Our Strategies & Concepts

  • Immediate financing arrangements

    The immediate financing arrangement (IFA) is a financial strategy we use to allow our clients to benefit from permanent life insurance coverage while allowing those who adhere to it to retain access to the required liquidity to sustain the growth of their company.

    An invested party holds a life insurance policy that will generate high surrender values. The policyholder then pays the insurance premiums and makes additional deposits to help the surrender value grow as quickly as possible based on the financial limits determined by the Income Tax Act (ITA). The surrender value of this life insurance policy will then accumulate tax-free.

    Once the life insurance policy's surrender value grows, it is used as security to acquire financing from an external financial organization. The liquidity generated by the loan is then reinvested in the course of the business's activities. When the conditions are respected, a portion of the premiums paid and the interest on the loans are deductible for tax purposes. New loans are issued each year to optimize this strategy.

    In the event the insured dies, the death benefit is then paid out tax-free. A portion of this benefit is used to repay the loan to the financial organization, and the remaining balance is paid to the named beneficiaries.

    To learn more:
    Immediate financing arrangement – Implementation Guide (PDF)file_download

  • Strengthening of balance sheets 

    When working with business owners, discussing the protection of human capital and the preservation of financial capital is essential.

    For short and medium-term insurance needs, such as coverage for loans, term insurance is an excellent alternative. When the needs are long-term, this type of life insurance can become detrimental to the business over time. Paying the premiums will become an expense that results in a reduction of cash flow or retained earnings instead of being used to support the company's growth.

    In this case, permanent insurance is a much more compelling solution. In addition to lifetime coverage, permanent insurance acquires the following benefits:

    ● It allows for a tax-free accumulation of funds and can help reduce the company's liabilities.● These funds are combined with the death benefit, in whole or part, and are not taxed at death. ● The amount of paid-up capital, minus the ACB, procures an amount that can be included in the capital dividend account (CDA). ● The amounts in the CDA are paid to the shareholders in the form of non-taxable dividends. ● The surrender values in an insurance policy are considered assets on the balance sheet.
    To learn more:
    Balance sheet strengtheningfile_download

  • Estate planning

    Estate planning is a financial strategy we use to improve estate inheritance while also offering the possible benefits of permanent life insurance.

    To carry out this strategy, the permanent life insurance policy payments are maximized for the insured person's life. Instead of purchasing unregistered fixed-income securities, the policyholder prefers payments to the insurance policy. The returns generated on the payments made to the policy and the surrender value accumulate tax-free for the duration of the insured person's life.

    At the time of the insured person's death, the death benefit, improved by the surplus contributions to the permanent life insurance policy, is paid out to the named beneficiaries tax-free.

  • Insurance as an asset class

    When an estate has a need for it, insurance can sometimes be used as an investment or as a separate asset class in some cases. The policy's implied after-tax rate of return depends on several factors, such as the premiums payable, underlying investments, management fees, the possibility of use of capital dividend accounts, etc.

    In many cases, the after-tax rate of return will be excellent, even after the client's life expectancy. It must then be considered whether it would be possible to obtain an equivalent pre-tax gross rate of return excluding the policy. Because the date of the client's death is unknown, it is essential to establish a strategy in the event of premature death. Life insurance can also be added to the prudent portion of a diversified portfolio.

  • Tax-efficient portfolios

    Taxation can absorb a substantial amount of a portfolio's returns. This is why optimizing investments of certain asset classes under different tax systems is essential. This optimization accounts for the client's circumstances, such as their investor profile, the after-tax amounts accessible in the different accounts, the category of the tax system, etc. For example, we will try to put growth securities into a tax-free savings account or avoid foreign income in a holding whenever possible. Ultimately, the goal is to acquire a higher overall value for the portfolio without increasing the risk.

  • Insured retirement strategies

    Insured retirement is a type of financial strategy that provides the client with the benefits of a life insurance policy while offering the prospect of flexible retirement income.

    Investments are made into a permanent life insurance policy for the duration of the insured's life. The income generated on these investments and the surrender value is collected tax-free for the insured person's lifetime.

    When the insured retires, the insurance policy is allocated as security to a financial organization. The financial organization can then issue loans to the policyholder depending on their needs. The amounts loaned by the financial organization are non-taxable and act as retirement income for the policyholder.

    Depending on the situation, the amount of the loan issued by the financial organization is limited to a predetermined amount of the surrender value of the insurance policy or the premiums. Generally, the borrower is not required to repay the loans or the interest during their lifetime.

    Upon the death of the policyholder, the financial organization will receive the amount of the death benefit that corresponds to the balance of the loans and any unpaid interest. The loan is then repaid in agreement with the terms and conditions of the agreement between the policyholder and the financial organization. The remaining balance of the death benefit is then paid to the beneficiaries named.

  • Intergenerational wealth transfers (Cascade)

    Some clients benefit from a desirable situation and wish to provide a solid financial future for their children or grandchildren. Our intergenerational wealth transfer strategy provides them with a way to do this tax-efficiently:

    ● A parent or grandparent purchases participating life insurance (such as an iA PAR) or any other permanent life insurance product that has a surrender value for their children or grandchildren.
    ● To free the policy from payment, the subscriber will pay the premiums in 10 or 20 years. The subscriber may also make excess premium contributions, creating a tax-free surrender value over the years.
    ● When the child or grandchild reaches adulthood, the parent or one of the grandparents can assign ownership of the full paid-up life insurance policy to that person. Under subsection 148(8) of the Income Tax Act (ITA), this transfer will have no tax consequences.
    ● The child or grandchild may also benefit from the surrender value accumulated in the life insurance policy to undertake certain expenses or benefits from later growth.

  • Shared ownership critical illness insurance

    The main objective of shared ownership critical illness insurance is to allow the shareholder of a private company to benefit from insurance coverage in the event of a critical illness that is covered by the policy. However, when a company and its shareholder take out a critical illness policy on said shareholder, this strategy can also offer other advantages:

    ● The insurance policy provides for the payment of benefits to the company in the event the shareholder suffers from one of the medical conditions or illnesses covered.
    ● The contract is taken out with a premium repayment option if the critical illness benefit has not been paid upon termination or the expiration of the policy (for example, after 15 years).
    ● This option is payable by the shareholder personally through a higher salary or dividend or by the company, thus becoming a taxable benefit. However, after a certain number of years, it provides for repayment of all premiums, particularly those of the company and the shareholder, all tax-free and net of management fees. The amount is paid to the shareholder, tax-free.
    ● In addition to allowing the money to be released by the company, this option allows an interesting off-balance sheet return in several circumstances, especially if the shareholder’s marginal rate is high. This could also reduce the amounts of liabilities and the risk of losing the perferable corporate rate.

  • Financing of share redemption

    Life insurance is a great way to finance a shareholder agreement in the event of the death or invalidity of a shareholder of a business corporation or company. The company takes out insurance policies on behalf of the shareholders and is named their beneficiary. At the time of a loss, the amounts paid to the company serve to redeem the shares of the disabled or deceased shareholder.

    If the shares are held by more than one person when a business corporation is established, it is recommended the shareholders sign an agreement. This agreement is a contract that will establish the general by-laws, the structure and operation of the company, the nature of the relations among the shareholders and their commitments to the company.

    The agreement provides for specific actions to be taken in different circumstances to avoid disagreements among the shareholders (for example, if a shareholder desires to sell their share of the business, declares personal bankruptcy, dies, becomes ill, etc.).


Contact us to learn more about how we can help you take your finances to the next level.