Canadian lenders offering an Immediate Financing Arrangement (IFA)

How does an IFA work in Canada?

Getting an immediate financing arrangement in Canada can become easy when you follow these steps:

Canadian lenders offering an immediate financing arrangement

Here is a list of popular Canadian lenders offering an Immediate Financing Arrangement in Canada:

• Equitable Bank
• Manulife Bank
• DUCA Credit Union

Equitable Bank IFA

Equitable Bank has a history dating back to 1970, when it was founded as the Equitable Trust Company. In 2013, it became a Schedule I Bank and now ranks as the 7th largest bank in Canada in terms of assets. Over the years, Equitable Bank has expanded its offerings with immediate financing arrangements or IFA to help you access up to 100% of the premium paid towards a permanent life insurance policy.

Here are some of the benefits of choosing Equitable Bank IFA:

• There is no additional collateral required except for the insurance policy
• Competitive interest rates so that you get better returns
• Use of technology for the complete documentation process and easy access to the loan
• An IFA is available to a wide range of borrowers, whether or not they are high net worth; the only requirement is an annual policy premium of $100,000
• You can choose from program 1 and program 2, depending on your net worth and FICO score

Eligibility:

You will be eligible to get an IFA from Equitable if you:

• Are a resident of Canada
• Have a whole life insurance policy or are in the process of obtaining a whole life policy with an annual premium of $100,000
• Meet the financial requirements to ensure that the loan can be paid back

Overview of Equitable Bank IFA

Manulife Bank IFA

Manulife Bank dates back to 1993 and is one of the Canadian banks founded by an insurance company. It operates as a wholly-owned subsidiary of Manulife Financial, one of Canada’s largest and most respected financial institutions. With an asset size of more than $29 billion, Manulife Bank has grown significantly over the past three decades. It has offered IFA programs since 1995.

Here are some of the reasons why you should choose Manulife Bank IFA:

• There is no maximum IFA size when you choose Manulife
• You can borrow up to 100% of the cash value of a whole life insurance policy or 90% against a Universal Life (UL) policy invested in Guaranteed Investment Accounts (GIAs)
• There is flexibility to choose from two structures: 100% CSV lending, or 100% replacement of premium, which requires paying the full premium and providing additional collateral
• There is no penalty for repaying the loan amount
• Experienced salespeople, loan adjudicators, and risk management people who know about IFA help you structure your IFA

Eligibility:

You will be eligible to get an IFA from Manulife if:

• You have a minimum IFA size of $300,000 over ten years, or $30,000 per year

Overview of Manulife Bank IFA

DUCA Credit Union IFA

DUCA Credit Union (DUCA Financial Services Credit Union Limited) was founded in 1954. Over the years, it has evolved into one of the largest member-owned financial institutions in Ontario. It has an asset size of $6 billion and offers a range of financial services, including immediate financing arrangements. DUCA’s Immediate Financing Arrangement is a strategy that combines permanent life insurance with a loan, giving clients both insurance protection and access to capital for other investments.

Here are some of the benefits of choosing DUCA IFA:

• DUCA makes the approval of a loan easier as it works with the major Canadian life insurance carriers
• A 100% lending ratio is available for whole life policies
• There are 3 primary structures to choose from: borrow the equivalent of 100% of the CSV each year, or the equivalent of 100% of the CSV and the entire premium each year, or 100% of the CSV plus the entire premium and a portion of net interest payments
• A competitive interest rate applies

Eligibility:

You will be eligible to get an IFA from DUCA when:

• The minimum loan amount is $50,000 and the maximum is $10,000,000
• It is used for a personal or corporate line of credit (LOC)

Overview of DUCA IFA

Equitable Bank vs. Manulife Bank vs. DUCA Credit Union: Which IFA lender fits your needs?

Here is a table that illustrates the key differences between Equitable, Manulife, and DUCA, the popular lenders in Canada.

Equitable vs Manulife vs DUCA

Is IFA really helpful in Canada?

An immediate financing arrangement is helpful for high‑income Canadians and business owners who need permanent life insurance but also want to keep their capital available for investments. It becomes helpful by providing liquidity to fund your immediate business and investment needs.

However, it is also a strategy that involves risks like rising interest rates, fluctuating dividends affecting CSV and policy performance, making it work best when carefully designed and monitored with a qualified advisor. Consult our licensed insurance experts who can help you decide if IFA is the right choice for you. We will help you choose the right strategy no matter what. Schedule a consultation with our advisors now!

What is IFA in Canada?

An Immediate Financing Arrangement (IFA) uses the cash surrender value of a permanent life insurance policy as collateral for a line of credit. You maintain coverage while potentially accessing capital for business or investment purposes, subject to credit approval and lender advance rates.

Which lenders offer IFA in Canada?

Many Canadian financial institutions offer IFAs. Examples include: Equitable Bank, Manulife Bank, and DUCA Credit Union.

Is it worth paying an IFA?

An IFA strategy is worthy if you are a high-income earner or business owner who has strong, stable cash flow and can invest the borrowed funds at attractive returns. If your income is uncertain, your risk appetite is lower, or you cannot comfortably handle rising interest costs, the IFA strategy may not be beneficial for you.

How to apply for IFA?

To apply for an IFA in Canada, first, secure a permanent life insurance policy. Assign the policy to the lender as collateral, then, depending on the program, borrow up to 100% of the policy’s CSV or up to the full premium amount. Use the funds for qualified business or investment purposes as appropriate.

Is IFA interest tax-deductible?

Interest may be deductible when borrowed funds are used to earn income from a business or property, and other conditions are met. Tax outcomes depend on your facts. Get tax advice from a financial advisor before implementing an IFA strategy.