Guaranteed Investment Certificates GIC: What You Need to Know

Have or Want a GIC From the Bank – Think Again

Guaranteed Investment Certificates GICs from Insurance Companies provide the same guarantees plus Extra Benefits that banks do not offer.

The Advantage of Guaranteed Investment Certificates (GICs)

The added benefits are that in the insurance GIA you can name a beneficiary on non-registered assets, in addition to registered assets like RRSPs and TFSAs. (Banks and Trust companies cannot offer this benefit to non-registered assets). When you name a beneficiary, the assets will be paid directly to your beneficiary when you die, hence avoiding legal, executor, and probate fees. This will avoid the long delay of probate and you maintain privacy because probate becomes part of the public record. The funds are paid to the beneficiary within two weeks thus avoiding the long wait for probate.

Insurance GIA’s have tax advantages for those that are 65 years old or older. If you are not already taking advantage of the pension income tax credit on the first $2,000 of pension or RRIF income, the income from an Insurance GIA’s in a non-registered account, qualifies for this pension income tax credit. Also, if both spouses are age 65 or older, and one spouse is in a lower tax bracket than the other, an election can be made to have up to 50 percent of eligible income transferred to the lower-income spouse, thus creating real tax savings.

Especially important for business owners to know is that creditors can seize your bank GIC if it is outside of your RRSP or RRIF. However, creditors can’t seize insurance GIAs whether inside or outside registered accounts, in certain circumstances.

Banks and Trust GIC investments are 100% protected by the Canadian Deposit Insurance Corporation up to the accumulated value of $100,000 per institution if a Bank or Trust becomes insolvent. Similarly, if an Insurance Company becomes insolvent, Assuris, a guarantor, provides coverage for 100% of the accumulated value of up to $100,000 of investment.

Unlike Bank GIC, GIA funds, in a segregated fund contract with a designated beneficiary, provide two significant advantages at death:

• Prompt payment of the accumulated amounts.
  The guaranteed value at death is paid directly to your beneficiaries with no waiting for the final settlement of the estate.
• Higher estate value
  Since the money paid at death is not part of the estate settlement, probate fees are excluded, thereby increasing the value you leave to your heirs.

Terminology

TFSA – Tax-Free Savings Account -a secure, tax-free savings account that’s perfect for younger Canadians.

RRSP – Registered Retirement Savings Plan – RRSPs are a great way to save for your retirement.

RRIF – Registered Retirement Income Fund – If you’re looking to make the most of your retirement savings, registered retirement income funds are a great option.

GIC – Guaranteed Investment Certificates – Guaranteed investment certificates are a great way to secure your future retirement income.

GIA – Guaranteed Investments Account – A GIA is a secure, low-risk type of savings account that lets you make money with guaranteed returns.

Assuris – a nonprofit organization under Canadian federal regulation

More About Investing

Guaranteed Investment Certificates GIC available in Kitchener, Waterloo, Guelph, Milton, Mississauga, Toronto, Elora, Elmira, Listowel, Mitchell, Stratford, New Hamburg, Brantford, Hamilton, Burlington, Fergus, Oakville, and Cambridge area.

Contact Glenn Stewart, CIP, CRM, CHS, CEA
 1-888-256-8685 or glenn@glennstewartinsurance.com