By city

Infinite Banking in Richmond Hill

Richmond Hill has one of the highest proportions of residents born outside Canada of any municipality in the country. Most will meet this subject in American material first, and several of the differences produce a confident wrong answer rather than an obvious one.

The observatory town that became a suburb

Richmond Hill grew along Yonge Street on the crest of the Oak Ridges Moraine, and the David Dunlap Observatory still stands in the middle of it, its telescope the largest in Canada when it opened in 1935. Mill Pond sits at the old heart of the village, and the Lake Wilcox and Oak Ridges neighbourhoods run north into the moraine's kettle lakes.

What defines it financially is who lives there now. A very large share of households arrived in Canada as adults, many mid-career, and many are supporting relatives here and abroad. That produces a set of questions this page has to answer directly rather than in general terms.

The Canadian rules that American material gets wrong for you

Search this subject in English and the first fifty results will be American. Several of the differences are not obvious errors; they produce an answer that sounds right and is not.

Canada has no estate tax. It has a deemed disposition at death, which taxes the accrued gain on capital property in the final return. Those are different mechanisms and they need different planning. The exempt policy test under the Income Tax Act regulations has no American equivalent in the same form, and it is what keeps growth inside the contract from being taxed annually. A policy loan interacts with the adjusted cost basis under section 148, and a loan can itself be a disposition depending on the calculation for that transaction, which is not how the American material describes it.

And deposit insurance from CDIC does not apply to an insurance contract at all. Policyholder protection in Canada comes from Assuris, within published limits. Anyone who tells you a policy is CDIC-insured is wrong, and wrong about something a reader can check in a minute.

Supporting relatives, which cuts both ways

Many households here support parents or siblings, under the same roof or in another country. Both halves of that are worth stating.

Capital reachable without a new credit application has particular value when a family obligation arrives on no schedule a lender recognises. But family commitments also reduce the stability of the surplus premiums depend on, and they rarely appear in a household budget as a line item. If you support relatives, the question is not whether the access would be useful, because it often would be. It is whether the premium will hold for decades alongside those commitments. If that is uncertain, start smaller and add capacity later through paid-up additions rather than committing to a base premium the household cannot guarantee.

Beneficiaries and property outside Canada

If relatives outside Canada may be named as beneficiaries, or if you hold property or accounts in another country, cross-border questions arise that this page cannot answer and that a general practitioner often cannot either. Reporting obligations, foreign estate rules and tax treaties all interact with what a policy does.

Ask directly whether the person advising you has handled those situations, and keep asking until the answer is straight. An advisor who has not should say so; one who waves it away is telling you something useful about how the rest of the advice was formed.

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, and a life insurance licence alone qualifies for neither. Verify the licence in the public register and ask how the person is paid.

Cash surrender value is typically below cumulative premiums for many years and commonly for more than a decade, so an early exit is a loss. A household early in a mortgage, without an emergency reserve, or carrying high-interest consumer debt should deal with those first. 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.