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Will You Be Paying For Your Child’s Student Loans When You’re About to Retire?

Do you believe with the cost of a standard 4 year university education expected to climb to over $137,000 (TD Bank) for your 1 year old child, you’ll be able to retire?
If you do then you must be one of the lucky to have paid off your student debt. Some parents today though are not so lucky. Not only are they still paying off their own student loans but are now also assuming the student loans of their children.

Instead of being carefree and traveling around the world or basking in the sun on a white sandy beach, many parents are in a panic about their retirement.

  • According to a survey by the National Institute on Retirement Security 54% of parents worry that their own retirement will be jeopardized because of their child’s student loan debt.
  • 94% of parents of college students ages 18 to 24 say they beleive their personal share for their kids’ college student loan debt is increasing.

Student loans are now the second largest form of consumer debt (home mortgages are in the number one position). Over 40 million Americans have student loans and an alarming number of these indebted people will never recover financially. Student loans have become a “catch 22” situation. Many parents didn’t save enough for their retirements because they were trying to pay off their own student loans.

According to Fidelity’s annual College Savings Indicator Study 80% of parents are concerned that student loan debt will hinder their child’s ability to be financially independent after graduation. And 84% of parents say that college debt will impact future generations’ ability to buy a home. To help their kids become financially independent many parents have chosen to assume the debt load of their children’s student loans to give their kids a chance to succeed in life without an enormous financial burden they may never be able to recover from.

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.

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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

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