By city

Infinite Banking in Burlington

Burlington has an older median age than the towns around it, and a large share of households who intend to retire in the house they already own. Arriving at this subject late changes which column of the illustration matters.

Between the escarpment and the bay

Burlington sits between the Niagara Escarpment and Burlington Bay, with the Royal Botanical Gardens spanning the marshes at the head of the harbour and Mount Nemo and Rattlesnake Point on the ridge above. Spencer Smith Park runs the length of the waterfront, and the Skyway carries the QEW over the canal into Hamilton.

What matters here is demographic. Burlington's median age runs higher than its neighbours, a large proportion of households own their home outright or nearly so, and many intend to stay in it. That combination changes the analysis in a direction most material on this subject does not address, because most of it is written for someone in their thirties.

Arriving late changes which column matters

The arithmetic of a participating policy rewards time above every other variable. A reader in their twenties has forty years for the contract to work. A reader at fifty-eight does not, and no amount of enthusiasm changes that.

What follows is not that the answer is no. It is that the guaranteed column becomes the column that matters, and the illustrated column becomes decoration. Ask in which year surrender value is projected to exceed cumulative premiums, then ask the identical question using only the guaranteed values. On a long horizon the two answers are years apart. On a short one they can be decades apart, and the second answer is the one you will live in.

Dividends are not guaranteed. They are declared annually by the insurer's board based on the participating account's experience, and the scale can be revised downward. A reader with thirty years ahead can absorb a poor decade. A reader with twelve cannot.

Where it does fit at this stage, stated honestly

Two situations, and they are narrower than the general pitch suggests.

An estate need. Canada has no estate tax but does have a deemed disposition at death, which taxes the accrued gain on capital property in the final return. A household holding a cottage, a rental property or a portfolio with a large unrealised gain faces a bill the estate must pay while the value sits in assets nobody wants to sell in a hurry. Life insurance has answered that problem for a long time, independently of any strategy. If that is your actual problem, you may need insurance and not need this strategy at all, and an honest practitioner will tell you which one you have.

A survivor gap. Many pensions reduce on the death of the member, some substantially. That gap is readable in your own plan documents and nowhere else. If it exists, closing it is an insurance question rather than a strategy question.

Where it does not fit at this stage

A household without dependants, without a corporation, with a pension that continues at full value to a survivor, and with no identifiable capital need is a poor candidate, and the strategy has little to offer them. That describes a real number of households in this city.

Insurability is the other constraint nobody mentions early enough. An application can be rated higher or declined on health grounds, and the likelihood of both rises with age. Never build a plan that depends on a policy being accepted before it has been accepted, and be wary of any presentation that treats acceptance as a formality. Ask that question first, not last.

Ontario rules and the closing caution

Insurance in Ontario is supervised by the Financial Services Regulatory Authority of Ontario, and a professional here holds the licence of a Life and Accident & Sickness Insurance Agent. Under the Financial Professionals Title Protection Act nobody may use the title Financial Planner or Financial Advisor without an approved credential, and a life insurance licence alone qualifies for neither. Verify the licence in the public register and ask how the person is paid.

Cash surrender value is typically below cumulative premiums for many years, so an early exit is a loss, and a shorter horizon means less room to recover from one. Nothing on this page is advice. No assessment has been made of anyone reading it, and the author is not a neutral party: he is licensed to sell the contracts this strategy uses and is paid a commission when one is placed. Bring your pension statements and your most recent illustration, and read the guaranteed column first.