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Infinite Banking in Coquitlam

A great many Coquitlam households carry a mortgage partly paid by a tenant, or a strata fee that behaves like a second tax bill. Both change what the household can commit to, and neither shows on a pay stub.

Where the Coquitlam River meets the Fraser

Coquitlam runs from the Fraser flats up to Burke Mountain, with Mundy Park's second-growth forest in the middle and Lafarge Lake at the civic centre. Como Lake sits in the older southwest, the Evergreen Extension of the SkyTrain reached Lincoln and Lafarge in 2016, and the northeast slopes have been under continuous construction since.

What matters financially is how households here actually pay for housing, because it is rarely a salary alone.

The mortgage helper, counted properly

A large share of detached homes here carry a secondary suite, and the rent is doing real work in the household budget. Two things have to be said about it before any premium is discussed.

First, it is taxable income. Rent from a suite is reported, and expenses are deducted against it, so the figure that reaches the household is smaller than the cheque. A household that sizes a premium against gross rent has overstated its own capacity, and a practitioner who accepts the gross figure has not asked the second question.

Second, it is not guaranteed. A suite between tenants earns nothing while the mortgage continues, and a strategy that asks for premiums maintained without interruption for decades will meet at least one vacancy. Size the base premium against the household's income without the suite, and put rent into paid-up additions when it arrives. In most contracts the base premium is the binding obligation and additional deposits are the flexible part.

There is a further point worth knowing, though it is a tax question rather than an insurance one: claiming business use of a portion of the home can affect the principal residence exemption on that portion. Households do this without advice more often than they should. Ask an accountant before, not after.

The strata fee, which behaves like a second tax bill

For the many households here in townhouses and apartments, the strata fee is a fixed monthly amount that rises, and a special levy can arrive with little notice when a building faces envelope repair, a roof, or plumbing.

That is the pattern this strategy handles worst: a large irregular obligation landing on a budget already committed to a long-dated premium. If the contract draws an automatic premium loan against cash value during a levy year, that is a real loan with real interest owed to the insurer, not a courtesy, and a lapse with an outstanding loan and an accumulated gain is a taxable disposition.

Before committing, read the depreciation report and the minutes. A building with a funded contingency reserve and no deferred work is a different financial position from one facing a levy nobody has voted on yet, and only one of those two households should be signing a thirty-year premium.

British Columbia rules

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, which takes a minute, and ask how the person is paid.

British Columbia has no title protection statute of the kind Ontario, Quebec and New Brunswick have enacted, so titles carry less information here than they do elsewhere. That makes the licence check and the compensation question matter more, not less.

Where it does not fit

A household whose mortgage depends on the suite being rented, or whose building faces known deferred maintenance, should settle those before committing to decades of premiums. Cash surrender value is typically below cumulative premiums for many years and commonly for more than a decade, so an early exit is a loss.

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. If you have a suite, bring the last two tax returns rather than the lease.