Immediate Financing Arrangements (IFA)

High-net-worth business owners often face a dilemma: they recognize the need for significant permanent life insurance for estate planning, but they hesitate to tie up capital that could be used for business growth or investments.

Enter the Immediate Financing Arrangement (IFA).

Have Your Cake and Eat It Too

An IFA allows you to purchase a policy while keeping your capital working for you. Here is the process:

1. Policy Purchase: Your corporation purchases a whole life or universal life policy.
2. Collateral Loan: You pledge the policy to a Canadian bank as collateral.
3. Line of Credit: The bank provides a line of credit back to your corporation, typically for 100% of the Cash Surrender Value (CSV) or even the total premiums paid.
4. Invest: Your corporation reinvests those borrowed funds into your business or property to generate income.

The Double Deduction

This strategy is highly tax-efficient. Not only does the policy grow tax-deferred, but the interest you pay on the collateral loan is generally tax-deductible as long as the borrowed funds are used to earn income.

Note: This strategy requires a sophisticated understanding of credit and tax rules. Vantage Corporate works with top Canadian lenders to facilitate these arrangements.