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03 Sep 2016

The Kind of Insurance Parents Don't Want To Talk About

Let me say straight off the bat that the thought of your child dying (no matter how old they are) is a morbid thought and as the father of a 21 year old son the thought never crosses my mind.

He is burying me and not the other way around, period.

I also need to state that insurance is simply money and everybody needs money, therefore the concept of insurance on children is simply providing money for your children. Every parent (myself included) wants to provide the best education for their child and see an RESP as a no brainer, and it is a no brainer indeed.

A few questions should also immediately come to mind:
Will the money saved in an RESP (including the government grants be enough to send them to university?
Do you only want to save for university or would you like to gift them money for life as well?
How would illness impact your ability to provide the funds needed to meet your goals?

Regardless of what your answers are to the above questions, one thing is certain - All parents want to provide the best for their children. What does insurance on children have to do with wanting the best for your children?

A life insurance policy on your child not only provides coverage for life, but also can provide guaranteed cash that they can withdraw or borrow to supplement education savings, deposit on a home, purchase a car, or save toward their retirement, plus they will have vested dividends growing for life. They can access the money and still keep the life insurance policy in force, you can save for 10 or 20 years then literally sit back and watch the legacy you provided for them unfold – GUARANTEED!

A critical illness policy on your child will not only provide a tax free lump sum in the event they are diagnosed with a life threatening condition (including childhood illnesses), but assuming your child remains healthy and never has a claim you can actually do the following:

First 15 years, get a refund of 75% of what you paid and still keep the policy
Second 15 years, get another refund of 75% of what you paid and still keep the policy
At age 75 they cancel the policy and get back 75% of what you paid since the previous refund

These refunds can be used in any way you wish including supplementing RESP savings and they will still be covered (except when then cancel the policy at age 75). Let’s say there is a claim, you can invest the proceeds for their education, because they will likely recover and need that money for school down the road.

This strategy is intended to complement and not replace an RESP. In fact if you are taking advantage of the government grants, you may as well invest in an RESP that will pay an additional 15% on top of what you save and the government grants.

If you think insuring your child is an astute decision, give us a call and we will help you ensure that your gift pays them money for life.

Read 2587 times Last modified on Saturday, 03 September 2016 08:48
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