By city

Infinite Banking in Kelowna

Kelowna sits on Okanagan Lake between the mountains and the vineyards, and a great many people came here to retire rather than to work. Age is the one variable this strategy cannot compensate for, so that has to be dealt with first.

The lake, the season, and who moved here

Kelowna runs along the eastern shore of Okanagan Lake, with Knox Mountain above the north end of town and the Mission Creek Greenway running inland. The valley grows tree fruit and wine grapes, Big White is up the hill for the winter, and the lake itself sets the rhythm of the year. Okanagan College and UBC Okanagan sit at the north end.

Two facts about the people matter here. Kelowna has attracted a large retiring and semi-retired population from across Western Canada, and the working economy is strongly seasonal: tourism, hospitality, construction, agriculture and wine. Those two facts push this analysis in different directions, and the page has to handle them separately.

Age is the variable that cannot be worked around

If you arrived here to retire, this is the first thing to settle, and it is arithmetic rather than opinion.

Two mechanisms compound. The cost of insurance rises with the age of the insured, so a policy issued at sixty carries a materially higher cost per dollar of coverage than the same policy issued at thirty. And the strategy depends on time: cash surrender value stays below cumulative premiums for many years, commonly more than a decade, so the period during which the arrangement is a net loss occupies a larger share of a shorter remaining horizon.

That does not make it impossible after sixty. It makes it narrower, and it moves the purpose. For an older reader the sensible framing is usually estate liquidity or a transfer to the next generation, not building a system to borrow from. Ask in which year surrender value is projected to exceed cumulative premiums, then ask the identical question using only the guaranteed column. If that year sits beyond your reasonable planning horizon, you have your answer.

One further point that becomes a real constraint with age: insurability. An application can be rated higher or declined on health grounds. 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 given.

Where it genuinely applies here

Two situations, and both concern the next generation rather than the reader.

The first is estate liquidity. Property in the Okanagan held for a long time can carry a substantial accrued gain on anything that is not a principal residence, a second property or a recreational property in particular. Canada has no estate tax but does have a deemed disposition at death, so the gain becomes taxable in the final return while the value stays locked in real estate. Insurance provides the liquidity to pay it without forcing a sale in a hurry.

The second is a policy on a child or grandchild. That is the one version where the age problem disappears entirely, because the insured is young, the premiums are small and the horizon is measured in decades by definition. Stay precise about what is being bought: this is life insurance, not an education fund, and an RESP answers the schooling need better because of the federal grants attached to it.

Seasonal income, for the working half of the city

If your income arrives with the season, size the base premium against your worst plausible year and put strong-year capacity into paid-up additions rather than a higher base premium. In most contracts the base premium is the binding obligation and additional deposits are the flexible part. Ask specifically how the contract treats a skipped additional deposit versus a skipped base premium, because the answers usually differ.

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.

A retired reader with a strong indexed pension, no dependants, no corporation and no estate tax exposure is a poor candidate. So is anyone in a lean season, without an emergency reserve, or carrying high-interest consumer debt. 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.