What is an immediate financing arrangement (IFA)?

An Immediate Financing Arrangement (IFA) is a strategy used mainly by high-net-worth individuals and businesses. An IFA offers the benefits of permanent life insurance and also allows you to access funds from the policy through a loan. A properly structured IFA can be a solution for some clients, and this video highlights some of the key benefits.

Video transcript

An immediate financing arrangement is a financial strategy that leverages permanent life insurance to build wealth while simultaneously accessing funds from the policy through a loan.

This allows clients to keep their money working for them the way they’d like while still taking advantage of the benefits permanent insurance offers. An IFA may be an ideal solution for the following reasons.

Coverage and capital

Allows you to enjoy the benefits of life insurance while still having cash flow to grow your business or investments.

Business benefits

For corporations, an IFA can increase the balance of the capital dividend account, which can have tax advantages.

How to determine if an IFA is a good fit

While an IFA can be a useful tool, it’s not suitable for everyone. Tax rules can change and the lending component of an IFA carries its own set of risks.

If you pursue an IFA, your advisor will coordinate with a bank to assist with the lending aspect. To truly understand if this option fits your needs, it’s best to seek advice from legal, tax, insurance and estate professionals.