The Immediate Financing Plan (IFP): a concrete strategy, far from the myth of "Infinite Banking".
On the Internet, one often sees videos praising the merits of Infinite Banking, an American approach where life insurance is used to 'bank yourself'. This concept also exists in Canada, but it is often poorly understood or poorly adapted to our financial and tax reality.
This is where the Immediate Financing Plan (PFI) enters the scene, a recognized and regulated Canadian strategy, which rests on a similar principle: using the value of a permanent life insurance policy as financial leverage, but in a structured and prudent way.
What is a PFI?
The Immediate Financing Plan is a strategy designed for people who have a real need for life insurance (family or business protection), but who wish to optimize how they finance this protection.
Specifically, the PFI combines:
a participating permanent life insurance policy,
a bank loan secured by this value,
and a tax and financial strategy that allows using this lever to maximize available liquidity without compromising the insurance coverage.
The difference between the PFI and Infinite Banking
Infinite Banking often emphasizes the idea of becoming "your own bank" — an appealing concept, but often taken to extremes and ill-suited to the Canadian tax context.
The PFI, on the other hand, relies on clear rules:
Financial institutions recognize the policy's value as loan collateral.
Loans are structured and documented.
The whole system is designed with the support of a financial security advisor and a tax specialist, so that the advantages (such as interest deductions in certain cases) comply with Canadian law.
Who is the PFI for?
The plan is aimed mainly at individuals or businesses who:
have a real need for permanent life insurance,
have a stable cash flow,
wish to grow their wealth, finance other projects without liquidating existing assets and optimize the tax efficiency of their cash flow while benefiting from life insurance.
Simplified example
A company takes out a permanent life insurance policy on the life of its principal shareholder.
It pays the premium, and then the bank lends it an amount equal to a portion of the policy's cash surrender value.
This loan can be used to finance investments, improve the company's liquidity, or even reinvest in operations.
Meanwhile, the life insurance protection remains intact, and the estate will benefit from the death benefit net of debts.
In conclusion
The PFI is a smart and regulated financial strategy that allows leveraging permanent life insurance as a growth and financing lever.
Unlike viral web concepts, this is a serious, personalized, and regulated approach that requires rigorous analysis before implementation.