What are the RESP fees?
Child Plan™ vs. RESP
Your child's future is incredibly important to you, and to help you make the best informed decision we believe it’s important you have all the information to make the best informed decision on the right savings plan for your child’s future. There's a lot of information out there, and we want to provide you with unbiased facts.
Saving For Your Child's Future - Your Options:
RESP, (registered educations savings plan)
Let's start with the Registered Education Savings Plan (RESP). Money placed in these investment accounts can grow tax-free deferred.
However when you open an RESP you will either open a plan at the bank or a group RESP company. Both are fine choices, however it’s important you’re aware of the risks and fees associated with each choice.
An RESP at your bank, an investment sales person will advise you to invest the money you deposit into a mutual fund, which is invested directly on the stock markets. They are not allowed to make any predictions or guarantees on what the account value will be when your child is 18 and advise you that it’s entirely at your risk.
Additionally there will be fees included in your mutual fund called Management Expense Ratio. MER, which you should ask as to what the MER is in each mutual fund they place your money into. The MER is charged daily on the account value whether it ‘s up or down and can range from 1.5% annually to 2.5% annually.
That means regardless of investment returns they will charge your RESP account up to 2.5% of the value every year.
There are also account management fees which can be as high as $50 per year and again regardless of the account value they will charge their fees.
Group RESP companies have severe limitations and in the past several years have been the subject of thousands of complaints due to the amount of sales charge fees they have placed onto the RESP account owners. The first rule when considering a group RESP is to learn of the fees built into your plan and what happens if you stop contributing.
Participating Whole Life Insurance (Child Plan™)
Finally, there is participating whole life insurance. Participating whole life insurance is a private life insurance plan that also doubles as a tax-free investment for your child’s future education and life.
From the day you open their Child Plan™:
- They will receive a tax-free annual dividend every year for life.
- They have the freedom to use the cash value in their plan for any financial need in life beyond education.
- The cash values in their Child Plan™ grows completely tax-free for life.
- And the cash value in their plan is guaranteed and will never decline in value no matter what happens in the stock market. With a Child Plan™ participating whole life you never have to make any investment decisions or be concerned their plan won’t be there when they start their education.
- Additionally, you and/or your child can access the cash values five different ways including two options that can be done without any income taxes.
- When your child uses their Child Plan™ cash values whether for their education or to buy their first home, there are no fees to withdraw the funds at any time.
Request your personalized Child Plan™ illustration for your Child's future
Sample Child Plan™ illustration of cash and Insurance values for a child starting at age one
Sample illustration is based on a monthly contribution of $250 for twenty years, starting when the child is less than 1 years old. Cash and life insurance values are based on the current dividend interest rate of 5.2% from a Canadian life insurance company. This example is strictly for illustration purposes. The dividend scale is not guaranteed, and values may differ.
Personalize Your Child Plan™
Request a Child Plan™ Illustration and see how much cash value your child will have for their education and for life.
*illustrations are reflective of the annual premium amount
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