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Everything You Need to Know About Mortgage Insurance

Posted on by canadianlic

Everything You Need to Know About Mortgage Insurance

By Candian LIC, November 30, 2020, 3 Minutes

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Mortgage Insurance can be your savior! Read on to find out more about mortgage insurance.

When purchasing an insurance plan, you get an option called mortgage protection. This plan works to protect both your investment and your family in the tragic situation of your death.

A Mortgage Insurance is designed to pay off your Mortgage in the event you pass away. This can help your family manage their finances better

How does one determine if he needs Mortgage Insurance?

 Most borrowers who have less than 20% down payment available tend to go for Mortgage Insurance. This helps them secure their Investment in a better manner. The LTV want to value ratio is high when you have less than a 20% down payment, leading your lender to believe that you are at higher risk of defaulting your payments.

How does Mortgage Insurance work and who pays it?

 Mortgage Insurance payments are, on paper, paid by your lender. However, the cost of the premiums for this mortgage are passed on to you, as a calculation of your loan.

Can you get mortgage insurance even if you have more than 20% down payment?

 Yes, you can. If you and your lender both feel it may be a necessity, you can get mortgage insurance on your loan. This type of plan actually works in your favor as it takes off the burden from the shoulders of your family.

It helps reduce the risk and assuage the chances of you drowning in debt even after your demise. One of the best ways to ensure less risk is having a higher down payment amount. But obviously, not everyone has that kind of money just lying around. In such scenarios a mortgage insurance plan can be a life saver.

How can you get mortgage insurance?

 Connecting with an insurance broker can give you access to the best plans in the market. They are well aware of the current rates and will help you understand what you’re getting into before you sign up.

Need a mortgage insurance plan? Connect with the best insurance brokers today! Canadian LIC is just a click away.

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Call 1 844-542-4678 to speak to our advisors.

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The above information is only meant to be informative. It comes from Canadian LIC’s own opinions, which can change at any time. This material is not meant to be financial or legal advice, and it should not be interpreted as such. If someone decides to act on the information on this page, Canadian LIC is not responsible for what happens. Every attempt is made to provide accurate and up-to-date information on Canadian LIC. Some of the terms, conditions, limitations, exclusions, termination, and other parts of the policies mentioned above may not be included, which may be important to the policy choice. For full details, please refer to the actual policy documents. If there is any disagreement, the language in the actual policy documents will be used. All rights reserved.

Please let us know if there is anything that should be updated, removed, or corrected from this article. Send an email to [email protected] or [email protected]

What is life insurance and how does it work

Posted on by canadianlic

What is life insurance and how does it work

By Candian LIC, October 27, 2020, 4 Minutes

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Long-term goals: Throughout your life, you may have some dreams or goals that may be a bit difficult for you to achieve based on your financial condition. You will be pleased to know that some insurance policies are tied to certain investments which can help you achieve your goals

Clearing your debts: Certain life insurance policies can help you in clearing our different types of debts such as auto loans, home loans and more. Don’t leave your family in a financial crisis, choose a life insurance policy today.
Secure the future of your loved ones even when you are gone: This is one of the major reasons why you should get life insurance. In the event when you pass away, what happens to your family? How will they sustain financially? Life insurance can take care of this matter and see to it that your family has financial stability.

Business investments: Life insurance policies are not only for you and your family. It can also protect your business from a financial crisis as well. There are two options available; term insurance, which can for a period of 10, 20, 30 years and full life insurance. For further details call us.

Save on taxes: You can also save on taxes by getting life insurance. The premium that you pay is eligible for tax benefits
Money back clause: You can add a money-back clause (ROI) in your life insurance agreement which means, you with getting a complete refund of the whole amount at the end of your tenure.

Who Needs Life Insurance

How often have you thought about getting life insurance? What were your reasons for passing on the opportunity? If you are wondering if life insurance is for you, now might be the right time. For many, life has brought so many changes in the past year. Maybe now you have a home or family of your own and are beginning a new stage in your life.

What is life insurance?

The simplest definition of life insurance is: life insurance is a type of financial coverage that is paid to a beneficiary upon the death of the policy holder (you.) There are various kinds of policies, and it is a good idea to speak to an insurance broker at Canadian LIC to see which one is right for you, your situation and budget. Three simple things you should consider when looking for life insurance are: Dependants, Income, and Financial Responsibilities.

