By city

Infinite Banking in Peterborough

Once a policy is in force, one document arrives each year and most people file it unopened. It is the only place the contract tells you the truth about itself, and it takes five minutes to read.

The lift lock city

Peterborough sits on the Otonabee at the centre of the Kawarthas, with the Peterborough Lift Lock, still the highest hydraulic boat lift in the world, raising vessels on the Trent-Severn. Trent University is on the river north of town, Little Lake is at its heart, and the city has an older median age than the province, with a large share of households already holding policies bought years ago.

That makes this the right page for the document nobody reads.

The illustration is a projection. The statement is the truth.

This is the page's central point. An illustration is produced once, before you buy, on assumptions chosen that day. The annual statement is produced every year from what actually happened. Where the two disagree, the statement is right.

Most households never compare them. They keep the illustration, which shows what was hoped for, and file the statements unopened. Ten years on they believe the projection and own the reality.

The five things to find

The dividend actually declared this year, against what the illustration assumed. This is the single most useful comparison you can make. 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 the declared amount has run below the assumption for several years, every projected figure you were shown is optimistic and should be re-run.

The current cash surrender value, against total premiums paid to date. That comparison tells you where you actually are, not where you were told you would be.

Any outstanding loan and its interest rate. Look for this specifically. A policy can run on an automatic premium loan for years without anyone deciding to borrow, and the balance compounds at the policy anniversary. Finding it in year three is a manageable problem; finding it in year fifteen may not be.

The adjusted cost basis, if shown, because it determines how much of any future withdrawal or loan is taxable. It generally falls as the policy matures, which means the taxable portion of a draw grows with time.

The named beneficiary. Confirm it is still who you intend. A policy pays the named beneficiary, and a will does not override a valid designation.

If something looks wrong

Ask the insurer directly, in writing, rather than only asking whoever sold it. The insurer holds the record and must answer the owner. If the policy was sold by someone who has since retired or moved, the contract is unaffected and the insurer remains bound, but nobody is watching it for you. Ask who is listed as the servicing advisor and ask for a current in-force statement. Both are yours and both are free.

Ontario rules and where it does not fit

Insurance in Ontario is supervised by the Financial Services Regulatory Authority of Ontario, and a professional here holds the licence of a Life and Accident & Sickness Insurance Agent. Under the Financial Professionals Title Protection Act nobody may use the title Financial Planner or Financial Advisor without an approved credential. Verify the licence in the public register and ask how the person is paid.

Cash surrender value stays below cumulative premiums for many years, commonly more than a decade, so an early exit is a loss. 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. Find last year's statement before any meeting. It will tell you more about your own position than any presentation can.