This guide will walk you through the steps to create and present an IFA (Immediate Financing Arrangement) within Life Design Analysis
Before you begin creating an IFA report, ensure that you have imported a Whole Life plan into your Design Case page. If you are unsure how to do this, please refer to our guide to adding a spreadsheet in LDA.
Selecting the IFA Report Concept
Once you have your whole life plan in place, follow these steps to set up the IFA report:
- Click on the "Report Concepts" drop-down menu.
- Select the latest IFA pre-selected LDA case design. This option will pre-select the most suitable page options for the IFA strategy, streamlining the process.
Setting IFA Parameters
In this section, you will configure the parameters for your IFA. These include:
- Finance rate (defaulted at 5%)
- Cash value collateral (defaulted at 90%)
- Additional asset collateral (defaulted at 90%)
- Interest deductibility and CPI deductibility options
- Choose between a holding or opco structure
- Set the tax rate
- Toggle options for interest of the loan balance to be paid at death
- Choose whether to include the reinvestment of loan proceeds in the net estate
Configuring Loan Assumptions
You can define loan assumptions based on your specific requirements. Options include:
- Advance insurance payments: Choose the percentage of the premium paid by the loan.
- Fixed annual advance: Specify the yearly loan amount for premium payments.
- Max cash value collateral: Decide when the loan balance should be paid off through cash value.
Ensure you enter the necessary information accurately, as this will significantly impact your IFA strategy.
Generating the IFA Report
Once you have set up the IFA parameters and loan assumptions, you can generate the IFA report. Click the "Generate Report" button to create the report based on your configured settings.
Reviewing the IFA Report
The generated IFA report will include various sections, providing insights into your IFA strategy. The default IFA report components include:
- Graphics and explanations of how the IFA works
- Details and assumptions
- Internal Rate of Return Summary
- Comparison of life insurance with and without an IFA
- Cash flow table
- Tax summary table
- Sensitivity analysis table
- Excess CDA table
- Investment balance projection table
Review the report carefully to gain a comprehensive understanding of your IFA strategy and its financial implications.