Why should I get life insurance? Are there any benefits to having a life insurance policy?

Here are four simple reasons you should get life insurance.

  • Supplement to Income: Life Insurance was created to make financial security for your family, especially if the policy holder was the only provider. Life insurance assists the beneficiary by supplementing the lost income of the deceased.
  • Final, end-of-life expenses: Having Life Insurance can help the beneficiary with many costs such as funeral bills, medical costs, and other unplanned expenses. Burial costs can be less of a burden if you have life insurance, because the policy can make sure money is available for such things.
  • Future costs that will be ongoing for some time: Life insurance was designed to help cover mortgage, education payments, and supplement student loans. Security is given with ongoing financial responsibilities when you have life insurance. If you have debts, life insurance can help with payments so creditors won’t come knocking. After paying creditors, the beneficiary gets the remainder of the policy.
  • and getting you an affordable monthly premium

During this time, everyone has different financial needs, and worries. To find a policy that suits you the best now, is important. With so many policies, there is something for everyone, even those who think they can’t afford this type of insurance. Remember, no one thinks about getting life insurance when things are going well, and they are healthy and young. That, however, is actually the best time to take control and get insurance. Even the smallest, life insurance policy brings peace of mind. You will be comforted knowing you have taken care of your loved ones, no matter what happens in the future.

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Reasons to buy life insurance

Often, you hear someone say how important having life insurance is. Perhaps now you have a home or family of your own and you are beginning a new stage in your life. You may be wondering if life insurance is for you.

What exactly is life insurance?

One way of describing it is: life insurance is financial coverage to be paid to a beneficiary upon the death of the policyholder. There are countless types of policies, and it is a good idea to do your homework to see which one is right for you and your situation. Three things to consider when searching for life insurance are income, dependents, and financial obligations.

Now you may ask, “Why should I get life insurance? Are there any benefits to such a policy?” Below are four reasons you should buy life insurance.

  • Income Supplement: Life insurance creates financial security for loved ones, especially if the policyholder was the sole provider. The insurance helps the beneficiary by supplementing the deceased’s lost income.
  • Final expenses: Having life insurance can assist the beneficiary with costs such as medical bills, funeral costs, and other “end-of-life” expenses. Burial costs can be less of a burden as life insurance can guarantee money is available for such things.
  • Costs that will be ongoing in the near future: Life insurance can help cover mortgage and education payments and supplement student loans. Having life insurance gives security with ongoing financial obligations. Perhaps you have debts that will need payment or creditors will come knocking. The beneficiary gets the remainder of the policy.
  • Equity and business: Depending on the policy, you may be able to withdraw funds that have built up over time by paying premiums. Life insurance is often used for emergencies. If you have a business, it’s financial responsibilities can be covered if something happens to you.

Everyone has different financial needs, and it is important to find a policy that suits you the best. There are policies for everyone, even those who think they can’t afford life insurance. No one really thinks of getting life insurance when they are young and full of health, but that is the best time to take charge and get some. Life insurance brings peace of mind, even with the smallest policy. It will comfort you knowing your loved ones are taken care of, no matter what, in the future.

How does it work?

To understand how a life insurance plan would work for you, we will have to first understand what are the kinds of life insurance plans available.

1. Term Life Insurance:

A term life insurance provides coverage only if the person passes away within a specified period of time. With this policy, the end of the term insurance can be set depending on a time duration or as an age limit.

It involves a consistent requirement of premiums and will be considered void if even one is missed. Term Life Insurance also works only if the event happens within the specified time period. If not, the beneficiaries do not receive any payouts.

2. Whole Life Insurance

The second type of coverage works without an age limit or a time period specification. The beneficiaries will be eligible to receive payments as long as you have ensured that the payments are being made at the right time for it.

Another thing whole life insurance has is the cash value. If you were to sell your whole life insurance, you would be able to get money instead of it. It builds up over time according to your premium payment.

3. Universal Life Insurance

Universal life insurance combines the benefit of an investment account with an insurance policy. The value of the policy may wax or wane depending on the kind of investments you have made.

This type of insurance also holds cash value and it can be used as collateral for a loan.

