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What Are Parent’s Options To Save For Their Child’s Future?

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As parents, we want the best for our children. Whether that means a great education, wonderful opportunities, or the house of their dreams.

Many of us will do everything we can to set our children up for a great future ahead of them. 

Saving money every month is a great way to give our children the head-start they deserve. However, options to save money for your child’s future can be limiting.

Here are the five main choices you have in investing money into your child’s future.

RESP (Registered Education Savings Plan)

A registered education savings plan is perhaps the most well-known option to save money for your child’s future. 

RESPs have been marketed to banks since 1998.

Essentially, it’s a government-run program with specific restrictions, including where your child can go to post-secondary school, what they can study, and how the money you saved can be used.

With an RESP you will receive a matching grant of 20% of what you deposited from the government annually up to $500.

This means that the total grants you can receive by the time your child turns 17 if you deposit $36,000 is $7,200.

The rest of the growth is up to you. Once your child is 17, in order to use the savings, they must select a school or program that was pre-approved by the Canadian government.

Opening An Investment Or Bank Account

Some parents opt for an investment account, also known as an informal trust account. 

The basic idea is for parents to open a savings account in the child’s name when the child is born and funnel money into it throughout their life. 

Once the child is 18, they take legal ownership of the account and have full control over the finances.

Some parents shy away from an investment account as a way to save for their child’s future. Once the child has the bank account in their possession, there is no way for the parent to dictate where the money goes.

TFSA (Tax-Free Savings Account)

Similar to an RESP, a tax-free savings account (TFSA) is a government-controlled account for parents to save for their child’s future. 

With TFSAs, parents remain the sole owner of the account, even when the child turns 18 – meaning you can never transfer the account into their name.

Give Your Child Shares In Your Company Or Business

Helping support your child with the business or company that you built is very popular. 

However, there are a few snags. 

Since children can’t legally consent and sign contracts, children under 18 cannot own shares in any company. 

This means that you won’t be able to put any shares of your business in your child’s name until they are 18 or older. 

If you decide to transfer shares to your child when they are 18, you will need to do a fair market value evaluation and pay any capital gains taxes on the shares transferred.

Child Plan: Whole Life Insurance Plan For Each Child

Hudson’s Bay Financial Services and Child Plan are proud to present a whole life insurance plan for your child to properly save for their future without holdbacks. 

Parents and grandparents are able to sign up their child for a whole life insurance plan starting for children as young as just 14 days old! 

From the day you open the account, your child will receive an annual dividend, as well as cash values tax-free for life,

In addition to being a great way to save for your child’s future, Child Plan also gives parents full control over the account, meaning they can choose when they feel their child is ready for the inheritance any time after they turn 18.

You are not legally required to transfer it to them until you feel they will be ready to manage the money. 

There are no taxes the day you transfer the plan to your child or grandchild regardless of the amount of cash value in their Child Plan!

Child Plan is committed to helping parents and grandparents plan for their children’s futures. Whether their dream is to get a first-rate education, buy their own home, start their own business or travel the world.

Insurance for Children helps parents invest in their children to achieve their dreams. Whatever they may be!

Child Plan – the fastest growing alternative to the RESP.

Sample illustration of Child Plan™ Cash and Insurance Values

Based on a Monthly Deposit of $225 per month

Age Accumulated Cash Value Life Insurance Value
20 $80,448 (Education) $770,802
35 $184,850 (House) $1,070,880
45 $325,714 (Security) $1,343,568
65 $964,321 (Retirement) $2,082,564

Sample illustration is based on a $225 monthly premium for twenty years, starting when the child is less than 1. Cash and life insurance values are based on the current dividend scale of 6.0% from a Canadian Life Insurance Company. This example is strictly for illustrative purposes only, the annual 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.

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*illustrations are reflective of the annual premium amount

Have a question about Child Plan or wish to speak with a Family Advisor?