IRP True-Net-Cost Comparator
Interest + fees + tax on fees + repayment + the CDA effect — the honest price of “tax-free” insured retirement income.
The IRP pitch: borrow against your policy’s cash value in retirement — the loan isn’t income, so the money arrives “tax-free.” The book’s discipline: nothing is free; it is pre-paid. Judge the structure only on True Net Cost — interest + guarantee fees + corporate tax on those fees + repayment at death + the effect on your CDA — against the tax you would simply have paid on withdrawals.
The mechanics matter: a collateral loan from a bank (not income, repaid from the death benefit) is not a policy loan from the insurer (taxable above ACBACB — Adjusted Cost Basis
The tax cost of a property or policy. For life insurance, the death benefit minus the ACB is what credits the CDA — and the ACB decays toward zero near life expectancy. Full glossary →). Confusing the two is the chapter’s COMMON MISTAKES box for a reason.
The comparator builds the loan year by year against your projected cash value, watches the 90% advance ceiling banks impose, totals the True Net CostTrue Net Cost — True Net Cost (IRP)
The honest price of an insured retirement plan: interest plus guarantee fees plus corporate tax on those fees plus loan repayment plus the ACB effect on the CDA — compared against simply paying tax on withdrawals. Full glossary →, and compares it to the dividend-route tax on the same income — including the OASOAS — Old Age Security
The government pension payable from 65, deferrable to 70 for +36%. Subject to a recovery tax (clawback) above an income threshold — tested on grossed-up income. Full glossary → clawback a loan-based income legitimately avoids. Sometimes the IRPIRP — Insured Retirement Plan
Using a policy’s cash value as collateral for retirement-income loans. Judge it on True Net Cost, never on the tax-free label. Full glossary → wins. Sometimes the boring answer wins. The label never decides.
The government pension payable from 65, deferrable to 70 for +36%. Subject to a recovery tax (clawback) above an income threshold — tested on grossed-up income. Full glossary → clawback threshold. For clawback-exposed retirees, that is often the IRPIRP — Insured Retirement Plan
Using a policy’s cash value as collateral for retirement-income loans. Judge it on True Net Cost, never on the tax-free label. Full glossary →’s biggest genuine edge.
The tax cost of a property or policy. For life insurance, the death benefit minus the ACB is what credits the CDA — and the ACB decays toward zero near life expectancy. Full glossary →; a collateral loan (from a bank) is not income — the IRPIRP — Insured Retirement Plan
Using a policy’s cash value as collateral for retirement-income loans. Judge it on True Net Cost, never on the tax-free label. Full glossary → uses the second. And rate risk is real: the loan compounds at whatever rates do, while the policy compounds at scale. Stress +2% before believing any projection.
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Questions to ask your advisor
Project the loan against the guaranteed cash value column, not just current scale — when does coverage breach 90%?
What would the same after-tax income cost via dividends or RRIF withdrawals, including OAS clawback, on my numbers?
What is the exit if rates spike or the bank tightens advance rates — collapse, paydown, or ride it out?
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Educational illustration, not advice. This tool is provided for educational purposes only and does not constitute financial, tax, legal, accounting, or insurance advice. Results are estimates, not promises — hypothetical illustrations are projections only. Figures use Ontario rates as of the date stamped above; rates and limits change. Confirm current figures and your specific situation with a CPA, tax lawyer, and licensed insurance advisor before acting.