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Why Aren’t Many Canadian Students Using RESPs?

Although we are bombarded with messaging about RESPs, not many Canadians are using them. This is quite surprising given the high cost of post-secondary education which can amount to $60,000+ for a four-year undergraduate degree. If you have young children now, the costs will most likely more than double by the time they are university age,

yet parents are not opening RESPs for their kids. In fact, a recent study by BMO Bank of Montreal found that only a third of Canadians currently enrolled in a post-secondary program have a Registered Education Savings Program (RESP) to help cope with the costs of tuition, books and room and board.

Some critics say RESPs have become too complicated over the years with too many rules and restrictions. And like many old, established government programs, they haven’t changed with the times and are not answering the needs of young people today. There are 2 major drawbacks of an RESP.

  • What can you do if your child decides not to pursue post-secondary studies? All of the money that you’ve saved for your child’s education is locked in and you have few options.
    1. Accounts can remain open for up to 36 years so you may want to wait and see if your child changes his/her mind.
    2. Transfer it to a sibling. Tax-free transfers can sometimes be made from one RESP to another.
    3. Transfer it to your RRSP. Under certain conditions, you can transfer up to $50,000 tax-free.
  • RESPs can only be used for education at government approved institutions and for government approved programs. If the program that your child wants to attend doesn’t appear on the government list of approved post secondary institutions, again you’re out of luck and the above 3 options apply.

Insurance for Children is focused on the family and the future of our children. We recognize that parents want to save for their children’s educations but they want options other than an RESP which is highly restrictive and doesn’t answer the needs of young people today. We’ve created Child Plan™ Education Achiever, a savings plan that will pay for any education program worldwide; not only those approved by the government.

And it offers incredible flexibility; it can be used even if your child doesn’t pursue post-secondary education to buy a house, start a business, or as a source of income. Contact us today for more information on this great savings plan.

Child Plan™ is Canada’s fastest growing alternative to RESP. It’s a secure and flexible way to invest in your child’s future.

Sample illustration of Child Plan™ Cash and Insurance Values

Based on a Monthly Deposit of $250 per month

Age Accumulated Cash Value Life Insurance Value
20 $82,568 (Education) $612,728
35 $177,953 (House) $1,115,297
45 $303,299 (Security) $1,115,297
65 $834,276 (Retirement) $1,666,824

Sample illustration is based on a monthly contribution of $8.32 a day/$250 a month 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 6% 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?