By city

Infinite Banking in Laval

Laval is a city of homeowners and families, with a home ownership rate well above Montreal's. That changes the question concretely, and not always in the direction people assume.

A city of owners, and what that implies

Laval differs from Montreal on one simple point: the proportion of households that own their home is considerably higher. Montreal is substantially a city of renters; Laval is single-family homes, semi-detached houses and families who bought. The regulation is identical, the AMF and the Civil Code apply on both sides of the Riviere des Prairies. What changes is the shape of the household balance sheet.

That produces two opposite effects. The first works against the strategy: a household that has recently bought, with a new mortgage and children, is in exactly the position where diverting cash into long-dated premiums is risky. Cash surrender value stays below cumulative premiums for many years, often more than a decade. An early exit is a loss, and a lapse with an accumulated gain is a taxable disposition arriving at the worst moment.

The second works in its favour, but later. A Laval household past the first decade of a mortgage holds significant value locked in the house and finds its cash flow easing. That is when the question of access to capital becomes real rather than theoretical.

Do not confuse a policy loan with a home equity line

This is the most common confusion in a city of owners, and it is worth undoing. Many readers here know the home equity line of credit and assume this book describes a variation on it. It does 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 the loan 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.

The two Quebec rules that affect access

A designation naming a married or civil-union spouse is presumed irrevocable in Quebec unless declared otherwise. Elsewhere in Canada it is revocable by default. An irrevocable designation cannot be changed without the beneficiary's consent and can restrict the ability to request a loan or assign the policy as collateral. For a reader considering this strategy precisely for the access, that is the first thing to verify, before signing rather than after.

Exemption from seizure is the second. It depends on the class of beneficiary, on when the designation was made and on the circumstances. It is never absolute and it disappears if the policy is assigned as security for a loan. A strategy sold on the promise of automatic protection is sold on a half-truth.

Where it does not fit

A household early in a mortgage, without an emergency reserve, or carrying high-interest consumer debt should deal with those first. Sequence matters more than product. Chapter 8 of the book exists to help you rule this out as readily as rule it in, and for many Laval families the answer is not yet rather than no.

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 in French, read the guaranteed column first, check the licence in the AMF register, and take the answers to an accountant and a notary of your own choosing.