Are you worried about the safety of your money in uncertain economic times? While Canada has a strong financial system, it’s essential to know what safety nets are available in case of a bank failure. Discover the measures in place to protect your hard-earned cash.
In today’s uncertain economic climate, it is natural to be concerned about the safety of your hard-earned money. After all, you never know when a financial institution might fail as has recently happened with several banks in the U.S. You can take solace in the fact that Canada has one of the strongest financial systems in the world and such events are unlikely to happen here.
Nevertheless, you should be aware of the following safety nets available to the public in the event that a Canadian financial institution should fail and plan accordingly.
Canada Deposit Insurance Corporation (CDIC)
The Canada Deposit Insurance Corporation (CDIC) is a crown corporation which was formed in 1967 to provide deposit insurance against the loss of eligible deposits held at member financial institutions in case of their failure. It covers chequing and savings accounts as well as term deposits up to 5 years in original maturity, to a maximum amount of $100,000. (Amounts over $100,000 are not insured at this time but there are calls for the government to increase maximum as it has not been updated since 1975).
Canada Investor Protection Fund (CIPF)
The Canadian Investor Protection Fund, which is a non-profit organization established by the Investment Industry Regulatory Organization of Canada (IIROC) to protect investors in case of the insolvency of a member firm. CIPF is funded by IIROC member firms, which include most Canadian investment dealers and investment banks, including Foster & Associates.
CIPF provides protection to eligible investors up to $1 million per account type in case of the insolvency of a member firm. The coverage provided by CIPF includes cash, securities, and other property held in a client account with a member firm.
Assuris
Assuris is a not-for-profit organization funded by the insurance industry, that protects Canadian policyholders in the event their life insurance company becomes insolvent.
The coverage is the greater of 85% of the value of the benefit or the following amounts by benefit type:
- Death Benefit – $200,000
- Health Expense – $60,000
- Monthly Income – $2,000
- Cash Value – $60,000
Assuris protection is automatic and does not require policyholders to sign up or pay any fees. It is funded by its member life insurance companies, which include most Canadian life insurance companies.
And remember, if you are concerned about the safety of your accounts consult your Foster & Associates Advisor or Portfolio Manager.
Disclaimer: This article is for general information purposes only, and is not legal, financial, or tax planning advice. Everyone’s situation is unique, and this article cannot apply to every person. The reader should not take any action, or refrain from taking any action, as a result of this article without first obtaining legal or professional advice.
