Legacy in Action: Aligning Wealth with Purpose

At Aria Wealth Solutions, we craft sophisticated wealth strategies tailored to the unique needs of high-net-worth families, entrepreneurs, and business leaders. As a boutique advisory firm, we specialize in tax-efficient strategies, specialized life insurance planning, and the strategic use of institutional capital to maximize net worth, protect wealth, and deliver peace of mind.

While the term Immediate Financing Arrangement (IFA) is widely recognized across the industry, we use the term Leveraged Insurance to more accurately represent the strategy and its unique benefits. Leveraged Insurance enables you to build significant net worth and meet estate planning or liquidity needs by leveraging institutional capital, rather than tying up your own business capital in premium payments.

Discover how Leveraged Insurance can strategically protect your wealth while maximizing estate value.

The Leveraged Insurance Advantage

Leveraged Insurance allows you, as a business owner, to create a powerful asset with multiple financial attributes, including:

• Balance Sheet Value: The policy’s cash value grows over time and is recorded as an asset on your corporate’s balance sheet.
• Tax Efficiency: Tax-efficient growth of the asset and distribution to eventual beneficiaries
• Favourable financing options enabl.
• Intergenerational Wealth Transfer: Upon death, the policy delivers tax-efficient liquidity, easing estate settlement and facilitating wealth transfer without financial strain.

Leveraged Insurance offers you the ability to secure long-term protection and peace of mind without sacrificing the liquidity needed to pursue immediate opportunities.

How Leveraged Insurance Works

The strategy involves the use of a permanent life insurance policy in conjunction with financing. This allows you to achieve comprehensive life insurance coverage without impacting the liquidity or capital needed for business growth. 

Here’s how the process works:

1. Purchasing a Life Insurance Policy: Your corporation purchases a permanent life insurance policy. Instead of using business cash flow for premiums, you can secure financing to cover these costs.
2. Securing Financing: A loan is secured from a financial institution, with the insurance policy and potentially other assets used as collateral. Over time, the policy’s cash value grows and serves as the primary collateral for the loan.
3. Tax Benefits: Leveraged Insurance offers significant tax advantages:
4. Estate Liquidity: Upon death, the life insurance proceeds settle the outstanding loan, with the remaining payout available for estate settlement, taxes, or wealth transfer.

This strategy allows you to maintain liquidity while building a substantial asset for your estate.

A Real-World Example: Chris and Joyce

Chris and Joyce are business owners in their 50s with significant corporate assets. Facing the need to prepare for future tax liabilities, they sought a solution that would allow them to maintain their business capital for reinvestment.

By working with Aria Wealth Solutions, they implemented a Leveraged Insurance strategy. This approach enabled them to:

• Secure a permanent life insurance policy funded through financing.
• Retain their business capital for ongoing projects.
• Use the policy’s cash value as collateral, reducing financial strain.

Upon their passing, the death benefit will cover the outstanding loan balance, with the remaining funds used to settle their estate and support their heirs.

The Value of Participating Whole Life Insurance

At Aria Wealth Solutions, we recommend participating whole life insurance for implementing Leveraged Insurance strategies. This policy type offers:

• Stable Growth: Participating policies are designed to deliver consistent growth over time.
• High Collateral Acceptance: Financial institutions accept 90-100% of the policy’s cash value as collateral, providing flexibility.
• Enhanced Tax Benefits: The collateral insurance deduction remains available, even when the policy is on premium offset in later years.

Participating whole life insurance ensures a solid foundation for your Leveraged Insurance strategy, maximizing both value and tax efficiency.

Minimizing Cash Flow Impact

A significant advantage of Leveraged Insurance is its minimal impact on cash flow. By using institutional financing, you pay only loan interest (less tax savings), and even have the option to borrow to cover this net interest amount, avoiding the traditional cash outlay of large annual premiums. Over time, as the policy’s cash value grows, the need for temporary additional collateral diminishes and in almost all cases is entirely eliminated. You have the flexibility to either repay the loan or extend it based on your financial needs.

This approach enables you to retain liquidity for growth while building a robust estate asset.

Maximizing Tax Efficiency

The success of Leveraged Insurance is closely linked to tax efficiency. High corporate or personal tax rates enhance the value of deductions available for loan interest and insurance premiums. If you are taxed at higher rates, substantial savings can be realized compared to traditional insurance funding approaches.

The Aria Wealth Solutions Difference

At Aria Wealth Solutions, we pride ourselves on delivering boutique, ultra-specialized solutions tailored to your unique needs. Leveraged Insurance exemplifies our commitment to strategies that protect your wealth, preserve your liquidity, and maximize your estate’s value.

With years of expertise, we ensure your strategy is impactful, strategic, and personalized.

Final Thoughts

Leveraged Insurance is a sophisticated solution for those who prioritize protecting their wealth while ensuring a seamless estate planning process. This approach preserves liquidity and maximizes estate value by combining institutional capital with permanent life insurance.

🔗 Book your discovery session and take the first step toward maximizing your estate value and securing peace of mind for generations. 

Let us help you create a legacy that endures. Your net worth. Your legacy. Your terms.