What is the opportunity cost of funding a policy?
Whatever the same capital would have done in the alternative the household would genuinely have chosen, which is a fact about the household rather than about the product. Named honestly, that alternative is rarely exotic: a low cost portfolio, unused registered contribution room, or paying down debt.
What kind of answer this is
- Claim type: Professional judgment
- Jurisdiction: Canada wide
This is professional judgment about how a comparison should be built. The result for a particular household depends on its own figures.
How it works
Measured on growth alone across decades, the comparison usually favours the alternative, and a presentation that hides this is not worth reading. That is the honest starting point rather than the conclusion.
The cost or the catch
What the growth comparison leaves out is that one of the two pays a death benefit whenever death occurs and the other does not, and that the contract sets a contractual floor while a portfolio outcome is not contractual at all. Both sides have to be measured the same way.
Where this answer may not apply
- The comparison changes entirely if the household would not in fact have invested the difference.
- Where permanent coverage is needed regardless, the alternative is term coverage plus a portfolio rather than a portfolio alone.
- Corporate ownership changes the tax treatment on both sides of the comparison.
What to verify in your own contract
- The alternative, named in writing before any comparison is run.
- That both sides are stated after their own costs and over the same period.
- Whether the household has in fact set a difference aside consistently in the past.
- Whether a death benefit is wanted at all, since only one side of the comparison carries one.
Continue to the full explanation
Read the complete costs and risks analysis.
Accountability and disclosure
- Written by
- José Salloum
- Professional capacity
- Financial security advisor, Canadian Wealth Creation Centre Inc., operating as IBC Financial
- Reviewed by
- Insurance and contract education tier, reviewed under a licensed insurance professional's own authority
- Jurisdiction
- Canada wide
- Last reviewed
- 2026-08-30
- Version
- 1.0
- Compensation disclosure
- Canadian Wealth Creation Centre Inc., operating as IBC Financial, may receive insurer paid compensation if a policy is purchased. It takes the form of first year compensation followed by renewal compensation, and the amount varies by insurer, product, age, premium, contract design, riders and the arrangement with the managing general agency. No single figure would describe every contract honestly, and none is published here.
- Report a correction
- Info@ibcfinancial.com. Write without a policy number, medical information or account details.
Last reviewed 2026-08-30. By Jose Salloum, Financial Security Advisor.