No RESP? No problem.

Insurance Insights | May 6, 2021

No RESP? No problem.


Parents often look to the Registered Education Savings Plan, or RESP, to fund their children’s college or university education due to the 20% grant provided by the government.

One challenge with RESPs is that you risk forfeiting this grant if your child does not continue on to a qualified post-secondary school. Some students may decide that post-secondary is not for them while others may choose to start their own business instead. These children can only rely on the principal they have invested into their plan and whatever interest has accumulated to that point. The grants are gone. But now there’s a new kid on the block that provides savings, investment and peace of mind all in one. This is an investment vehicle available to parents into which they can contribute a set sum of money every month. In the future, this money can be directed towards anything the child desires when he or she becomes an adult: school, start a business, down payment on a home, travel, anything. This is also a great option for grandparents that want to put something aside for their grandkids.

What an Insurance Company can do for you

An insurance company manages this plan, investing the parent’s contribution and simultaneously offering life insurance coverage for the child. Having that life insurance piece exempts your child from answering medical questions in the future should he or she wish to acquire additional life insurance coverage. Once the child turns 18, the parent has the option of transferring ownership of the plan to their son or daughter who can then withdraw and use the money freely, tax free.

What is the best time to get insurance for your child?

It’s best to arrange this plan before your child’s first birthday. The plan can be capped at 20 years so that the parent isn’t paying their entire life. The annual contribution level can be customized to fit the parent’s budget and has no lifetime maximum contribution unlike an RESP that is capped. The current rate of return on this plan is 6.25% and is guaranteed never to lose money. Contact us today to create the possibility of prosperity and peace of mind for your children.