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Infinite Banking in North Vancouver

Many households here already hold a policy bought years ago. The question they are usually asked is whether to buy a new one. The question they should ask is whether replacing the old one is being done for them or to them.

The City, the District and the mountains

North Vancouver is a City and a District sharing a name and a shoreline under the North Shore mountains. Lonsdale runs up from the Quay where the SeaBus lands, Lynn Canyon and the Capilano River cut down through the District, and Grouse and Seymour rise behind. Much of the housing stock is detached and long held, and a large share of households have owned since values were a fraction of what they are.

That produces a specific situation: a household with equity, a settled financial life, and often a life insurance policy bought in the 1990s or 2000s that nobody has looked at since.

The replacement question

This is the page's central point, and it is a consumer protection question before it is a financial one.

Replacing an existing policy with a new one is sometimes right. An old contract may be poorly structured, the coverage may no longer match the need, or the original purpose may have gone. But replacement also generates a new commission, and that creates an interest which does not align with yours. Both things are true at once, and the way to tell them apart is to insist on the arithmetic.

Insurance regulators across Canada require a disclosure when a policy is being replaced. In practice that means the person proposing the replacement must set out, in writing, what you give up and what you gain. Ask for that document by name and read it before anything is signed. A practitioner who treats the request as unusual has told you something.

Five things to check yourself, whatever the document says. What the surrender value of the old policy is today, and whether surrendering triggers a taxable gain. Whether a new contestability period starts, during which the insurer can decline a claim for misstatement. Whether the new policy is priced at your current age and health, which it will be, and whether that is worse than the old one. Whether any rider on the old policy, such as a waiver of premium or a guaranteed insurability option, disappears. And whether the old policy could simply be kept alongside the new one instead of replaced.

The old policy nobody has read

Before any of that, get the current position from the insurer directly rather than from a summary. Ask them for the in-force values, the current death benefit, any outstanding loan and its interest rate, the adjusted cost basis, and whether the contract is still paying premiums or has gone paid-up.

Households are regularly surprised. A policy assumed lapsed is in force. A policy assumed in force has been running on an automatic premium loan for years and carries a balance. Either fact changes the conversation entirely, and both are available for the asking.

What the strategy asks of a household that already owns coverage

Premiums maintained without interruption for decades. Cash surrender value stays below cumulative premiums for many years, commonly more than a decade, so an early exit is a loss. 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.

If you are being shown a new contract, ask for the illustration and read the guaranteed column first, then ask the same question of the policy you already hold. Comparing the illustrated column of a new policy against the guaranteed reality of an old one is not a comparison, and it is the commonest way a replacement is made to look attractive.

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, and on a replacement ask specifically what the commission is on the new contract. British Columbia has no title protection statute of the kind Ontario, Quebec and New Brunswick have enacted.

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, including on a replacement. Bring the old policy, or the insurer's current in-force statement, to any meeting where a new one is discussed.