What you need to know about Guaranteed Investment Certificates (GICs) and CDIC coverage
What is a GIC?
A Guaranteed Investment Certificate (GIC) is a type of term deposit. When you purchase a GIC, you are loaning money to the financial institution which issued the GIC (the issuer). In return, you are guaranteed an interest rate for the term of the investment, as well as the repayment of your initial investment at the end of the term. Contact your financial institution to learn more about available GIC terms.
The Financial Consumer Agency of Canada (FCAC) has resources to review before purchasing a GIC.
Where can I buy GICs?
You can buy GICs directly from the issuer (banks, trust companies, credit unions, and caisses populaires), or through a broker or investment advisor.
If the GIC issuer is a member of CDIC, your GIC is eligible for insurance, even if it is purchased through an institution that is not a CDIC member.
Does CDIC insure GICs?
Yes, when issued by a member of CDIC GICs are a type of deposit eligible for CDIC insurance as long as they are held within one of our deposit insurance categories.
CDIC’s $100,000 coverage limit per deposit insurance category includes both the principal deposit and any interest earned. Please keep this in mind if looking to stay within the coverage limit.
GICs issued by provincial credit unions and caisses populaires are not eligible for CDIC deposit insurance. These GICs may be protected by provincial deposit insurance.
GICs issued by insurance companies may be eligible for protection through Assuris.
What happens when I purchase a GIC through a broker or investment advisor?
GICs purchased through a broker or investment advisor can be held at an issuing CDIC member in two ways:
- in your name (i.e., in client name) or;
- in your broker’s name as your nominee (i.e., in nominee name as deposits ‘held in trust’ for you)
Placed in your name: Eligible deposits, including GICs, placed by a broker in your name are combined with other deposits held in your name at that member (including those you may have purchased directly with that member) that are in the same insurance category and protected up to $100,000 at each member.
Placed in your broker’s name as your nominee: Eligible deposits, including GICs, held by your broker as a nominee for you are treated by CDIC as a deposit ‘held in trust’. Deposits ‘held in trust’ are protected separately up to $100,000 per beneficiary, provided certain disclosure rules are met by the broker.
When you buy GICs through brokers or investment advisors, here are a few questions you should ask:
- What financial institution issued the GIC?
- Is the GIC eligible for CDIC protection?
- Is the GIC held in my name or in the broker’s name on my behalf?
If my CDIC member institution fails, what happens to my GIC?
If a CDIC member institution fails, GICs issued by the failed member institution are combined with any other eligible deposits (e.g., cash, other term deposits, etc) held at the same institution in the same deposit insurance category and reimbursed up to a limit of $100,000 including interest.
If you bought the GIC through a broker:
- CDIC will reimburse you directly if GICs are held in your name
- CDIC will reimburse your broker if GICs are held in your broker’s name
Please note:
GICs are not their own CDIC deposit insurance category
GICs are deposit products that can be held in any CDIC deposit insurance category
A GIC’s term to maturity does not affect CDIC deposit insurance eligibility
Your country of residence does not affect CDIC deposit insurance eligibility
GICs issued by a member of CDIC are eligible for CDIC insurance, regardless of the platform, advisor, or brokerage they were purchased from.