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This past year has highlighted the importance of Canadians, especially business owners, to manage uncertainty in the world with two practical tools: life insurance and cash reserves.
However, the two are often at odds. Having a policy in good standing offers peace of mind that loved ones will be cared for, but only at the expense of ongoing premiums that eat into current cash flows. As the economy struggles to regain footing, businesses and individuals may need to brace for the potential of uncertain incomes. So, which takes priority:
liquidity today, or security tomorrow?
Immediate Financing Arrangements (IFA) have typically provided a strategic solution to bridge the gap, allowing the policy holder to borrow back 100% of the premium amount so they have both coverage and tax-free cash. But while this process is straightforward in theory, the reality can be more complex. Common problems include:
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