The RESP vs.
IGLI FINANCIAL PLAN
Many believe that RESP's (Registered Educational Savings Plans) are a great place to grow a nest egg for post secondary educational options.
They used to be quite restrictive, yet most organized plans are now flexible when it comes to many of the universities, colleges and trade schools. After all, it is fair to assume that some further education will always be needed to have a chance for a 'better life'.
The unique aspects of the RESPs vs regular savings measures, is that the investment growth is sheltered from tax, and they qualify for Federal and possible Provincial grants. These annual or one-time top ups can add great growth acceleration to the account.
Our firm offers one of the best plans that has also additional bonuses by Industrial Alliance. The plan is flexible and very effective.
However, there is always some risk that the child does not utilize the RESP benefits. This is a single purpose plan. Should that occur, original deposits and growth can be transferred to the payor's RRSP (Registered Retirement Savings Plan), yet the grants would not transfer.
Ask us to show you what a lump sum or a systematic savings schedule can accomplish.
More often than not, the IGLI Financial Plan (Investment Grade Life Insurance Financial Plan) is chosen instead, or as an additional / parallel savings structure for the baby, child or youth. As with an RESP, deposits are finite, and can be for shorter periods of time. Eight, nine, ten, fifteen and twenty years are common.
Of course, no one wants to think about the death of a child, but if it were to happen, it could also affect the family in devastating ways. Parents would likely need to take significant time off work. Having insurance would give parents the time necessary to properly grieve their child's loss and be there for the surviving family members. An additional insurance aspect benefit is the fact that one locks in current and long-term insurability for the child for future adult years. This is important as health can easily change. And, early insurance locks in the least expensive insurance costs possible.
They key aspect with the IGLI is that children's lives and needs do not stop with the need for education, or a brief hand up after high school.
Inflation and taxation have contributed to the expensive times we find ourselves in. This plan accomplished the creation of a financial vehicle that becomes a life-long companion with use of funds available for any reason. Short-term it is used for University, College or any Post Secondary Training; long-term it can assist in risk management during adult and family life, contribute as a down payment towards their first home and allow for mortgage protection, and/or start a business, and eventually tax free growth for retirement.
The plan has no limits to what the policy funds can be used for, certain growth is guaranteed, with additional dividends (although not guaranteed) that have been uninterrupted for close to 100 years. Amounts never decrease (i.e. negative performance) and have extremely low volatility.
This is also a fantastic family wealth management tool. When structured with a cascading design, wealth can flow tax free or tax advantaged (depending on circumstances) from one generation to another, bypassing probate, and thus creating time and cost benefits not found any other way.
Even though these plans outperform mutual funds and other comparative plans in their own right over time - without stress or concern for market performance; the fact that they built on an insurance contract, the above mentioned beneficial aspects enhance it's general purpose tremendously.
Ask us to show you what an IGLI Financial Plan can do for you and your family for both the short term and the long term.