The Gift That Grows: How to Build a Lifelong Financial Legacy for Your Child

The Gift That Grows: How to Build a Lifelong Financial Legacy for Your Child

A smart insurance strategy that turns today’s child benefit into tomorrow’s financial freedom

Most parents dream of giving their children a better future. But what if you could give them more than just a head start—what if you could give them a financial legacy that grows quietly in the background for decades?

There’s a little-known strategy that uses permanent life insurance as a long-term wealth-building tool for children. It’s not about death benefits—it’s about living benefits. And it’s a powerful way to turn a portion of your Canada Child Benefit (CCB) into a tax-advantaged asset your child can use for education, a first home, or even retirement.

Let’s explore how it works—and why more Canadian families are using this strategy alongside RESPs to build generational wealth.

The Concept: Small Contributions, Big Future

This strategy leverages two powerful financial principles:

• The Time Value of Money: The earlier you start, the more time your money has to grow

• Compound Growth Inside a Tax-Sheltered Policy: Permanent life insurance policies accumulate cash value that grows tax-deferred and can be accessed later in life

By starting early—ideally when your child is an infant—you give the policy decades to grow. With consistent contributions, the cash value can reach six or even seven figures by the time your child retires.

Where Does the Money Come From?

Many parents fund this strategy using a portion of their Canada Child Benefit (CCB)—a tax-free monthly payment from the federal government. As of 2025, eligible families can receive up to:

• $666/month per child under age 6

• $562/month per child aged 6–17

Even allocating $100–$250/month from your CCB can fund a robust policy that builds lifelong value.

This strategy can also complement your Registered Education Savings Plan (RESP). While RESPs are great for post-secondary education, they’re limited in scope. A permanent insurance policy offers:

• No restrictions on how funds are used

• No impact on student aid eligibility

• Tax-deferred growth and potential tax-free access
   

Case Study 1: Ava’s 1st Birthday Gift

Samantha and David live in Mississauga and just celebrated their daughter Ava’s first birthday. They receive $650/month in CCB and already contribute $100/month to Ava’s RESP.

To build a longer-term financial foundation, Ava’s grandfather—retired and passionate about legacy planning—decides to fund a participating whole life insurance policy for her. He contributes $200/month, using a portion of his retirement income to help his granddaughter and ease the financial load on her parents.

The policy:

• Provides a small death benefit

• Accumulates cash value that grows over time

• Allows for tax-free borrowing against the policy later in life

By age 18, Ava’s policy has built up over $60,000 in cash value. By age 40, it’s projected to exceed $250,000. And by retirement, it could be worth $1 million or more, depending on dividends and performance.

Ava can use the funds to:

• Start a business

• Buy a home

• Supplement retirement income

• Or simply keep it growing for the next generation

This gift from her grandfather becomes more than a financial tool—it’s a legacy of love, foresight, and empowerment.
 

Case Study 2: The Patel Family—Three Kids, One Strategy

Raj and Meera have three children under the age of 10. They receive over $1,500/month in CCB and contribute modestly to each child’s RESP.

Instead of splitting the remainder into savings accounts, they decide to fund three individual permanent life insurance policies—one for each child—at $150/month per policy.

Each policy:

• Builds cash value over time

• Can be transferred to the child in adulthood

• Offers flexibility for education, home ownership, or retirement

By age 30, each child could have access to $100,000+ in cash value, with the potential to grow even further. Raj and Meera view this as a way to equalize opportunity across their children and create a multi-generational wealth strategy.
 

Case Study 3: Grandma Linda’s Legacy Plan

Linda is a retired teacher with four grandchildren. She wants to leave a meaningful legacy—but also help her children with the financial load of raising kids.

She sets up four permanent life insurance policies, one for each grandchild, contributing $100/month per policy. She retains ownership and control, with the option to transfer each policy when the child turns 25.

Her goals:

• Give each grandchild a financial head start

• Reduce estate taxes by gifting during her lifetime

• Create a legacy that lasts beyond her years

Linda’s strategy allows her to support her family today while building a tax-efficient legacy for tomorrow.

RESP vs. Insurance-Based Strategy

How Does the Policy Work?

• Participating Whole Life Insurance: Offers guaranteed premiums, death benefit, and cash value growth

• Par Fund Dividends: Policies may receive annual dividends that boost both cash value and death benefit

• Tax-Deferred Growth: Cash value grows inside the policy without triggering taxes

• Policy Loans: Funds can be accessed via tax-free loans or withdrawals, depending on structure

• Ownership Transfer: Parents or grandparents can transfer ownership to the child later in life
   

Frequently Asked Questions

Can I set this up for my grandchild? Absolutely. Grandparents can own and fund policies, retaining control and transferring ownership later.

Is this better than an RESP? It’s not a replacement—it’s a complement. RESPs are great for education; permanent insurance offers broader flexibility and legacy potential.

What happens if I stop contributing? Most policies are designed to be “paid-up” after a set number of years. Even if contributions stop, the policy continues to grow.

Can my child access the funds tax-free? Yes—if structured properly, funds can be accessed via policy loans or withdrawals with minimal tax impact.

Is this safe? Participating whole life policies are backed by Canadian insurers and managed by professional investment teams. They’re considered one of the most stable long-term financial tools available.
 

Let’s Build Their Future—Together

This strategy isn’t just about insurance—it’s about empowerment. It’s about using today’s resources to create tomorrow’s opportunities. And it’s about giving your child or grandchild a financial foundation that grows with them.

I work with Canadian families to design personalized plans that align with your values, your budget, and your long-term goals. Whether you’re just starting your family or planning for your grandkids, I’m here to help you give the gift of a lifetime.

Ready to Start?

Let’s explore how you can turn your Canada Child Benefit—or a grandparent’s gift—into a lifelong asset for your child.

Vikas Ramrakha Insurance & Benefits Advisor Helping families protect what matters most

Call: +1 (416) 558-3061
Email: vikas@vrinsurance.ca
www.vrinsurance.ca