The grandchild Legacy strategy

You have spent your life saving and now you may be at a stage in your life where you are enjoying financial security. The future is uncertain. With the current generation of young people being touted as the first to be less financially stable than their parents, you may now want to help your grandchild get a head start on their financial future. 

Consider the Grandchild Legacy Strategy. This is a savings and wealth transfer strategy using a financial product known as “Participating Whole Life Insurance”.  This savings strategy has the following benefits:

•    You remain in control of the funds until you feel your grandchild is ready and responsible.  You can       even use the funds for yourself if your circumstances change.
•    The funds grow tax-deferred, at an attractive rate, without investment risk. 
•    When you are ready, you can transfer policy to your grandchild without attracting tax.  
•    Your grandchild can access the cash value of the policy.  


Putting the Grandchild legacy strategy In place

As the grandparent, you allocate a single lump sum to this strategy. We find grandparents are often directing about 10% of their planned estate to their grandchildren. This strategy will work best with a lump sum allocation of at least $50,000 to each grandchild. When your grandchild is ready, you transfer ownership of the Participating While Life Policy to them.

What About the insurance?

The goals of this strategy are tax-efficient growth and wealth transfer. There is a death benefit with the policies used in this strategy. The death benefit is a secondary concern for most grandparents implementing this strategy.

Read more, here is a brochure from Equitable Life.  

expect the unexpected

We want our kids to have what is best.  We want them to be happy and have all their hopes and dreams come true. Therefore, we devote much of our time and energy protecting them against unfortunate events in life. Fortunately, most children will have a healthy childhood.  

However the unexpected can happen; for example, your child can suffer a critical illness. Would you want to be free from financial worries so you could take the time to be there for them, when they need you the most?  Critical illness plans for a child can provide the financial assistance you need.   Many parents or grandparents select a plan that is fully paid for in 20 years, and covers the child for the rest of their life.  


Registered Education Savings Plans (RESPs) are a tax advantaged way to save for a child’s future education.  The beneficiary of the RESP is your child, the contributor retains ownership. There are federal grants available, and in British Columbia the British Columbia Training and Education Savings Grant is available between the child’s 6th and 9th birthday.   

There are limitations on claiming the federal grants depending on when the account is opened and your contribution history.

© 2016 Doug Ransom - Insurance Advisor