For the right client, accessing capital through an IFA can help grow wealth or finance a business while borrowing at low interest rates
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The borrowing process can be repeated as long as premiums are paid, which can be for 10 to 20 years, depending on the policy. Repayment of the loan is also flexible, allowing for regular payments, lump sums or full repayment if the client has generated enough cash. That’s because IFAs are considered to have higher risk as clients who qualify are not only borrowing money, they also need to have the money to be able to pay the premiums and the interest, he says.Mr. Fray says that clients who use IFAs are often paying hundreds of thousands, if not millions, of dollars in annual premiums.
Mr. Pilz says IFAs are for people who are in capital-intensive businesses and are accustomed to using leverage as a way to fund growth.
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