When it comes to finances and insurance, most new parents find themselves overwhelmed. Fortunately, AccèsConseil is there to answer your questions so you can focus on life’s most memorable moments.
Do I need life insurance? How does health insurance work for a newborn baby? Should I contribute to a Registered Education Savings Plan (RESP)? If so, when? What should be my priorities so I can sleep soundly knowing we are managing the family budget effectively?
Life and disability insurance for parents
The one thing you should consider when you are pregnant is to have adequate life insurance for yourself. Indeed, your responsibilities are about to change completely. It is important to make sure that in the event of death, the needs of your children will be covered until they come of age.
It’s the same with disability insurance. If one of the two parents can no longer work and therefore has a loss of income, he or she must be able to count on this type of protection to keep contributing to the family budget.
Plan a meeting with your financial advisor to analyze your current coverage and take the necessary steps to adjust to your new reality. Remember that you must notify your insurance company of any change in status.
Add your child to your life insurance policy
You can add what is called a life insurance rider to your insurance policy. This initiative will guarantee your child’s insurability so that he or she will be able to benefit from permanent life insurance at a fixed cost, regardless of his or her state of health, from the age of 21. Most insurance companies will offer coverage of up to $250,000.
It is also possible to take out an insurance policy for your child, unrelated to your life insurance. This type of insurance is permanent and guarantees future insurability. And since your child is young, the premiums are very affordable.
We all want healthy children, but it’s always best to be prepared for any situation.
Critical illness insurance
Are you the worrying type? Does your family history carry risk factors that could affect the health of your future children? If so, you should look into critical illness insurance for children. This type of protection will help your cover the costs incurred if you have to stop working to take care of a child affected by a serious illness.
Start saving now for your children’s education
Already saving with an RRSP or TFSA? Now is the time to think about RESPs—the Registered Education Savings Plan! RESPs save for a child’s post-secondary education. Contributing to an RESP is really advantageous! As your child grows, so does the investment in their education. This is one of the most generous government contributions.
The grant rate is based on family income. In Quebec, the grants received are a minimum of 30% of the contributions made to the RESP and are calculated according to certain scales of contributions and the maximum reached. This means that, for a monthly contribution of $100, the two governments contribute a total amount of $30. In the long run, it’s huge! Contributing to an RESP allows you to save tax-free. Knowing that, it would be a shame not to take advantage of it.
To go into more detail, know that the federal government will pay the equivalent of 20% of the amount contributed and the provincial will pay the equivalent of 10% of the amount contributed. The grant limits are $500/year ($7,200 in total) at the federal level and $250/year ($3,600 in total) in Quebec. So the maximum government contribution over the life of the RESP of $10,800. To receive the maximum grants in a year, you must contribute $2,500 to the RESP.
If you have a child or plan to have one soon, consider contacting your financial advisor at AccèsConseil!
Collaboration spéciale avec Alysson Tremblay, Conseillère en sécurité financière chez AccèsConseil.