The insurance market has a variety of plans that help you curate one which suits your family the best. Taking help from an insurance broker from Canadian LIC Inc and can help you find the right one at the right price with more ease and comfort. They are experienced individuals who know the market like the back of their hand.

Get in touch with an expert and get your peace of mind. Connect with Canadian LIC for your life insurance today.

Life Insurance for Children

Life insurance is for everyone, even children. Although we don’t seem to talk about children needing life insurance, it is a way of protecting an act of love. Even if your children are still dependant on you, there are reasons why such a policy is a good idea. So, let’s see how important children’s life insurance is, and see if it is a great idea for your family.

As with all life insurance policies, life insurance policies for children are contracts with insurance companies. However, children’s policies are more focused on providing financial protection for the life of the child, but still include protection if the child pre-deceases you. This kind of insurance guarantees long term financial security to a dependant’s child. If your child has a hobby involving risky, such as scuba diving, motocross, or horseback riding, perhaps you should think about getting insurance.

The Benefits of Children’s life insurance:

  • Child’s Funeral Expenses Coverage – However unhappy or uncomfortable thinking about it makes us feel, if something ever happened to your child, having this insurance would be beneficial. You would be able to pay for the child’s end-of-life costs. Any counselling would be paid for the whole family, and the family or guardians would be able to take time off work to grieve and recuperate after the loss.
  • Future Investment and Savings for Child – children’s life insurance allows parents and other family members to leave a future financial tool for the child. This can go towards future houses, education, or even trips.
  • Affordable Premiums are locked in – A child’s life insurance policy has cash value. The larger portion of paid premiums go towards the cash value, which takes time for cash to build.
  • Child’s Insurability is Protected – child has guaranteed coverage even if he or she develops health issues at some point during life.  Also, your child will be able to purchase or convert life insurance into permanent life insurance even more coverage in later years without having to get a medical exam.

There are several different types of Children’s Life Insurance. One is to have the child be a “rider.” The child “rides” on your policy and is called a term rider. This dependant is added to the parent’s policy. Term riders usually have less coverage, but because of that, are less expensive. Another type of life insurance for children is permanent or Whole Life insurance.  Whole life insurance has lifelong coverage, and is an independent policy that does not have an expiry date. This policy is solely the children.

Getting life insurance for a child is a big and personal decision to be made, and it’s a decision that requires some discussion and research. To choose the best available option for your family, ask your insurance broker at Canadian LIC to advise you. Let your decision be comfortable knowing you have the best information available to protect your family.

Get The Best Insurance Quote From Canadian L.I.C

Call 1 844-542-4678 to speak to our advisors.

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Tips to save on your life Insurance

Deciding on life insurance is a big decision. You may feel that you can’t afford to have a good policy, but don’t worry, there are ways to save money while getting the best policy for you and your loved ones. Here are some ideas to help save money on your life insurance.

  • Permanent or Term Policy: While permanent life insurance is often needed if there are special needs dependants or an intricate estate needs, you can save by getting a term insurance policy. Term policies have a definite expiration date and no cash value element. This makes it less expensive at the beginning but can increase when the policy is renewed. Term policies are for a certain amount of time, between five and twenty. Whole life, or permanent life insurance is for your entire life. This type of policy may be cheaper for you in the long run. It really depends on your needs and plans.
  • Paying annually and Premiums: Paying annually will save you money as insurers add fees on premiums when they are paid monthly. There are usually discounts for paying annually. Speaking of premiums, selecting a guaranteed level term premium is often recommended. With this policy, the paid premiums do not increase during the entire term.
  • Stay Healthy, Quit Smoking and Get a Medical: This is no joke. Quit smoking and if you have any healthy issues, no matter how minor, now it the time to disclose By doing so, you will get the most accurate quotes. Be honest so your premiums won’t be effected down the road, and your Financial Advisor can better match you with the right insurer. Quitting smoking will save you money, as smoking has the most impact on life insurance premiums. Stay healthy. Try to maintain a healthy weight, drink little to no alcohol, and stop smoking. Getting a medical will also save you money. Non-medical policies will cost you. Premiums will be higher without the medical exam as insurers need to account for the risk of not knowing your health.
  • Sooner is better than later: You aren’t getting any younger, and Life Insurance costs go up the older you get. Depending on your health, less insurers may be willing to take you on so it’s better to get Life Insurance sooner than later.
  • Find that Special Insurance Advisor: Work with someone who can get multiple quotes, and don’t shop brokers. This will save you time because you won’t have to contact several insurance companies to get individual quotes. Insurance rates are regulated, so what one offers you here will be the same everywhere.

