We all know the RRSP song bank mutual fund sales persons sing when they want you to open an RRSP.
Open an RRSP and get a tax refund. Don’t you want a tax refund? That’s it! That’s the entire song.
The mutual fund sales person doesn’t ask any questions or even attempt to explain the RRSP or the account fees, investment management fees, the risks, how it works or the taxes you’ll pay when you are required to withdraw or even if you’ll actually get any tax refunds, since they don’t even ask what you do or how much you earn.
For that they tell you to go pay an accountant. They count on you hearing only the two words “tax refund” and retirement and you’re in.
“ An RRSP is a registered investment account that lets you save for your retirement by deferring taxes on your investment earnings. This means more of your money can stay invested and grow faster. An RRSP also helps you lower your tax bill today, by allowing you to deduct RRSP contributions from your taxable income. By the time you retire you will likely be in a lower tax bracket, so withdrawals are taxed at a lower rate than today.”
– Actual text from a Canadian bank RRSP web page promoting RRSP.
They’re counting on you not asking what any of that means to you.
Here is what’s not in their text and what they don’t want you to ask about your RRSP.
- Is there a possibility the money I invest in my RRSP with you can decline in value?
- Is there any risk that there could be less money than what I put in at retirement?
- Can I get an annual tax-free amount from my RRSP when I retire?
- Other than withdrawing from my RRSP, are there any other ways to access the money in my RRSP account?
- What happens to my RRSP if I move out of Canada to a warmer country?
- Can I transfer my RRSP tax-free to my children?
- What happens to my RRSP when I pass away and have no spouse to leave it to?
- How much taxes will the government take from what’s left in my RRSP/RRIF when I pass away before it’s given to my children?
- Does my RRSP include whole life insurance to protect my family and pay all my future taxes?
- Do I need to contribute to my RRSP every year until I retire? What happens if I stop?
We pay a lot of taxes during our working years and It’s hard to believe that in retirement the Government will give us a break on taxes.
Why the banks won’t tell you about the Insured Retirement Plan (IRP)?
So the one question you should ask your bank when they promote the RRSP, is there any alternative to the RRSP? There is, but they won’t ever tell you about it.
The IRP, Insured Retirement Plan is the fastest growing alternative to the RRSP and only tax free investment that Canadians can open.
An IRP is a Participating Whole Life insurance plan that combines both cash value and life insurance into one plan.
From the day you open an IRP you will receive a tax-free annual dividend from the life insurance company for life and you;
- Can use the cash value for any financial need in life, not only retirement
- Have guaranteed cash value growing completely tax-free for life
- Have whole life insurance to protect your family
- Can access tax-free when you retire.
Let’s compare the key questions you should ask your bank about your RRSP and how it compares to an IRP.
Q1. Is there a possibility the money I invest in my IRP with you can decline in value?
A. No – Your IRP cash values are guaranteed and grow tax-free for life.
Q2. Is there any risk that there could be less money than what I put in at retirement?
A. No. You receive a tax-free dividend every year for life which is vested and locked in. Your IRP cash values are not based on the stock market and no matter what happens in the markets, your cash value never declines.
Q3. Can I get an annual tax-free amount from my IRP when I retire?
A. Yes- you can choose to receive an annual tax-free amount from the life insurance company when you retire.
Q4. Other than withdrawing from my IRP, are there any other ways to access the money in my IRP?
A. You have five ways to access your IRP cash value, including two ways which are tax-free.
Q5. What happens to my IRP if I move out of Canada to a warmer country?
A. Your IRP is international. You can access your IRP from anywhere in the world not only Canada.
Q6. Can I transfer my IRP tax-free to my children?
A. Yes- You can transfer your IRP tax-free to your children if you wish.
Q7. What happens to my IRP when I pass away and have no spouse to leave it to?
A. Your IRP includes is a whole life insurance plan and if you pass away at any time, the life insurance will be paid tax-free to your children.
Q8. How much taxes will the government take from what’s left in my IRP when I pass away before it’s given to my children?
A. The IRP insurance is paid completely tax-free to your family and children. The government doesn’t take $1 in taxes when you pass away.
Q9. Does my IRP include whole life insurance to protect my family before I retire?
A. Yes. Your IRP includes whole life insurance to protect your family until the day you pass away.
Q10. Do I need to deposit to make annual deposits to my IRP until I retire?
A. No. Your IRP is completely funded after year 20 and your plan will continue to grow tax-free until you retirement and the rest of your life.
I believe that you should have as many sources of revenue as possible in retirement and having both an RRSP and IRP is a smart plan.
If information is power, then education is empowerment and the more information you have the more educated you are about the decisions you need to make to have a happy and secure retirement.
To learn more about the Parent Plan IRP from www.insuracneforchildren.ca, go to and request your personalized IRP Illustration.
