Your financial responsibilities typically grow with your family. You have to start considering their future educational needs, healthcare, and a secure financial future. As overwhelming as it can be to start thinking about financial planning, it can be crucial for future stability.
If you’re unsure where to begin, here are some of the best insurance and savings plans to explore for your growing family.
Registered Education Savings Plans
A Registered Education Savings Plan (RESP) is a Canada government-sponsored savings program for families wishing to save for their children’s post-secondary educational needs. Alongside the plan owner making contributions and building up tax-free earnings, the Canadian government also contributes to these education plans.
If you set up an RESP when your children are young, you can save and invest money in a long-term fund and withdraw it when they’re ready to attend post-secondary education.
As an added incentive for families to set up savings plans for their children, the Canadian government also offers Canada Education Savings Grants (CESG) to eligible contributors. Employment and Social Development Canada will match 20% of your contributions annually to a maximum of $500 a year and $7,200 over the lifetime of your plan.
An education savings plan like a CST RESP can be crucial when you’re setting your child up for future success. Post-secondary education can cost tens of thousands of dollars and be a significant financial burden on them for years after graduation.
Health Insurance
Citizens and permanent residents in Canada are entitled to free public healthcare, but that doesn’t mean health insurance isn’t a necessary consideration. By taking out a policy for your family, you can receive coverage for services not covered by a standard health care plan, supplement your income after an injury or illness, and pay for medical expenses while traveling.
There are many different health insurance policies to choose from, giving you the freedom to select one that suits your financial situation the best. Some plans and policies are basic and provide coverage for essential medical services in hospitals and doctor visits, while others are more extensive, extending to surgical care and specialist treatment.
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Most people don’t like thinking about their mortality, but it can be important when you have a family to provide for. If you’re no longer around, your family might not have the financial security they need to thrive without you. As a result, a life insurance policy can be worth considering.
A whole life or term life policy allows you to take care of your family’s financial needs after you’re gone. Most industry experts suggest a policy paying 10 to 15 times your annual income.
Term life insurance covers you for a specific length of time or a ‘term.’ Your insurance provider pays your beneficiaries a tax-free lump sum if you die within that term. Many Canadians take out term life insurance for 10, 20, 25, and 30 years, and even up to age 65. It’s most popular for people with outstanding debt for a specific period, such as a mortgage or educational expenses.
Many people also explore their options around permanent life insurance, which provides coverage for your entire life and provides your beneficiaries with a tax-free lump-sum payment. You can pay into your permanent policy over time and build value, with the option to cash out your policy to pay expenses or supplement your retirement income at a later date.
Disability Insurance
Disability insurance might be an option worth considering if your income is integral to your household’s survival and comfort. If an illness or accident prevents you from returning to work, you have peace of mind in the form of monthly income to replace part of your income. Typically, this form of insurance replaces up to 90% of your take-home pay.
Many of the best insurance providers provide customization plans to suit your unique needs and guaranteed payments until age 65. They also make the sign-up process for such an insurance policy straightforward. You simply need to choose the coverage you want and any optional extras, pay a monthly premium and file a claim if you become disabled.
You can then receive your monthly payments when your waiting period ends and stop receiving them if you return to work or your payment period ends.
Auto Insurance
There are thousands of car accidents every day in Canada, resulting in tens of thousands of injuries and hundreds of fatalities. You might not be able to avoid all accidents, but auto insurance can often ensure they do not financially impact you.
Most standard car insurance policies include liability insurance, accident benefits, and bodily injury insurance. You might also enjoy added benefits like comprehensive insurance and collision insurance. A small monthly payment might be all it takes to enjoy peace of mind on the road.
High-Interest Savings Accounts
Saving money can be challenging, and it can sometimes seem like you’re not making any progress when working toward your financial goals. However, that might change if you open a high-interest savings account. While they function similarly to a standard bank account, they typically have more attractive 1%+ interest rates. Many banks offer different savings account types, so inquire with your financial provider to see which option will suit your unique situation the best.
Youth Savings Account
It’s never too early to start teaching your children about money, such as how to save it, its value, how compound interest works, and more. Consider setting up youth savings accounts for your children, and they can be on the path to financial security.
Many of the best banks in Canada offer youth bank accounts with various benefits and desirable interest rates. Some offer free unlimited transactions and e-transfers, while others offer automatic savings plans and cash bonuses. Generally, these bank accounts offer interest rates ranging from 0.01% to more than 1%, depending on the bank.
Set up a youth savings account for your child when they’re young and contribute to it regularly. By doing so, you can enjoy peace of mind knowing they’ll have money to put toward their future, such as education to supplement their RESP, housing, or travel.
We don’t know what the future holds for our families, but we can do our best to prepare. Explore your insurance and saving plan options, and enjoy peace of mind knowing your family’s financial needs are taken care of.
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