Q&A: Life insurance or TFSAs?

This reader’s children haven’t saved much for retirement. How can she help them out? Gordon Pape gives an answer.

Q – Is tax-exempt life insurance a good thing to add to my estate plan? It would be on my adult children, who have little saved for their retirement. Is there a better way to help them, perhaps by investing in TFSAs for them instead? – Virginia R.

A – It’s not clear what you mean when you say “on them”. If you’re talking about insuring their lives, that’s not going to be any help with their retirement income. If you mean adding to your own insurance with the children as beneficiaries, that would work, assuming you are insurable.

However, life insurance premiums can be very expensive and the older you are the costlier it will be to open a new policy. The Tax-Free Savings Accounts will cost you very little (perhaps a small annual administration fee). If the children don’t have TFSAs now, they each have contribution room of $25,500. So do you and you can make them the beneficiaries of your own plan as well. – G.P.

Do you have a money question you’d like to ask Gordon? Find out how to submit it here and then check out our Money section regularly to see if it was chosen for a response. Sorry, we cannot send personal answers.