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Westmount, QC


An Immediate Financing Arrangement (commonly known as an IFA) is a financial planning vehicle that combines life insurance coverage with tax-advantaged wealth accumulation.

Who could benefit from an Immediate Financing Arrangement?

An IFA is a financial strategy that serves a particular purpose and, as such, isn’t suitable for everybody. Affluent individuals with a high net worth or business owners of a private corporation that have a steady and stable cash flow situation could potentially benefit significantly from an IFA if they are seeking permanent life insurance coverage, as well as paying (and expecting to pay in the future) income tax at the highest rate.

How does an Immediate Financing Arrangement work?

There is a particular process that should be followed in order to get the most from this estate planning strategy, as follows:

  • First, the individual or company buy a cash value permanent life insurance policy, contributing the maximum premiums permitted by the policy.

  • This policy is pledged as collateral to a bank in exchange for loan.

  • The individual/company must pay the loan interest.

  • The individual/company can then use the loan funds to reinvest into their business or to invest.

Upon the death of the policyholder, the loan is paid off by the payout from the life insurance policy and the policyholder’s beneficiaries receive the difference. Alternatively, if the policy is owned by a private corporation, the full amount of life insurance death benefit is available for Capital Dividend Account.

Are there any downsides to an Immediate Financing Arrangement?

It’s critical that you seek professional advice to ensure that your personal situation is suited to such an arrangement and to also ensure that it is conducted and executed in exactly the right way in order to perform successfully.

If you are interested in the benefits that an IFA can offer you and / or your business, please contact us directly and we can work with you to analyze the potential effectiveness of this strategy and support you make it work for you.

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