Beyond the RESP: Another way to invest in your child’s future

Back-to-school season is more than a return to the classroom. It often feels like a fresh start for families: between shopping for school supplies, signing permission forms, making lunches, and juggling extracurricular activities, many parents also take the opportunity to revisit their budget and longer-term goals, including how they’re planning for their children’s future.

The RESP typically comes first, and for good reason. It's one of the most useful education savings tools available to Canadian families. The Canada Education Savings Grant can add 20% to eligible annual RESP contributions, usually up to $500 per year, for a lifetime maximum of $7,200 per child.

But once the RESP is in place, some families start asking a bigger question: "What else can we do to help give our child a financial head start?”

One option worth understanding is permanent life insurance for children.

That idea can feel surprising at first. Most people think about life insurance as something they need only when they have financial responsibilities – when they’re married, or have children, a mortgage, or a business. Buying coverage for a child is a different kind of decision. It’s less about an immediate need and more about creating future options.

Why would a child need life insurance?

For many families, the honest answer is: they may not need it right now.

That’s important to acknowledge. Permanent life insurance for children is rarely the first financial priority. Most parents are better served by focusing on the fundamentals first: protecting their own income, building emergency savings, contributing to an RESP, and making sure their own life and disability coverage are appropriate.

Once those foundations are in place, a child’s permanent life insurance policy can become part of a longer-term planning conversation.

The value isn’t only the death benefit. Depending on the type of policy, permanent life insurance may offer lifelong coverage, potential cash value, and the ability to secure insurance while your child is young and healthy.

It can help protect future insurability

Health can change at any age.

A child who is healthy today may develop a medical condition later that makes life insurance harder to obtain, more expensive, or limited in scope. Buying permanent coverage early can secure a base amount of insurance before those changes happen.

That can matter years later when your child becomes an adult and starts building their own life. They may want coverage for a mortgage, a family, a business, or estate planning. Having an existing policy can give them a starting point.

Some policies may also include future insurability options, which allow the insured person – your child – to purchase additional coverage later without new medical underwriting. The details vary by policy, so this is something that should be reviewed carefully.

Starting early can make premiums more manageable

Age and health are two major factors in life insurance pricing. Since children are usually young and healthy, permanent coverage can often be put in place at a lower cost than it would be later in life.

This doesn’t mean every family should rush into a policy, but timing can make a difference.

For parents or grandparents who want to make a long-term financial gift, a permanent life insurance policy can be one way to do that. The policy may be paid over a set number of years, then transferred to the child when they are older.

It can build long-term value

Certain types of permanent life insurance can build cash value over time. That value may be accessed later, depending on the policy and the options available at that time.

But this doesn’t mean permanent insurance is a replacement for an RESP, TFSA, or other savings strategy. Each of these tools serves very different purposes. An RESP is designed for education; a TFSA can be used to save for short- or long-term goals; a permanent life insurance policy is designed to provide insurance coverage, with potential long-term value as part of the contract.

This distinction matters.

A child may not attend post-secondary school. They may start a business, buy a home, support a family, or need financial flexibility in a way that is hard to predict when they’re young. Permanent life insurance may become one piece of that broader planning picture.

It can be a meaningful gift from parents or grandparents

Many parents and grandparents want to give children something that lasts longer than toys, clothes, or cash in a birthday card.

A permanent life insurance policy can be structured as a long-term gift. It may not feel exciting to a young child, but years later, it could become something they appreciate deeply.

It can also open the door to conversations about money, planning, responsibility, and protection. Those conversations are just as valuable as the policy itself.

It should fit into your family’s full financial picture

Permanent life insurance for children can be useful, but it should never be considered in isolation.

Before buying a policy for your child, ask yourself:

• Are we properly insured?
• Is there disability coverage in place to protect our household income?
• Is our child’s RESP being funded in a way that makes sense?
• Do we have an emergency fund?
• Will the premiums remain affordable over time?
   

The strongest plans are built in the right order. Your children benefit most when your family’s financial foundation is strong.

Looking ahead

Back-to-school season naturally brings the future into focus. Parents are thinking about what their children need today, and what they may need years from now.

An RESP is often a smart place to start. For some families, permanent life insurance may be another tool to consider after the basics are covered.

It can help protect future insurability, create long-term options, and provide a financial gift that grows with the child.

We help families look at the full picture before making decisions. The goal is not to buy every product available. It is to understand which tools fit, which ones can wait, and how to build protection that supports your family over time.

Reach out today and let’s talk.

Sources

Government of Canada. Canada Education Savings Grant (CESG). Canada.ca. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-education-savings-plans-resps/canada-education-savings-programs-cesp/canada-education-savings-grant-cesg.html.