Helping “insure” your child can afford post-secondary education

#Exploring your options

Using permanent life insurance to help fund your child's education

Tuition costs have nearly tripled over the past quarter-century ­– good enough reason to start planning for your child’s university or college education.Footnote 1

With the average cost of a post-secondary education in 2010-2011 at $58,000 – and climbing – and with the maximum contribution to registered education savings plans (RESPs) set at $50,000, you may be looking for other ways to fund your child’s education.Footnote 2

Life insurance can help your children fund their post-secondary education if you or your partner die unexpectedly.

How does it work? Most permanent life insurance products offer a guaranteed cash value accumulation component that allows the cash value to grow tax-free (within limits).

When it’s time to withdraw funds for your child’s education, you can either withdraw the accumulated cash value or take out a loan against the policy’s accumulation.* If you take out a loan, your cash value can continue to grow, provided you repay the loan. Alternatively, you can surrender your insurance policy if coverage is no longer required and apply this money to your child’s education needs (tax may apply).

It’s estimated that on average students will owe $37,000 once they graduate from post secondary education.
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Purchasing participating life insurance for your child or grandchild is a gift that keeps on giving. A participating life insurance policy has cash value that can grow over time and can be accessed to pay for things like tuition, a new car, or a down payment on a house. With their insurance needs taken care of for life, they can focus on other key priorities.

A financial security advisor can help you make sense of using permanent life insurance to pay for tuition.


Habib, Marlene. "University tuition rising to record levels in Canada" September 11, 2013.
Government of Canada. CanLearn, "Cost of Post-Secondary Education". July 21, 2013. Government of Canada Revenue Agency, "Contribution Limits". January 16, 2014.
* A withdrawal of your paid-up additional insurance will reduce the total cash value and the total death benefit of the policy.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.


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