There is a policy out there for everyone, and these five simple points will guide you on saving money with your life insurance.

The above information is only meant to be informative. It comes from Canadian LIC’s own opinions, which can change at any time. This material is not meant to be financial or legal advice, and it should not be interpreted as such. If someone decides to act on the information on this page, Canadian LIC is not responsible for what happens. Every attempt is made to provide accurate and up-to-date information on Canadian LIC. Some of the terms, conditions, limitations, exclusions, termination, and other parts of the policies mentioned above may not be included, which may be important to the policy choice. For full details, please refer to the actual policy documents. If there is any disagreement, the language in the actual policy documents will be used. All rights reserved.

Please let us know if there is anything that should be updated, removed, or corrected from this article. Send an email to [email protected] or [email protected]

Importance of RESP

Posted on by canadianlic

What is an RESP?

By Candian LIC, October 22, 2020, 4 Minutes

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A Registered Educations Savings Plan is a government enabled system that allows you and other family members to make contributions to your child’s education in a systematic manner. This also allows you to gain access to a number of grants that can boost your savings.

Why is it important?

 RESPs are considered a great choice for saving for the following reasons:

1.Government incentives

 An RESP can help you make use of the CESG and Canadian Learning Bonds based on your income. These accumulate to a large sum over the years and can be super helpful in funding your children’s education comfortably.

2. Tax-Free Savings

 Over the years, your contributions made to the RESP can be withdrawn tax-free. The grants received from the government are taxable once withdrawn but at very low rates, giving you more profit than loss!

3. It can be easily transferred

 The greatest feature of an RESP is its flexibility. Not all plans are created this way, but when you choose one which is flexible, even if your child does not make use of the amount, it never goes to waste. It can be transferred easily to your other offspring or can even be converted to an RRSP to help finance your retirement comfortably.

Final Word

 The dependence on a good education to get placed in the right organizations has increased significantly. Most parents, without a plan like RESP would not be able to work towards saving the right amount, considering the increased costs and fees involved.

The RESP provides parents with an investment plan that only grows exponentially. The government aids that come with it, work towards providing better opportunities to children even from very low-income families. The many plans can be tailored to work for the betterment of your child’s future and provide them with a comfortable cushion.

Get started now! Open your RESP account and secure your child’s future with Canadian LIC.

How does RESP work?

How this plan works

  • You, the contributor, enter into a contract with a promoter to open a RESP account for your child, the beneficiary.
  • You can then make contributions to the RESP that accumulate over time. Government grants (if applicable) will be paid to the RESP as well. Government grants are provided for children under the age of 17.
  • The amount in the RESP is not taxable and your savings can grow tax-free.
  • When your child enrolls in post-secondary education, they can start taking payments called Education Assistance Payments (EAPs). These are included in the student’s income. The promoters makes sure payments from the RESP are made according to the terms of the plan. Your child can claim the EAPs when they enroll in university, college or any other specified qualifying education program.
  • The account can stay open for up to 36 years. Under specified plan rules, the plan can stay open for up to 40 years for beneficiaries eligible for the disability tax credit.
  • If your child wished to not pursue higher education, the funds can be transferred to a sibling. If there is no sibling, the people who contributed money may transfer it to their personal RRSP tax-free for retirement savings.

Please note that when you close your RESP, the money that you have put into the RESP is returned to you. However, you will have to pay tax on the earnings in the RESP. Although there will be earnings on the CESG, the grant must be returned to the Government of Canada.

Types of RESP

There are three types of RESPs:

  • Individual RESP – This plan is pretty straightforward. Anyone can open this account and contribute to it, be it a parent, grandparent, guardian, a benefactor or even yourself.
  • Family RESP – This plan can have more than beneficiaries, they just have to be related to the contributor or formally adopted by the contributor. The beneficiaries should be under the age of 21 to be added to the plan.
  • Group RESP – In this plan, a single child is a beneficiary, even if the child is not related to the contributor. Many people invest in this plan and the beneficiary shares the pooled earnings with children of the same age group. This plan has a lot more restrictions and rules than other RESP plans.

