By city

Infinite Banking in Burnaby

Burnaby is the rare Canadian city that decided decades ago what it wanted to become and then built it. That habit of long-horizon thinking is worth borrowing, because it is exactly what this strategy asks of a household.

A city that plans in decades

Burnaby is unusual among Canadian municipalities. In the 1960s and 1970s it set out a town-centre plan, concentrating density at Metrotown, Brentwood, Lougheed and Edmonds, and it has largely followed that plan ever since. Add to it Burnaby Mountain, where Simon Fraser University sits above the city and where the surrounding conservation area was protected rather than developed, and Central Park and Deer Lake held as parkland while everything around them intensified.

That is a city that decided what it wanted in thirty years and then declined to be talked out of it. It is worth naming here because the same discipline is what this strategy actually requires, and it is the part most people underestimate.

What the long horizon means in practice

A participating whole life contract does not reward speed. Cash surrender value is typically lower than the cumulative premiums paid for many years, and commonly for more than a decade. That is not a flaw; it is how the contract is built. The consequence is that the early years feel like nothing is happening, which is exactly when most people abandon the plan, and abandoning early converts a long-term arrangement into a plain loss.

So the honest test is not whether the idea appeals. It is whether you can hold premiums steady through a decade in which the numbers look unremarkable. A household that can answer yes has the one thing the arithmetic needs. A household that cannot should not start, and a good practitioner will say so rather than find a reason.

What the local economy adds

Burnaby carries a substantial technology, film production, telecommunications and post-secondary workforce, and a large population of professionals in their thirties and forties. That combination is favourable in a way worth stating plainly: the horizon is long enough for the arithmetic to work, and the incomes are often stable enough to sustain it.

Housing here is expensive by any national standard, though less punishing than Vancouver proper, which moves the timing question. A household past the acquisition squeeze, with the mortgage under control, is in a genuinely good position to consider this. A household still stretching for the purchase is not, and should deal with that first.

The confusion worth undoing

Many readers here know the home equity line of credit and assume this is a variation on it. It is not. A home equity line is granted by a lender who can change its terms, reduce the limit, demand repayment and realise on the house. A policy loan is advanced by the insurer against the value of the contract, with no new application, no credit check and no risk to the residence. That does not make it free: the interest is real and owed to the insurer, and an unpaid loan reduces the death benefit. But the nature of the risk differs, and conflating the two leads to poor decisions where the house is already most of the family's net worth.

BC rules and where it does not fit

Insurance in British Columbia is supervised by the Insurance Council of British Columbia, which is not ICBC. ICBC is the provincial auto insurer and has nothing to do with life licensing. A professional here holds the licence of Life Insurance Agent. British Columbia has not enacted title protection legislation, so financial advisor and financial planner are less constrained here than in Ontario. Verify the licence with the council and ask how the person is paid.

A household early in a mortgage, without an emergency reserve, or carrying high-interest consumer debt should deal with those first. 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. Take the answers to an accountant and a legal advisor of your own choosing.