Investments - GICs

Guaranteed Investment Certificates

These are traditional bank GICs. You deposit money and the bank pays you interest at very attractive rates. We offer two types of Guaranteed Investment Certificates:

  • 1-5 year GICs
  • Short Term Deposits (30, 60 and 90 day)

Guaranteed Interest Contracts

This type of GIC works in a similar way -- you deposit money and we pay you interest. But the difference with Guaranteed Interest Contracts is that you are investing your money through a contract from an insurance company. This difference has its benefits:

  • cashability
  • you may designate a beneficiary,
  • probate fees and estate settlement delays may be avoided upon death, and
  • you may have creditor protection.

Cashability

Unlike most guaranteed investments from banks, trust companies and mutual fund organizations, most insurance companies' GIC's are fully or partially cashable at any time. (Surrender charges may apply on terms cashed before maturity).

Why are estate planning advantages important?

Insurance companies offer several distinct estate planning advantages over non-insurance institutions, beginning with the ability to name beneficiaries on registered and non-registered plans.

Here's how a couple might use the estate planning advantages available

Terry has named his wife, Connie, as his beneficiary. At the time of Terry's death, the current value of his GIC -- including accumulated interest -- goes directly to Connie. Because the money will therefore bypass the estate, Connie can avoid the expense and delays of probate fees, legal fees and surrender charges.

As Terry's spouse, Connie can also choose to have the value of Terry's investment transferred directly to her own RRSP or RRIF at the time of Terry's death, privately and without tax implications.

What about creditor protection?

When you name a "family class" or irrevocable beneficiary, your GIC is generally safeguarded from creditors under provincial insurance laws that protect the investments of insurance company clients only.

In all provinces except Quebec, the annuitant's spouse, child, parent or grandchild are all recognized as family class beneficiaries. In Quebec, family class beneficiaries are the policy owner's spouse and/or descendants and ascendants.

The creditor protection feature is particularly useful for small business owners and professionals, as added security in case of bankruptcy.

Here's how a small business owner might benefit from creditor protection

Joe owns and operates a small business and has built up sizable personal savings outside of the business to provide for his family. Joe would like to be sure that his personal savings are as secure as possible. By opting to invest his personal savings in an insurance company GIC and naming his wife as beneficiary, Joe benefits from the potential creditor protection available only through insurance companies.

Why are guaranteed investments important?

Guaranteed investments can form an integral part of your financial portfolio because, regardless of market conditions, the guaranteed portion of your portfolio is always growing -- and that reduces overall risk.

Depending on your individual investment needs, you may use a guaranteed investment as:

  • A solid foundation for a well-diversified investment portfolio,
  • A short-term savings vehicle when investment safety and reliable growth are paramount, and/or
  • A reliable long-term savings vehicle when you have low tolerance for risk and portfolio value fluctuations.

How much of your portfolio should be in guaranteed investments?

Most investors' portfolios are comprised of a combination of guaranteed investments and equities such as segregated funds or mutual funds . The balance between guaranteed investments and equities depends on your:

  • financial situation,
  • risk tolerance, and
  • investment goals.

A well-known formula to determine the right balance for you is to align the percentage of guaranteed investments in your portfolio with your age. Of course, this formula is simply a guide. Depending on your individual circumstances, a higher or lower percentage of guaranteed investments may be appropriate. We can help determine the right balance for you.

Here's how the well-known formula for determining your portfolio balance might work

If Robin is 55 years of age, 55% of his investment portfolio would be comprised of guaranteed investments, which could include several guaranteed interest accounts with varied maturity dates, with or without a daily interest account. The remaining 45% would be invested in equities. As Robin gets older, he may choose to proportionately increase the guaranteed interest portion of his investment portfolio to maintain the same portfolio balance of guaranteed investments and equities into his retirement years. And, if Robin opts to divide his guaranteed investments into several different terms spread across a number of years, he will have the added security of:

Interest rates on various terms averaging out over time, and Reduced overall portfolio risk with maturities spread out over a number of years.

Competitive interest rates

Interest rates are always an important consideration when choosing your guaranteed investment. We can provide some of the highest rates available.