Feel free to contact us for more information on RESP plans. We can also help you find out about any conditions that may apply to the plan if your child does not continue their education after high school.

Guide To Choosing The Best RESP Provider For You

Deciding whose hands you choose to put your children’s future education is a daunting process. Here’s our guide to choosing an RESP provider!

While searching for a good RESP plan, most of us don’t give much thought to the RESP provider. However, this is the person who will be going to be advising us, taking care of our RESP, and will be in charge of providing us with the monetary value once we want to take it out.

Why is paying attention to your RESP provider so important?

 The RESP or Registered Education Savings plan provider is in-charge of your plan. Some providers tend to have extra costs or hidden fees in their plans. It is important to know

if there is any fee when you reach a limit on the amount or whether there is a service fee they may be taking. Sometimes, certain providers may even charge penalties when you want to close your account pre-maturely.

Another thing to keep in mind is that some portion of RESP money can be invested in the market too. Some people prefer to invest in other avenues to increase their value. This can be stock or mutual funds. As a provider, they will be doing so from their end. These methods usually have risks involved and need to be monitored on regular basis.

How can you choose the best RESP provider for you?

 Well, the first step in ensuring if the provider is good for you is to get to know them.

Meeting your RESP provider can help you understand their ideology and make the right decision. Asking them questions like “What is the extra fees involved? Do I have to pay anything once I have opened the RESP? Will I get regular reports on investments? and other such crucial questions, you can get a grasp of the way they function.

Checking their credibility using references and testimonials from previous clients can also help you make a better decision. It is also recommended to check whether they are allowed to provide you an RESP or not. Another way to verify the credibility of your RESP provider is to test their knowledge of the industry. This can help you determine how far your provider is going to be able to help you benefit.

Stop your search for the best RESP provider! Get in touch with Canadian LIC.

Get The Best Insurance Quote From Canadian L.I.C

Call 1 844-542-4678 to speak to our advisors.

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The above information is only meant to be informative. It comes from Canadian LIC’s own opinions, which can change at any time. This material is not meant to be financial or legal advice, and it should not be interpreted as such. If someone decides to act on the information on this page, Canadian LIC is not responsible for what happens. Every attempt is made to provide accurate and up-to-date information on Canadian LIC. Some of the terms, conditions, limitations, exclusions, termination, and other parts of the policies mentioned above may not be included, which may be important to the policy choice. For full details, please refer to the actual policy documents. If there is any disagreement, the language in the actual policy documents will be used. All rights reserved.

Please let us know if there is anything that should be updated, removed, or corrected from this article. Send an email to [email protected] or [email protected]

What kind of medical health insurance do international students get?

Posted on by canadianlic

What kind of medical health insurance do international students get?

By Candian LIC, August 24, 2020, 4 Minutes

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If you are planning to study in Canada, then you must have health insurance, and medical insurance is included in that policy. In some provinces, it might not be, in that case, you would have to make necessary arrangements for a private insurance policy. You can get in touch with Canadian LIC and we will be more than happy to help you with your insurance requirements.

The benefits that come with international medical health insurance When you apply for medical insurance in Canada, you should know of the benefits that come with it. Have a look below:

Low insurance premiums:

The premiums for these plans are affordable and it can break down into several easy payments that can be paid during the student’s stay.

Dedicated benefits:

The following is the list of benefits that you would be getting with all insurance policies:

  • Hospital expenses and accommodation;
  • Diagnostic services
  • Physician charges
  • Prescription drugs
  • Paramedical services
  • Psychiatric treatment
  • Trauma counseling
  • Medical appliances
  • Treatment of dental accident

What are the types of insurance plans available?

If you do a Google search of what type of insurance you should get, you may get confused with the wide range of options that Google throws at you. Don’t worry though, below are some specific insurance policies which are tailored to a student’s needs and also don’t cost that much, have a look.

  • International travel medical insurance: It is specifically aimed for those students who are traveling to Canada and are valid for one year. It can be used as a supplement to medical insurance.
  • International major medical insurance: It’s a long-term insurance policy and is renewable. It offers flexible coverage options, pre-existing health issues or injuries, and much more.

