An RESP or Registered Education Savings Plan is a type of insurance available in Canada that disburses money to the beneficiary for their post-secondary education in return for payments having been made by the subscriber initially. As evident from its nomenclature, RESP is mostly a savings plan. However, it has a host of other benefits that make it equally if not more tempting as an investment option. Let’s look at a few reasons why RESP is such a beneficial insurance option.
The most over-arching and important advantage of having an RESP savings account is the financial security it provides in this age of uncertainty. With sudden and unexpected calamities hitting the world, like the 2020 pandemic which spurred mass layoffs, it is always wise to have an economic back-up plan, especially for essential expenses such as academic expenses.
The installments that are paid for RESP have been made tax-exempt by the Canadian government which allows you to fully utilize the entire amount you deposit. Moreover, even though the amount that is paid out to the beneficiary, i.e., your child, is taxable, it is taxable through the beneficiary itself. This implies that the beneficiary pays little to no tax as students generally fall under the ‘lower-income category’, making the total tax paid on your investment as well as return is very low.
Another great benefit of RESP is the fact that it is partially funded by the Canadian government through CESG or Canada Education Savings Grant. The beneficiary receives pay outs in the form of EAPs or Education Assistance Payments. It is a great initiative to offset the ever-increasing tuition fees in Canada and reduce education costs for future generations by providing government assistance. This implies that part of your child’s education is being sponsored by the government.
Flexibility of options
Like most good insurance plans, RESP also has a variety of investment options and even plan options to choose from. Investment options, when it comes to RESP, ranges from stocks, mutual funds, bonds to GICs (Guaranteed Investment Certificates) and ETFs (Exchange–traded funds). When it comes to plan options, there are three types of RESP: Family RESP for families who want to make more than one child a beneficiary, Individual RESP for a single beneficiary who may or may not be related to you by blood or adoption, and Group RESPs for single beneficiary allotment where the payments made by the subscriber are pooled with other investors.
If you are interested in getting a RESP Insurance Plan in Winnipeg, Manitoba or any other forms of insurance such as Super Visa Insurance or Term Life Insurance in Winnipeg, Manitoba, reach out to us at Focused Insurance to book a consultation with our expert insurance agents.