Participating Life Insurance vs. Education Savings Plans: Which is Better for Your Child's Future?
As a parent, you want to give your child the best start possible — including financial security. When planning for big future costs like post-secondary education, many families turn to Registered Education Savings Plans (RESPs). But there’s another valuable tool to consider: participating whole life insurance for children. Which option is right for you?
What is an RESP?
A government-registered savings account for education that offers:
Tax-deferred growth
Canada Education Savings Grant (CESG) contributions
Funds restricted for qualifying educational costs
RESPs are ideal for families committed to funding their child’s post-secondary education and who want to receive government incentives.
What is Participating Whole Life Insurance?
A permanent life insurance policy that:
Provides lifetime insurance protection
Accumulates cash value
Pays dividends (which can buy more coverage or grow cash value)
Offers flexible cash access, not limited to education
These policies also allow the insured child to maintain coverage for their lifetime, regardless of future health issues.
Pros of RESP:
Direct government grants (20% on the first $2,500/year, up to $7,200 lifetime)
Targeted savings for post-secondary costs
Tax-deferred growth until withdrawal
Pros of Participating Life Insurance:
Lifetime coverage guaranteed
Tax-advantaged, flexible cash value growth
Can be used for any purpose: education, first home, business start-up
Locked-in insurability regardless of future health
Key Differences:
FeatureRESPParticipating Life InsurancePurposeEducation onlyBroad: education, home, businessGrants AvailableCESG (20%)NoneFlexibilityRestricted to qualifying expensesCan be used for any purposeGrowth TypeMarket-based, tax-deferredDividend + cash value, tax-deferredInsurance ProtectionNoneIncluded: lifetime coverage
The Best Solution? Maybe Both.
For families able to afford both, combining RESP savings with a participating whole life policy provides the best of both worlds: government grant maximization and long-term financial flexibility.
Consider using the RESP for predictable, near-term education expenses — while the whole life policy serves as an adaptable financial reserve for housing, business, or other needs.
Which One is Right for You?
If your budget only allows for one option, your goals will dictate the choice. RESP may be best if you want to optimize education funding. Whole life insurance may suit you if you value broad flexibility and future wealth-building potential.
While RESPs are excellent for targeted education funding, participating whole life insurance offers broader, lifelong benefits — including asset growth, guaranteed protection, and wealth transfer potential. In many cases, a combination of both provides a comprehensive financial foundation for your child’s future.
Connect with us and find out what works best for you and your family with a comprehensive plan.