To know how to apply for medical insurance using your insurance card, you can always get in touch with our team at Canadian LIC. We look forward to hearing from you.

The above information is only meant to be informative. It comes from Canadian LIC’s own opinions, which can change at any time. This material is not meant to be financial or legal advice, and it should not be interpreted as such. If someone decides to act on the information on this page, Canadian LIC is not responsible for what happens. Every attempt is made to provide accurate and up-to-date information on Canadian LIC. Some of the terms, conditions, limitations, exclusions, termination, and other parts of the policies mentioned above may not be included, which may be important to the policy choice. For full details, please refer to the actual policy documents. If there is any disagreement, the language in the actual policy documents will be used. All rights reserved.

Please let us know if there is anything that should be updated, removed, or corrected from this article. Send an email to [email protected] or [email protected]

Can You Pay for Your Child’s Full Education with an RESP in Canada?

Posted on by canadianlic

Can You Pay for Your Child’s Full Education with an RESP in Canada?

By Candian LIC, August   21, 2020, 8 Minutes

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As parents, we often dream of providing the best possible education for our children. In Canada, post-secondary education costs continue to rise, making it a significant financial consideration for many families. To help parents save for their children’s education, the Canadian government introduced the Registered Education Savings Plan (RESP). But the main question is: Can you pay for your child’s entire education with an RESP in Canada? This blog will help you understand RESP, its benefits, limitations, strategies to make the most of this savings tool, and most importantly can help to pay for the full education of your child or not.

A Brief Overview of RESP

The Registered Education Savings Plan (RESP) is a tax-advantaged savings plan designed to help parents save for their children’s post-secondary education. RESP has now become an essential tool for Canadian parents looking to invest in their children’s future. Key features of an RESP include:

  • Tax Advantages: Contributions to an RESP are not tax-deductible, but the investment grows tax-deferred until withdrawn for educational purposes. When the funds are used for education, the earnings are taxed at the beneficiary’s (the student’s) lower tax rate.
  • Canada Education Savings Grant (CESG): The government provides additional support in the form of the CESG, which matches a percentage of your contributions. This grant significantly boosts your savings.
  • Canada Learning Bond (CLB): The government offers the CLB for lower-income families, providing an initial contribution and additional funds annually until the beneficiary turns 15.
  • Flexible Investment Options: RESPs offer a variety of investment options, including mutual funds, GICs, and stocks. This flexibility allows you to choose investments that align with your risk tolerance and financial goals.
  • Lifetime Contribution Limit: There is a lifetime contribution limit of $50,000 per beneficiary. While this may not cover the entire cost of education, it provides a substantial head start.

Read More – why to choose an RESP

The RESP’s Potential to Cover Educational Costs

While RESPs offer significant benefits for saving for education, managing expectations is essential. Here’s a breakdown of the RESP’s potential to cover educational costs:

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  • Tuition and Fees: Depending on the program and institution, tuition and fees can vary widely in Canada. An RESP, especially when coupled with government grants, can help cover a significant portion of these costs. However, it’s unlikely to cover the entire expense.
  • Books and Supplies: RESPs can also be used to pay for books, supplies, and other education-related expenses. These costs can add up, but an RESP can help to reduce the burden.
  • Room and Board: If your child plans to live on campus or rent an apartment while studying, an RESP can contribute to these expenses. However, it may not cover the full cost, especially in high-cost cities like Vancouver or Toronto.
  • Transportation: If your child needs to commute to the educational institution, RESP funds can be used for transportation costs. Again, the coverage will depend on the distance and mode of transportation.
  • Other Expenses: Miscellaneous expenses, such as a computer, software, or even a part-time job, can also be funded with RESP withdrawals.

