Most Principal Protected Notes (PPNs) are tradable debt securities issued by an agent with the repayment of the investment’s principal guaranteed by a financial institution. CDIC does not consider these to be deposits as defined under the CDIC Act and they are therefore not insured by CDIC.
However, it is important to note that some index-linked products that are referred to as “PPNs” may indeed be eligible for deposit insurance.
Under the CDIC Deposit Insurance Information By-law, member institutions must provide notification to depositors when a deposit (or deposit-like) product is not eligible for CDIC deposit insurance. Such notification must be in the form of a warning statement on the certificate or instrument evidencing the deposit. If you are not sure if your product is eligible for CDIC protection, check the PPN certificate carefully, look for a warning statement, and speak to a representative from your financial institution about the applicability of CDIC deposit protection.