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How do I buy investments from an insurance company?

You don’t buy mutual funds the same way you buy Guaranteed Investment Certificates (GICs). The same thing is true when you buy different investments from an insurance company. Here are some important questions to ask and the steps to take when buying their products.

What should I ask before I buy a Guaranteed Interest Annuity (GIA)?

  • How does this GIA differ from a GIC?
  • How long will I have to invest (the term)?
  • What happens if, for some reason, I need to get my money early?
  • How much interest can I make over different terms? Can I get a better interest rate than the posted one?
  • When will I receive interest payments?
  • How much, in total, will I make from this GIA?

What should I ask before I buy mutual funds or segregated funds?

  • How well has this fund performed in the past?
  • What will affect how it performs in the future?
  • What is the current unit price? How many units can I afford to buy?
  • What are the risks?
  • What fees will I pay?
  • Does the adviser make money selling me these funds? How?

Five steps to buy investment products from an insurance company

  1. Contact your life insurance adviser. Ask about the products they sell. If they offer mutual funds as well as segregated funds, check that they are registered to sell them.
  2. Choose the investment(s) you want to buy. Make sure you understand how each product works. Talk about your goals and how comfortable you are with risk. Decide which choices are best for you and how you will pay.
  3. Decide if you want to shelter the investment(s). If you would like the investment(s) to be part of your Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF), you can set up an account with the insurance company.
  4. Fill out and sign the order forms. Be ready to provide some personal information. This helps the insurance adviser make sure the investment is right for you.
  5. Keep a copy of all records for your files. Also, be sure to read and file all reports you get in the future. You need to check that investment is working out the way you expect.

Remember: Investments from an insurance company have special features.

Take time to ask questions before you buy – not after, when you may worry you made the wrong choice.