Strategies to Maximize Your RESP’s Value

To make the most of your RESP and increase its potential to cover educational costs, consider these strategies:

  • Begin Early: Your investments will have more time to grow the earlier you begin making contributions to a RESP. Over time, compound interest can considerably increase your savings.
  • Participate frequently: Make recurring contributions to your RESP to guarantee steady growth. To stay on track, many parents decide to make a monthly or yearly contribution.
  • Maximize Government Grants: For increasing government grants use the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB) to your advantage by making the highest annual contribution permitted to get the full grant amounts.
  • Invest Smartly: Choose your RESP investments wisely based on your time horizon and risk tolerance. Your portfolio’s diversification can reduce risk.
  • Think about family plans: If you have several kids, think about a family RESP. This enables you to divide money among siblings, maximizing the advantages.
  • Understand the Withdrawal Policies: Learn about the regulations governing RESP withdrawals. Ensure that the school your child attends meets the requirements and that withdrawals are processed in a way that minimizes taxes.
  • Encourage Your Child to Work Part-Time: Encourage your child to work part-time to help them pay their living expenses while they are in school. Withdrawals from a RESP can be combined with earnings from a part-time job.
  • Explore Scholarships and Bursaries:  Encourage your child to apply for scholarships and bursaries, which can help reduce the cost of their education.
  • Examine Additional Funding Sources: Investigate alternative funding sources, including student loans or credit lines, if your RESP cannot pay all of your expenses.

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RESP Rules and Regulations

While RESPs are a valuable tool for saving for education, it’s essential to be aware of their limitations and considerations:

  • Lifetime Contribution Limit: The lifetime contribution limit of $50,000 per beneficiary may not cover the full cost of a four-year university program, especially in high-cost regions.
  • Market Volatility: RESP investments are subject to market fluctuations. While they offer growth potential, there is also a risk of losing money, especially if investments are overly aggressive.
  • Withdrawal Rules: Funds must be used for eligible educational expenses, and there are specific rules governing withdrawals. Make sure you understand these rules to avoid penalties.
  • Unused RESP Funds: If your child decides not to pursue post-secondary education or if they receive a full scholarship, you may face penalties when withdrawing RESP funds. However, there are ways to mitigate these penalties.
  • Impact on Financial Aid: Large RESP balances can impact your child’s eligibility for financial aid. It’s important to consider this when planning your contributions.
  • No Tax Deduction for Contributions: Unlike RRSPs (Registered Retirement Savings Plans), contributions to an RESP are not tax-deductible, which means you don’t get an immediate tax benefit.

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The big question: Would RESP cover all higher education costs?

Now, we come to the main part of this blog. Whether or not the RESP account you have started would cover the complete costs. At Canadian LIC, we use a special calculator which takes into account factors such as the annual rise in tuition costs and the growth of annual investments. Another factor is, if your family income is more than $47,630 then you won’t be eligible for the Canada Learning Bond. So, to max out the CESG grants received, you will have to contribute $2500 annually.

So, if the total education cost is $83,504.02, then on a planned contribution of $2500 the lifetime saved amount would be $100,092.14. This lump sum amount is a combination of your contributions, the CESG grants, and investment return. You will save at least $16,588.12 by the end of the final year.

In other words, if you start saving early for your child’s education, then the RESP account will be more than sufficient. If you have any queries, feel free to get in touch. Don’t wait anymore, take advantage of the government’s free grants and open an RESP account today!

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Coming to The End

To sum up, a Registered Education Savings Plan (RESP) is an excellent way for Canadian parents to start saving for their child’s post-secondary education. Even though it might not completely cover the expense of education, it offers a strong foundation and can significantly ease the financial strain. You may get the most out of your RESP by getting started early, taking advantage of government assistance, and making wise investment choices. However, in order to make sure that your child’s educational goals come true, it’s critical to be aware of the program’s restrictions and take into account other funding options. An RESP can be a potent tool in safeguarding your child’s educational future in Canada with careful planning and diligent saving.

FAQ’s

So now let’s get the answers to some frequently asked questions (FAQs) related to paying for your child’s full education with an RESP in Canada:

An RESP, or Registered Education Savings Plan, is a tax-advantaged savings plan in Canada designed to help parents and guardians save for their child’s post-secondary education. It allows you to invest money that grows tax-free until it’s withdrawn for educational purposes.

