By city

Infinite Banking in Terrebonne

Terrebonne is one of the fastest-growing cities in Quebec, filled with young families who bought recently. That is exactly the profile where the honest answer is often not yet rather than no.

The Ile-des-Moulins and the city that grew around it

Terrebonne keeps the Ile-des-Moulins at its heart, a historic site where the nineteenth-century new mill, the bakery and the seigneurial office still stand, where the Riviere des Mille Iles once supplied the water power. Vieux-Terrebonne holds its old streets around that core, while Lachenaie and La Plaine to the north and east have become family neighbourhoods.

It is that recent growth which defines the financial question here. Terrebonne has a high proportion of households that bought their home in the last ten or fifteen years, with young children and a mortgage early in its run. So this page has to say something most presentations avoid.

The order of decisions matters more than the product

A household with a recent mortgage and children has a real death benefit need today. That need exists whether or not anyone ever borrows against a policy, and it can be calculated: the remaining mortgage, the years until the last child leaves, the cost of keeping everyone in the same house and the same school if the main income disappears.

Have that calculated before listening to anyone talk about a strategy. If the coverage you need exceeds what you can fund in permanent insurance today, the right answer is not to reduce the coverage. It is to cover the need with convertible term now, at a premium a young household can carry, and build the rest later. A practitioner who starts with the product rather than that calculation is selling you something.

Why starting too early is expensive

The strategy asks for premiums maintained without interruption for decades. Cash surrender value stays below cumulative premiums for many years, commonly more than a decade. A household that commits to a premium sized against a tight budget, and then meets a more expensive daycare year, a parental leave or a roof that needs replacing, faces a choice it should never have had to make.

If the contract draws an automatic premium loan against cash value to stay in force, that is a real loan with real interest owed to the insurer. A lapse with an outstanding loan and an accumulated gain is a taxable disposition, and it arrives in exactly the year the budget was already failing. For many families here the honest answer is not yet, and a practitioner who cannot say that to you is not assessing your situation.

A policy on a child, and what it actually is

The question comes up often in a city of young families. Starting a participating contract on a child gives the arrangement the longest uninterrupted run it can have, which is the variable the arithmetic is most sensitive to, and the premiums are small because the insured is young. It is also the one version where the timing objection disappears.

Stay precise about what is being bought: this is life insurance, not an education fund. An RESP answers the schooling need better because of the federal grants attached to it, and nobody should present a policy to you as a substitute for one.

The two Quebec rules that bear on 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 drawn to this strategy precisely because of the access, that is the first thing to verify.

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.

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, and Chapter 8 of the book exists to help you rule this out as readily as rule it in.

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, which is your right under the Charter of the French Language, 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.

One closing word the mill on the Ile-des-Moulins makes plain. It turned because the river ran without stopping, not because a flood arrived once. A modest premium held for twenty years beats an ambitious one abandoned in year eight, and year eight is precisely when the temptation arrives.