Forgotten insurance plan perfect for children, says former RBC advisor

by David Keelaghan14 Sep 2016
Soon after the birth of his third child Elizabeth, former advisor with RBC Dominion Securities Michael Lampel had the very natural reaction of wanting to plan for his daughter’s future. That led him to the realisation that financially speaking, there wasn’t much in the way of choice in that regard across Canada.

In fact, his research showed there wasn’t a company in the entire country devoted to financial planning for children. That was then, this is now, and Insurance for Children is a firm going from strength-to-strength. The reason for that is simply it offers a product that most parents would want, but few knew about ­­– despite the fact the product in question has been around for about 170 years.

According to Lampel, a participating whole-life insurance contract or Child Plan as it is known with his business is something that brings benefits right throughout the life of a child. That stretches from their birth when the policy becomes active and they start to receive dividends on an annual basis, all the way up to retirement when a substantial nest egg awaits.

“The most common question we get is ‘why do we not know this is around?’ The answer is the RESP,” says Lampel. “Once that came around all financial advisors simply said RESP for your child and stopped educating Canadian families about this product. Even though this has been around since before Confederation.” 

The Registered Education Savings Plan has been a popular method for parents saving for the ever-increasing costs associated with their children’s schooling. In Lampel’s opinion, however, the RESP is severely limited as an investment compared to Child Plan.

“The RESP is not an education savings plan,” he says. “It is a government program with rules on where the child can go to school, what they can study and how the money can be used. Child Plan is different because it is a private investment.”

He continues: “They are the most valuable contracts in Canada. For children they work because of three factors – the cost of the insurance is next to nothing; the children receive dividends from the moment the plan is open; and it is tax free.”

Those three factors mean financial planners and advisors are paying a lot more attention to Insurance for Children, according to its founder. Itself a marketing general agency, it offers policies through Equitable Life, but for an advisor that wants to bring Child Plan to their clients, there is a process involved.  

“Advisors that want to offer Child Plan must go through our own communications training program,” says Lampel. “The greatest challenge we have found with advisors is that their head is full of products, but not communication skills, so we need to know they understand the product.”

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