Claims That Should Never Be Made About This Approach

Several claims are made about this approach so routinely that they have become part of how it is described.

They are wrong. Each has a correct version, and the correct version is less dramatic and survives scrutiny.

This page exists because the inaccurate versions do more damage to the approach than any critic does. A household that accepts one of them will eventually discover it was untrue, and will reasonably conclude that everything else it was told was untrue as well.

"You are borrowing your own money"

Wrong. The insurer advances its own funds and takes the contract's value as security. Your value remains in the contract.

Correct. You request an advance from the insurer, secured against your contract's value, one of the ordinary mechanics of a policy. Nothing circular occurs. The value stays where it is and continues under the contract's terms, which is precisely the feature that makes the approach work, and it is not the same as spending your own money.

"You pay the interest to yourself"

Wrong. Interest on an advance is paid to the insurer, and the insurer keeps it.

Correct. Interest is paid to the insurer. Where the contract is participating, the insurer's overall results reach policyholders through the dividend scale, which is a discretionary annual declaration and is not a return of your interest. The distinction matters because the inaccurate version implies the borrowing is costless, and it is not.

"The cash value grows the same whether or not you have a loan"

Sometimes true, sometimes not, and never simply true.

Correct. It depends on whether the insurer applies direct or non-direct recognition. Under non-direct recognition the declared dividend is not adjusted for an outstanding advance. Under direct recognition it is. Ask your insurer which applies to your contract, because the answer differs between companies and it changes the arithmetic of every advance you take.

"It replaces your RRSP or TFSA"

Wrong. They do different things.

Correct. Registered plans keep their purpose and their contributions. This approach concerns the route capital takes through a household, not which container it ends in. Anyone describing it as a replacement has described something else, and a household that stops funding registered plans on that basis has been misadvised.

"Everyone should do this"

Wrong, and it is the clearest signal available that the person explaining has stopped explaining.

Correct. Most households should not. It requires durable surplus cash flow, a horizon measured in decades, a genuine want for permanent coverage, and the discipline to repay advances that nothing external compels. A description that fits every household describes none of them.

"The dividends are guaranteed"

Wrong. They never are.

Correct. A dividend is declared annually by the insurer's board at its discretion, based on investment results, claims experience and expenses. Most established Canadian insurers have paid one for well over a century. That is a record, not a commitment, and the guaranteed schedule in the contract is the part that is contractual.

The claim that you become an institution of that kind

Wrong, and it is prohibited rather than merely inaccurate.

Correct. A policy is not such an institution, a practice arranging policies is not one, and a contract is not a deposit. Section 983 of the Bank Act restricts the use of that word to describe a business or its services, and Assuris rather than deposit insurance stands behind a policy, within published limits. The approach concerns who performs the financing function in a household, which is a different statement and an accurate one.

"It is a tax-free retirement income strategy"

Wrong as stated.

Correct. Borrowed money is not income and is not taxed on receipt. That is accurate and it is not the same as an arrangement being tax-free. If the structure unwinds and the contract is surrendered, the accumulated gain above the adjusted cost basis becomes taxable, frequently in a single year. The full mechanism is on the Canadian retirement planning material.

"It earns a guaranteed rate of return"

Wrong. A contract guarantees a schedule of amounts, year by year.

Correct. A schedule of amounts is not a rate of return, and converting one into the other imports expectations the contract does not support. Ask for the guaranteed column and read the numbers rather than a percentage derived from them.

"You can access your money immediately"

Wrong in the early years, and misleading in any year.

Correct. Accessible value builds slowly, because the cost structure falls heaviest at the start. Even later, an advance takes days rather than minutes and requires a request the insurer processes. A household that treats this as an emergency fund has misunderstood both the timing and the purpose, and should hold cash for emergencies as well.

The money-creation claims in particular are examined against the Canadian position set out in the money principles material.

Four more, less common and equally wrong

"The insurance is free." Sometimes said of a contract whose dividends eventually equal or exceed the premium. Correct: the cost of insurance is charged throughout the life of the contract and is met from within it. A dividend offsetting a premium is a dividend being used, not a cost disappearing.

"You can never lose money." Correct: a contract surrendered in the early years returns materially less than was paid into it, a lapse can lose everything paid, and a lapse with an advance outstanding can produce a tax bill on top. The guaranteed schedule does not fall; that is a narrower statement.

"It is completely private." Correct: the insurer holds the contract, the Canada Revenue Agency receives reporting on dispositions, and a court can reach policy values in several circumstances. Creditor protection exists in some situations and is not automatic and not universal.

"The strategy is proprietary to us." Correct: the contract is an ordinary regulated product available from several Canadian insurers, and the method was published in a book anyone can buy. What a practitioner contributes is design and servicing, which is real and is not a proprietary product.

How to use this page

Take it to any presentation you are given, including one from this practice.

Listen for the ten claims. Each is easy to hear once named, and each is common enough that hearing none of them is itself informative.

Ask for the correct version. Someone who knows the material can give it immediately. Someone who cannot has learned the pitch rather than the subject.

And note what is not on this list. Nothing here says the approach does not work, or that permanent insurance is a poor product. The claims are wrong; the underlying arrangement is an ordinary regulated one that suits a minority of households and is described accurately elsewhere on this site.

Where these claims come from

Worth understanding, because the origin explains why they persist and why correcting them is difficult.

