By city

Infinite Banking in Nanaimo

A great many households arrive in Nanaimo having sold a house on the mainland, with a sum of money they have never held before. That is the moment this strategy is sold hardest, and the moment to move slowest.

The harbour city

Nanaimo runs along the Strait of Georgia opposite the mainland, with the Bastion of 1853 still on the waterfront and the coal seams that built the city long since closed. The Departure Bay and Duke Point ferries land here, Newcastle Island sits in the harbour, and the seawall runs the length of the downtown. Vancouver Island University is above the old town.

What matters financially is who arrives. A large share of new households here sold property on the mainland, in Vancouver or the Fraser Valley, bought for considerably less, and now hold the difference.

The lump sum, and why it is the dangerous moment

This is the page's central point. A household that has never held two or three hundred thousand dollars at once is, for a short period, the most sought-after client in the market. Everyone with something to sell knows the pattern, and the pressure arrives quickly.

Three things are worth knowing before deciding anything.

The money is probably not taxable, and that is not a reason to spend it. The principal residence exemption generally shelters the gain on a home, so the sum in your account is likely yours entire. That makes it feel like winnings. It is not winnings; it is the same money the house was, in a different form, and it now has to last as long as the house would have.

A lump sum is not income. A participating policy asks for premiums maintained without interruption for decades. Funding those premiums out of capital rather than out of earnings means the capital shrinks while the contract fills, and if the capital runs out before the contract matures you are holding a commitment with no way to pay it. Ask what your monthly income will be after the move, and size against that. If the answer is that the lump sum is the income, the strategy is the wrong tool.

Nothing needs deciding this year. Money in a plain savings or short-term instrument loses a little to inflation and costs nothing in flexibility. A thirty-year contract entered in the first six months after a move is very hard to unwind: cash surrender value stays below cumulative premiums for many years, commonly more than a decade, so an early exit is a loss.

What a large deposit into a policy actually does

People arriving with capital are often told to put as much into a policy as it will take. There is a limit, and it is statutory rather than a matter of preference.

A policy must satisfy the exempt test under the Income Tax Act regulations to keep the growth inside it from being taxed annually. There is a ceiling on how much can be deposited relative to the death benefit, and exceeding it changes the tax treatment of the contract. Any practitioner proposing a large deposit should be able to explain that limit and show where your proposal sits against it. If they cannot, that is the answer to a different question.

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, so titles carry less information here than elsewhere.

A household whose retirement income depends on the lump sum lasting is a poor candidate, and that describes a real number of arrivals. 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. 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. Before any meeting, write down what your monthly income will be once you are settled. That single figure answers most of this.