By city

Infinite Banking in Kamloops

Access is what this strategy is sold on, and access is where it is described least carefully. There are three ways to take money out of a policy, they behave differently, and the difference is the whole thing.

Where two rivers meet

Kamloops sits at the confluence of the North and South Thompson, in the dry belt where the grassland runs up to the hills and the Secwepemc have lived for millennia. It is the transport hinge of the southern interior, with rail yards, distribution, ranching to the north and south, forestry, and Thompson Rivers University in the middle of it.

Two rivers meeting and continuing as one is a fair way into the subject of this page, because the mistake here is treating three separate things as though they were one.

Three ways money leaves a policy

Every presentation of this strategy is built on access to the value in the contract. Very few explain that there are three distinct mechanisms, with three different consequences. Ask which one is being described, every time.

A policy loan. The insurer advances money against the value of the contract. The policy stays in force and the death benefit remains, reduced by any unpaid loan. Interest is real, owed to the insurer, and compounds at the policy anniversary. The loan is not automatically taxable, but a loan can itself be a disposition depending on the calculation for that transaction against the policy's adjusted cost basis under section 148, and the amount above that basis can be taxable in the year taken.

A withdrawal, or partial surrender. Money comes out of the contract permanently. The cash value falls, and the death benefit usually falls with it, which is the part people do not expect. A withdrawal is a disposition of part of the policy, and the portion above the adjusted cost basis is taxable.

A full surrender. The contract ends. Everything above the adjusted cost basis is taxable in that year, in one amount, and the coverage is gone. Surrendering in the early years is also where the loss is largest, because cash surrender value stays below cumulative premiums for many years, commonly more than a decade.

Those are three different products of the same contract. A practitioner who says "you can just take it out" without naming which one has skipped the only part of the sentence that matters.

The two questions that follow

First: what is the adjusted cost basis of the policy today, and what is it projected to be in the years you might draw on it? That single number determines how much of any draw is taxable. It is on the insurer's records and it changes over time, generally falling as the policy matures, which means the taxable portion of a draw grows as the years pass. Very few illustrations lead with that.

Second: what happens to an unpaid loan if the policy lapses? The answer is that the gain becomes taxable in the year of the lapse, and that is the sequence which does the most damage, because it arrives in whatever year the household could not pay the premium.

Cyclical income, and why it interacts with all of this

Forestry, ranching, transport and mining service all move on cycles nobody in Kamloops sets. A household with uneven income is the most likely to draw on the policy and the most likely to miss a premium, which means it is the most exposed to every mechanism above.

Size the base premium against your worst plausible year and put strong-year capacity into paid-up additions. In most contracts the base premium is the binding obligation and additional deposits are the flexible part.

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.

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. Nothing on this page is advice, and none of it is tax advice: the treatment of any particular draw depends on your own contract and your own numbers, and that is an accountant's work. 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.