Article 3
IFA Structures 90% / 100%
IFAs typically come in two structures, depending on the leverage applied to the CSV. For example, many business owners opt for a 90% strategy, borrowing 90% of the CSV of a policy, which leads to a rapidly increasing borrowing capacity over time. It’s worth noting that using the 90% strategy requires a substantial funding commitment during the initial years of the policy.
If you prefer to borrow back all of the premiums, additional acceptable collateral security will be required. This collateral could be provided in the form of a letter of credit from a chartered bank, a mortgage on specified residential real estate, a collateral assignment of an investment portfolio, or other assets. By doing so, you increase the rate of return on the IFA.
However, it’s important to bear in mind the potential risks. The value of the additional security may fluctuate or even disappear entirely, depending on the quality of the security, prevailing economic conditions, and other factors.
Contact
Get In Touch
Ready to take the next step toward securing your financial future?
Contact us today for a consultation.