While an RESP can provide substantial financial support, it’s unlikely to cover the entire cost of your child & education, especially if they pursue a long and expensive program or study in a high-cost city. However, it can significantly ease the financial burden.

government subsidies like the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB), multiple investment choices, and the ability to increase your savings over time are the key advantages of holding a RESP.
government subsidies like the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB), multiple investment choices, and the ability to increase your savings over time are the key advantages of holding a RESP.
It’s advisable to start contributing to an RESP as early as possible. The longer your investments have to grow, the more you can potentially accumulate. Ideally, it would be best if you opened an RESP shortly after your child’s birth
If your child decides not to pursue post-secondary education, you have a few options. You can transfer the RESP to another eligible beneficiary within the family, postpone withdrawals until your child changes their mind, or withdraw the contributions without penalty. However, government grant money may need to be returned or forfeited in certain situations

It’s generally recommended to purchase travel insurance before your trip begins. However, some insurance providers may offer options to Yes, there are specific rules governing RESP withdrawals. Funds must be used for eligible educational expenses, and you must provide proof of enrollment. Be aware of these rules to avoid penalties.

Yes, you can open a family RESP that allows you to allocate funds between siblings. This is a convenient way to manage savings for multiple children.

You can still use your RESP funds if your child receives a scholarship or other financial aid. However, you may need to repay government grant money or consider other options for using the RESP funds without penalty.

Yes, you can contribute to an RESP for any eligible beneficiary as long as you have the necessary permissions and information.
While starting early is best, it’s never too late to open an RESP and contribute what you can. You may miss out on some government grants, but your contributions can still grow tax-free and provide valuable support for your child’s education.
RESPs can last for a maximum of 36 years. If the money isn’t used within this time, the plan has to be ended, and any money left over is given to the subscriber, the beneficiary.

Yes, RESP funds may be applied to eligible postsecondary programs offered outside of Canada. However, it’s crucial to confirm that the institution and program satisfy the requirements for eligibility.

Over contributions (contributions made in excess of the lifetime limit of $50,000 per beneficiary) may be subject to penalties, including possible taxation.
You cannot directly borrow against RESP funds, and you cannot use them as collateral for loans.
An RESP can be used to hold equity investments, such as mutual funds, individual stocks, and bonds, as well as fixed-income products. With the assistance of a Canadian LIC expert, you can decide which set of investments will perform the best for you.

A Registered Education Savings Plan accepts a limitless number of contributions each year. The maximum annual contribution per recipient is $50,000, though. (Your plan may have more than $50,000 in it until the time comes for your child to use it because government grants and investment growth in your RESP are not counted toward the $50,000 limit.

There is no time restriction. Contributions to a RESP are welcome at any time of the year. When requesting government support, use the calendar year.

If you want to take money out of a RESP, you might need to show the bank your receipts for purchases like laptops and books. Additionally, you need to demonstrate that the beneficiary is registered in an acceptable post-secondary program.

You are only qualified for $5,000 in payments from a RESP’s investment growth during the first 13 weeks of enrolment, in addition to any Canada Education Savings Grants, provincial grants, or Canada Learning Bonds (the educational assistance payment). After that, provided the payment is appropriate, you are entitled to any amount of payment. You can withdraw as much of your personal plan contributions as you want whenever you’d like.

In order to qualify for the CESG, beneficiaries who are 16 or 17 years old must fulfill certain contribution requirements. RESPs with beneficiaries aged 16 and 17 may be eligible for the CESG if at least one of the following two conditions is met:

  • Before the conclusion of the beneficiary’s 15th birthday, at least $2,000 was deposited into their RESP; this money was not withdrawn.
  • A minimum of $100 was paid to the RESP each year (and was not taken out of it) in any of the four years before the end of the calendar year that the beneficiary turned 15.

Yes, you are able to start a RESP for yourself. However, if you are 18 or older, a TFSA might be better than a RESP for you.

With the help of a Canadian LIC advisor, you may assess which type of account is best for your requirements.

The above information is only meant to be informative. It comes from Canadian LIC’s own opinions, which can change at any time. This material is not meant to be financial or legal advice, and it should not be interpreted as such. If someone decides to act on the information on this page, Canadian LIC is not responsible for what happens. Every attempt is made to provide accurate and up-to-date information on Canadian LIC. Some of the terms, conditions, limitations, exclusions, termination, and other parts of the policies mentioned above may not be included, which may be important to the policy choice. For full details, please refer to the actual policy documents. If there is any disagreement, the language in the actual policy documents will be used. All rights reserved.

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