By city

Infinite Banking in Chilliwack

Every conversation about this strategy ends with an illustration: pages of numbers running forty years forward. Almost nobody is taught how to read one, and the reading takes about ten minutes.

The eastern end of the valley

Chilliwack sits where the Fraser Valley narrows against the Cascades, with Mount Cheam over the town and Cultus Lake to the south. Sardis and Vedder Crossing run along the Chilliwack River, the Canada Education Park occupies the former military base, and the valley floor around the city is some of the most productive farmland in the province.

What matters for this page is not the geography but a habit the valley encourages: people here generally want to see the numbers before they decide. That is the right instinct, and it deserves the tools to act on it.

What an illustration is, and what it is not

An illustration is a projection produced by the insurer's software on assumptions chosen at the time it is run. It is not a contract, it is not a promise, and no part of it obliges the insurer to anything. The contract is the policy document. The illustration is a picture of what would happen if a set of assumptions held for forty years, and one of those assumptions will not.

The Canadian life insurance industry publishes guidance on how illustrations must be presented, and the central requirement is that guaranteed and non-guaranteed values are shown separately. That separation is the whole document. Everything below is about reading it.

The four things to find, in order

One: the guaranteed column. Find it first and read it alone, covering the rest of the page. These are the values the insurer is contractually obliged to provide, dependent on the insurer's financial strength and its claims-paying ability. They are not government guaranteed; policyholder protection in Canada comes from Assuris, within published limits. If the guaranteed column alone does not justify the premium, you are buying the projection rather than the contract.

Two: the dividend scale assumed. The non-guaranteed column runs on an assumed dividend scale, usually the insurer's current one, projected unchanged for decades. Ask what scale was used, and ask to see the same illustration run at a lower scale. Most insurers can produce a reduced scale illustration on request. If nobody offers one, ask why. 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.

Three: the crossover year. Find the year in which cash surrender value first exceeds cumulative premiums paid, in the guaranteed column and then in the illustrated column. On most contracts those two years are far apart. The guaranteed answer is the one to plan around.

Four: the early years. Look at years one to five in the guaranteed column. That is what you would receive if you had to stop. It is usually a fraction of what has been paid in, and it is the single most important number for anyone whose income is not certain.

Two things illustrations do not show

They generally do not adjust for inflation, so a figure at year thirty is in nominal dollars and buys considerably less than the same figure today. And they assume every premium is paid on time for the full period. There is no column for the year you could not pay.

British Columbia rules and where it does not fit

Insurance in British Columbia is regulated by the Insurance Council of British Columbia, and a professional here holds a Life Insurance Agent licence. Verify it in the Council's public register and ask how the person is paid. British Columbia has no title protection statute of the kind Ontario, Quebec and New Brunswick have enacted.

A household 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. Ask for the illustration by email before the meeting rather than across the table during it. Numbers read at home are read differently.