Banks won’t tell you about Participating Whole Life Insurance plans as an alternative to RESP for your child’s education and future.
For over a century, banks were viewed by Canadian families as trusted community partners who provided advice to help manage their financial lives. You walked into your branch, spoke with your manager on what’s best for yours and your family’s future, and they provided you options and services.
For the Banks, Today It’s All About the Dollars
Times have changed. Today, as we’ve learned, banks no longer offer advice that’s in your best interest. The goal of the person in front of you or on the phone is to get you to buy more of their financial products and services, whether you need it or not. The person behind a desk, counter or on the phone is reading a script promoting and selling you their financial products with their fees attached.
As recent revelations by bank employees have revealed, even when you call to complete a simple transaction or discuss a problem, the poor faceless voice, whose every word is being monitored are forced to read a menu of products they must push on you.
However, I learned when I worked at Canada’s largest bank’s wealth management division, if you’re in the top 1% wealth bracket you get choices of products and services the other 99% won’t even know exist.
You Have Better Options
When my daughter Ellie was born in 2009, like all parents, I began looking at ways to save for her education and future. Like everyone else, I believed my only option was the RESP. While Banks and RESP companies kept pushing the 20% free money from the government, I looked at the restrictions and fees associated with the RESP and felt it wasn’t the best option for my child’s future.
I spoke with our wealth management division’s life insurance specialist about my concerns of opening an RESP for her education, and she said there is another option that’s way better for Ellie than an RESP.
She told me since the branches aren’t allowed to speak about life insurance, wealth management clients are able to be offered both RESP and Participating Whole Life Insurance plans as a safe and flexible investment for their children’s education and for their life.
RESP vs. Participating Whole Life Plans
I asked her what’s the difference between the two and why, as an expert believed Participating Whole Life Plans were a better option for Ellie’s future. She educated me that;
• With RESP, Ellie can only use the Government grants if she attends an education program or college approved by the Government of Canada.
o With a Participating Whole Life Plan she’s free to use the funds in the plan for any college, university or education program around the world, without any restrictions.
• With RESP if Ellie has scholarships or chooses a different path, we have to close the RESP account and return all the Government Grants we received, even if our advisor lost it on the stock market.
o With a Participating Whole Life Plan, Ellie has the freedom and flexibility to use the funds during her whole life for any financial need or dream, including buying her first home, funding her own company one day if that’s her dream, her future children’s education or for any need during her whole life.
• My RESP accounts will be continuously charged annual account management fees, transfer fees, investment management fees, trading fees if using online trading platforms, withdrawal fees, cancellation fees, mutual fund expense fees and so on…
o With a Participating Whole Life Plan, Ellie will receive an annual tax-free dividend for life which is deposited into the cash value account of her plan. Once deposited, there are no more fees being charged to her plan. Also, there are no fees when she’s ready to withdraw from her Participating Whole Life Plan.
When I asked her why bank branch clients are only shown RESPs and not Participating Whole Life Plans she said, bank branches are not allowed to discuss life insurance with clients and “It’s easier to attract parents if we only promote FREE money from the Government”.
She further added that participating whole life plans which have been available and used by parents for over 100 years in Canada, are the ONLY plans in Canada Banks don’t have, and as we’ve all recently learned, if the banks don’t have a product of their own to sell you then they won’t tell clients it even exists or where to get it.
I am Michael Lampel, President of insuranceforchildren and creator of Child PlanTM, a Participating Whole Life Plan and the fastest growing alternative to RESP. This is in the continuing series in financial planning for children.