An IFA lets a corporation or a high-net-worth individual fund a large permanent life insurance policy without tying up the cash to do it.
The mechanics, in order: the policy is purchased and funded; a bank lends against it, using the policy as security; the borrowed funds return to the business or the portfolio.
The result is that the coverage is in force and the capital is still working — rather than sitting inside a policy where the business cannot reach it. This page sets out the minimums, who the structure is for, and where we decline to proceed. It is not a recommendation.
We arrange these through two banks. Their entry requirements are not the same, and the difference usually decides which one a case goes to.
$50,000
minimum annual premium · minimum 5 years
At the floor, that is a $250,000 commitment over the term.
$100,000
minimum annual premium · minimum 10 years
At the floor, that is a $1,000,000 commitment over the term.
These are entry thresholds, not targets. Meeting the minimum means the file can be looked at — not that the structure is appropriate. Both figures are annual premium, not a one-time deposit. If that commitment is not comfortably serviceable from predictable cash flow, an IFA is the wrong tool.
Corporations carrying significant retained earnings. Profitable operating companies and holding companies with capital sitting idle inside the corporation.
High-net-worth individuals. With the income and balance sheet to sustain a multi-year premium commitment.
We turn these away regularly. The two most common:
Investable assets under $100,000. An IFA is not a way to acquire coverage you cannot otherwise afford. If the capital base is not there, the structure adds obligations, not options.
Someone with $100,000 who wants to borrow against it repeatedly. This is a long-term insurance and estate structure, not a leverage engine to be recycled. People who arrive wanting to loop the same capital are looking for a different product, and usually for a different kind of advisor.
If either describes your situation, an IFA is not the answer — and we will say so at the first conversation rather than the fifth.
When a corporation owns the policy and receives the death benefit, the amount in excess of the policy’s adjusted cost basis (ACB) is credited to the company’s capital dividend account (CDA).
Capital dividends paid out of that account to Canadian-resident shareholders are received tax-free.
In practice this is what makes corporate-owned insurance structurally different from simply holding investments in the company: it creates a route for value to reach shareholders’ hands that other corporate assets do not have.
Two things this does not mean
The death benefit is not entirely tax-free — it is the portion above ACB that credits the CDA, and ACB changes over the life of the policy. And the outcome depends on ownership, beneficiary designation and the policy being structured correctly from the start. Get this wrong at setup and it cannot be repaired later.
We do not provide tax advice. On any corporate IFA we expect your accountant to be at the table, and for larger structures, a tax lawyer.
We will not sell an IFA to someone who does not need the insurance. If the coverage itself is not warranted, the financing around it is irrelevant.
We will not build a structure that depends on refinancing to survive. If it only holds together when the bank keeps saying yes, it does not hold together.
We will not advise on the tax structure alone. We handle the insurance and the lender relationship; your accountant owns the tax position.
We will not promise deductibility, a CDA amount, or an approval. Any of those in writing from an advisor should worry you.
Premium capacity, corporate structure, and whether the insurance need stands on its own. Most conversations end here, correctly.
Medical and financial underwriting on the policy. Approval is not automatic at these face amounts.
Scotiabank or Manulife Bank, depending on the case.
Ownership, beneficiary and CDA treatment confirmed before anything is signed.
The structure is reviewed each year, not filed away.
An Immediate Financing Arrangement involves both a life insurance contract and a bank loan, and carries risks including changes in lending rates and lender terms. Tax treatment depends on individual circumstances and current legislation. This page is general information, not advice, and not an offer of insurance or credit.