By city

Infinite Banking in Victoria

Victoria has the oldest median age of any major Canadian city, and a large provincial public service. Both facts push against this strategy rather than for it, and the reasons are worth understanding because age is the one variable that cannot be worked around.

Age is the variable this strategy cannot compensate for

Victoria has an older population than any other major Canadian city, and that is the first thing an honest page has to address, because it changes the arithmetic in a way nothing else does.

Two mechanisms, and they compound. The cost of insurance rises with the age of the insured, so a policy issued at sixty carries a materially higher cost per dollar of coverage than the same policy issued at thirty. And the strategy depends on time: cash surrender value stays below cumulative premiums for many years and commonly for more than a decade, so the period during which the arrangement is a net loss is a larger share of a shorter remaining horizon.

That does not make it impossible after sixty. It makes it narrower, and it moves the purpose. For an older reader the sensible framing is usually estate liquidity or an intergenerational transfer rather than building a system to borrow from. If someone presents this strategy to a person in their sixties using the same reasoning they would use for someone in their thirties, that is a reason to stop and ask for the guaranteed-only column.

The provincial public service

Victoria is the seat of the British Columbia government, with a large concentration of public service, health and education employment and therefore of workplace pensions. If you have a defined benefit plan, half the usual argument does not apply to you: it already provides an income that does not run out and does not depend on markets, so the retirement income case is substantially weaker than in American material written for people with nothing of the kind.

What remains is access, because a pension is not collateral, and the survivor question, which depends on reading your own plan. Provisions vary by plan and by the elections made at retirement, and some reduce the benefit substantially. If your plan leaves a gap, insurance is the ordinary tool for closing it, and for many readers here that is the entire answer.

Where it genuinely applies in this city

Two situations, and both are about the next generation rather than the reader.

The first is estate liquidity. Property values on southern Vancouver Island have risen substantially over decades, and a home held for a long time can carry a large accrued gain on any non-principal-residence property, a second property or a recreational property in particular. Canada has no estate tax but does have a deemed disposition at death, so the gain becomes taxable in the final return while the value stays locked in real estate. Insurance provides the liquidity to pay it.

The second is a policy on a child or grandchild. That is the one version where the age problem disappears completely, because the insured is young, the premiums are small and the horizon is measured in decades by definition. A grandparent funding a contract on a grandchild is doing something the arithmetic actually supports, which is not true of the same grandparent funding one on themselves.

BC rules

Insurance in British Columbia is supervised by the Insurance Council of British Columbia, which is not ICBC. ICBC is the provincial auto insurer and has nothing to do with life licensing. A professional here holds the licence of Life Insurance Agent. British Columbia has not enacted title protection legislation, so financial advisor and financial planner are less constrained here than in Ontario. Verify the licence with the council and ask how the person is paid.

Where it does not fit

A retired reader with a strong indexed pension, no dependants, no corporation and no estate tax exposure is a poor candidate, and the strategy has little to offer them. So is anyone whose remaining horizon is short enough that the early-year loss period consumes most of it. Ask for the illustration, read the guaranteed column first, and ask in which year surrender value is projected to exceed cumulative premiums. If that year is beyond your reasonable planning horizon, you have your answer.

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. Take the answers to an accountant and a legal advisor of your own choosing.