Insurance and Education Saving Plans for Children
- September 5, 2018
- Posted by: olinsadmin
- Category: Health Care Ontario, Insurance Toronto, Medical Insurance Ontario
It’s back-to-school time and I’d like to share some ideas with parents and grandparents about their children and grandchildren wellbeing. It’s back-to-school time and I’d like to share some ideas with parents and grandparents about their children and grandchildren wellbeing.
1. RESP – Registered Education Saving Plan – the government can contribute up to 55%
Plus: 15% of additional funds from the Insurance Company where a single RESP was registered.
An RESP is an investment vehicle available to parents in Canada to help collect funds for their children post-secondary education. The principal advantage of RESPs is the access they give to the government grants that can contribute up to 55% and provide supervision. These grants can be the Canada Education Savings Grant (CESG), Canada Learning Bond (CLB), or any designated provincial education savings program. RESP is also a method of generating tax-deferred income.
Also, the Insurance Company your single RESP was registered with can give the beneficiary 15% of additional funds.
The promoter can return the subscriber’s contributions tax-free.
There are two different types of RESP available: family plans and specified plans.
- Family plans are the only RESP that allows subscribers to name more than one beneficiary (future student). Each beneficiary must be connected by blood relationship or adoption to each living subscriber or have been so tied to a deceased original subscriber. A beneficiary under a family plan must be less than 21 years of age at the time he or she is named as a beneficiary. When one family plan is transferred to another, a beneficiary who is 21 years of age or older can still be named a beneficiary to the new RESP.
- A specified plan is essentially a single beneficiary RESP (non-family plan) under which the beneficiary is entitled to the disability tax credit for the beneficiary’s tax year that includes the 31st anniversary of the plan. Furthermore, a specified plan cannot permit another individual to be designated as a beneficiary under the RESP at any time after the end of the year that includes the 35th anniversary of the plan.
Except for family plans, generally, there are no restrictions on who can be the original subscriber under an RESP:
2. Critical illness insurance as a saving account – financial support at the time of diagnoses or gift funds in 15 years
As a parent and grandparent, I hope I’ll never have to claim for a critical illness insurance benefit. But bad things happen. Your child’s serious illness can affect the whole family physically, emotionally and financially.
A couple of weeks ago, a 7-year old son of my dear friend was diagnosed with type 1 diabetes mellitus. He had to stay in the hospital for one week and now the whole family is adapting to unexpected circumstances. Fortunately, they have child critical illness insurance that eases the strain.
Let’s think positive. Your kid will never get seriously ill and for his or her 15th birthday they will get a great gift – the money that has been accumulated over many years.
3. Accidental Fracture Benefit as a part of critical illness insurance or standalone policy: onetime payment in case of any broken bone (from $500 to $10,000 cheque).
No, an accidental fracture insurance plan will not protect your kid from falling down and breaking a limb. But if it happens, it protects your family from unexpected expenses year round.
Accidental fracture insurance is an inexpensive and comprehensive way to ease a financial burden when the fracture occurs. It’s essential for children of any age; especially if they are involved with sports, special interest clubs, and other activities on or off school property. In many cases, it is required by school boards in order to participate in activities such as field trips and sporting events.
If you have questions, need an advice or want to buy an insurance plan for your peace of mind, just contact me and we’ll talk.
Happy parenting and grand-parenting!