Most are compressions of something true. "You are borrowing your own money" compresses "you are borrowing against value you own, which stays in the contract and keeps working". The compression is shorter, it is memorable, and it is wrong in a way the accurate version is not. A description that has been simplified until it is false is the commonest failure in this field, and it usually happened long before it reached the person repeating it.

Some come from the United States. Different tax law, different product rules, and different regulatory language, repeated in Canada without adaptation.

Some are honest enthusiasm. A practitioner who has seen the arrangement work for households describes it in the terms that convinced them, which are rarely the precise ones. That is human, and it is still their responsibility to correct once they know better.

And some are sales technique. A claim that removes an objection sells better than one that acknowledges it. The commercial incentive runs toward the inaccurate version, which is why the correction has to be deliberate.

None of that excuses repeating them. A practitioner licensed to advise is responsible for the accuracy of what they say, whoever taught it to them.

What to do if you were told one of these

You have not necessarily been harmed. An inaccurate description of an arrangement that suits you is a communication failure rather than a loss.

Establish what you actually own. Request a policy summary from the insurer: the guaranteed values, the current total, any outstanding advance, the dividend option in force, and the beneficiary designations.

Check the arithmetic you were shown. Ask for the guaranteed column beside cumulative premiums at years three, five and ten, and compare it against what the contract has actually done.

Ask the practitioner directly. Naming a specific claim and asking for the correct version is a reasonable request, and the answer tells you what you are dealing with.

A practitioner who says "that was a shorthand, here is the accurate version" is doing the job. One who repeats the claim more firmly has answered the question you were really asking.

Get a second opinion from someone who did not arrange it, particularly if the arrangement is large or leveraged.

Check whether the arrangement is leveraged. If a third-party lender holds an assignment over the contract, the stakes are materially higher and the review should happen sooner rather than at the next annual statement.

And if the contract still suits you, keep it. A poor explanation does not make a contract wrong, and surrendering in reaction crystallises any gain above the adjusted cost basis and ends the coverage. The remedy for bad information is better information, not a hasty exit.

What an accurate description sounds like

For comparison, since a list of what not to say is only half of it.

"A participating whole life contract accumulates a contractual value on a schedule set out in the policy, and may receive dividends that are never guaranteed."

"You can request an advance from the insurer against that value. The insurer advances its own funds, charges interest, and reduces the death benefit by the outstanding balance while it stands."

"Repaying the advance rebuilds the capacity. Nothing compels you to, which is the appeal and the risk."

"This suits a household with durable surplus cash flow, a horizon of decades, and a genuine want for permanent coverage. Most households do not have all three."

"I am paid by commission from the insurer when a contract is issued."

Five sentences, all accurate, none dramatic. If a presentation cannot survive being reduced to them, the presentation was carrying the weight rather than the arrangement.

A household that hears those five and still wants to continue is a household worth continuing with. One that needs the dramatic version to stay interested has told the practitioner something important, and proceeding anyway is how files end up in front of a regulator years later.

Why a list like this exists

Because the claims below are made constantly, and a practice that avoids them privately while its website is silent has not corrected anything.

Because they are checkable. Every item here can be verified against the contract, the Income Tax Act or a regulator's published position.

And because they damage the accurate case. A reader who finds one false claim discounts the true ones beside it, and the true ones are strong enough not to need help.

Why these claims persist

They are persuasive. Each supplies a grievance and a remedy in one move, and a grievance moves people that an explanation does not.

They are hard to check quickly. A reader without the contract in front of them cannot immediately test a statement about how money is created or what a policy returns.

They are repeated by people who believe them. Most are not deliberate misrepresentation; they are inherited from material nobody verified, much of it American and older than the rules it describes.

And nothing stops them. No regulator reviews a seminar slide before it is shown, and the correction arrives, if at all, years later.

What to do when you meet one

Ask for it in writing. A claim that will not be written down has answered the question.

Ask which document supports it. The contract, the Income Tax Act, or a regulator's published position. A claim supported by none of the three is a claim about nothing.

Ask what would have to be true. Many of these fail on their own logic before any fact is checked.

And ask who should not buy this. The answer, or the absence of one, tells you what kind of conversation you are in.

The standard behind the list

Would this survive being read aloud in a regulator's office?

Not whether it is technically defensible, and not whether everybody says it. Whether the person who said it would repeat it in front of somebody with the contract open.

Every claim on this page fails that test, which is why it is here.

What to say instead

The true version of each claim on this page exists and is strong enough without help.

Interest paid outward is real. Capital spent stops working. A contract has a guaranteed schedule. None of those needs a mechanism that does not operate.

And a practice that publishes the list has bound itself to it, which is the only reason a reader should take the rest of this site more seriously than any other.

A list you can hold us to is worth more than a promise you cannot.

Hold us to the list.

Why this page is published by a practice that sells the product

Because the inaccurate versions are used to sell it, and a practice that knows they are wrong and says nothing has participated.

Because a reader who can identify them is protected, including from this practice.

And because the accurate versions are enough. The approach does not require any of the ten claims above to be worth considering for the households it suits. Every one of them can be removed and the case remains, which is the strongest thing that can be said about it.

An arrangement that needs an inaccurate description to be attractive is not an arrangement worth arranging, and one that survives an accurate description does not need the other kind.

The method Nelson Nash named The Infinite Banking Concept® is a registered trademark of Infinite Banking Concepts, LLC. Neither this practice nor its author is affiliated with, sponsored by or endorsed by that company or the Nelson Nash Institute. It is set out here, and the arguments against it, including the correct ones, are at arguments against it, including the correct ones, are at objections and risks.