Registered Education Savings Plan
An education is certainly one of the greatest gifts you can give your child. It is certainly too early to reflect on your child’s career choice, but it is not too early to set aside the funds needed for a good education.
To help you save, the federal government set up the Canada Education Savings Grant (CESG) in 1998. This program is specifically designed to encourage parents to invest in their children’s postsecondary education. The grant corresponds to 20% of the amount you contribute to an education savings plan. For each dollar contributed to the plan, the federal government contributes $0.20. This means you can receive up to $7,200 for your child’s postsecondary education.
An education is the best way parents can ensure their child becomes a functional and productive member of the society.
- Government grants
Under the Final Expense Plan: your acceptance is guaranteed! No waiting around for medical tests or follow up with an insurer. If you meet the age, you are already qualified for coverage.
- Tax-free Benefits
The purpose of RESP is to benefit post-secondary students in their education. Contributions made to this plan have already been taxed. Your child will receive the sum at little or no federal income tax owed to tuition and education tax credits.
- Contributions are paid back
In the event of contributions not being paid out to the student, the organization pays them back to you or the subscriber at the end of the contract.
- One or more beneficiaries
This plan is designed for individuals with past health issues or a history of difficulty getting insurance. Even if other insurers have said you’re too risky to insure, you’re still eligible for the Final Expense Plan, with no tests or health questions needed.
- Instant Issue
When you sign up for the Final Expense Plan online, your policy will be instantly issued and emailed to you. Most insurance policies can take up to two months to be approved – Usually your policy is issued within the hour!
The goal of a Registered Education Savings Plan
The Registered Education Savings Plan (RESP) is a financial tool specially designed to accumulate savings to be used as a financial resource for a beneficiary’s post-secondary education. As with a registered retirement savings plan (RRSP), the federal government allows the investment income to grow, in a tax shelter, until the money is withdrawn from the plan.
Who can benefit with RESP
This financial vehicle is designed for people who want to accumulate money, tax-free, in order to provide a loved one with the opportunity of having a promising future thanks to a post-secondary education. The rising costs of indebtedness resulting from the increase in tuition fees over the past few years and the demands of the employment market, which favour post-secondary graduates, will most likely result in a significant increase in popularity for RESPs in the years to come.
- Prudent parents who want to avoid debt when their children attend a post-secondary institution
- Young parents who have experienced significant increases in tuition fees and debt from student loans
- Grandparents who would like to help finance their grandchildren’s education
- Parents and grandparents who have reached their RRSP contribution limits and are looking for another tax-exempt financial vehicle
- People who want to accumulate savings to upgrade their own education in the future.
There are no medical exams to qualify for this plan, and your benefits cannot be denied due to health reasons if you meet the above criteria.
That means you will have guaranteed coverage, even if:
- You have health issues that other insurers would consider “uninsurable”;
- You have been denied in the past for any kind of life insurance or other insurance plans;
- You have risk factors in your life (obesity, smoking) that would make finding insurance difficult;
- You are a newly-landed resident of Canada. No SIN or prove of Canadian citizenship is required to qualify.
Type of Plans
To meet the growing needs of many parents, the My Education RESP is now offered for two types of plan, the individual plan and the family plan. The differences between these two types of plan will be specified throughout the guide, when necessary. Following is a brief description of each:
This plan allows the subscriber to designate one beneficiary per plan. The beneficiary may or may not be related to the subscriber by blood or adoption.
This plan allows the subscriber to designate several beneficiaries. However, they must all be linked to the subscriber by blood or adoption and be under 21 years of age. Moreover, the special feature of the family plan is that all children from the same family can be combined in a single education savings plan. The family plan is more suited to parents and grandparents whose family is complete so that they can take advantage of the longest possible accumulation period for each child. The family plan also offers the flexibility of distributing the amounts among the children as each one begins their post-secondary studies.
How does RESP works?
The RESP contract is a savings vehicle that involves four parties: the subscriber, the beneficiary, the promoter and the trustee.
The subscriber: The subscriber is the individual who is the contract holder and who will make the contributions to the My Education RESP.
The beneficiary: The beneficiary is the person designated by the subscriber to receive the educational assistance payments (EAP) when pursuing post-secondary studies.
The promoter: Industrial Alliance Insurance and Financial Services Inc. is the company that will distribute and manage the plan provided through Final Expense Ontario.
The trustee: Industrial Alliance Trust Company is the trustee that irrevocably holds the amounts invested in the plan as required by the federal government for the purposes of the RESP.
The plan will take effect when a contract between the subscriber and the promoter is signed. At that time, the subscriber will designate one or more beneficiaries who will use the investment income generated by the plan and the grants paid by the Canadian government and by certain provincial governments as EAP’s for a post-secondary education. Subscriber contributions are not tax-deductible and the accumulated income and grants are not taxable until they have been attributed to the beneficiary. Furthermore, the amounts invested in the plan must be held by a trust company at all times. Finally, no contributions can be made after December 31 of the 31st calendar year 1 following the plan’s creation, and the plan must cease to exist no later than December 31 of the 35th year following the plan’s creation.
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