   
• Either the corporation or the shareholder obtain a bank loan.
   
• Where the corporation borrows, funds flow out to the shareholder as a taxable bonus of dividend.
   
• Repayment of the bank loan occurs at death of the insured.

Who can benefit from the Corporate Insured Retirement Program?

• The shareholder of a private corporation that requires life insurance protection. (i.e. key person, buy-sell, estate liquidity)
   
• Corporations with excess cash flow not required for business operations.
   
• Shareholders who want to access corporate dollars on a tax-advantage basis.

Benefits of the Corporate IRP

• Permanent insurance protection
   
• Use of "cheaper" corporate dollars
   
• Cash values are a corporate asset
   
• Tax deferred accumulation within exempt life insurance
   
• Access to cash values on tax efficient basis via bank loan
   
• Bank loan repaid by tax-free insurance proceeds
   
• Excess death benefit and other assets (equal to bank loan) paid out to estate tax-free

How Does the Corporate IRP Work?

1. The corporation purchases and makes deposits into an exempt life insurance contract under which the shareholder is the life insured.
    
2. At a point in the future, the company borrows from the bank using the life insurance policy to secure the debt (up to 75% of cash value). The company pays bonus / dividend to the shareholder.