How GIAs work

Guaranteed interest annuities (GIAs) work similarly to GICs, but are life insurance contracts. Sometimes called “guaranteed interest contracts,” “guaranteed interest accounts,” “term deposits” or “accumulation annuities,” GIAs are fixed-rate deposits for a set period of time.

Comparing GICs and GIAs

  1. Bankruptcy protection – GICs are protected for terms up to 5 years and up to $100,000 by the Canada Deposit Insurance Corporation (CDIC). As an insurance product, GIAs are covered by Assuris, also up to $100,000, but are covered even if the term exceeds 5 years.
  2. Early redemption – GICs are normally locked in until maturity. GIAs can often be redeemed early with a “market value adjustment” that will reduce or increase the payout depending on how interest rates have moved since purchase. This is similar to how bonds work.
  3. Ability to name a beneficiary – Unlike GICs, you can name a beneficiary for your GIA who receives the funds if you die.
  4. Creditor protection – GICs carry no creditor protection. GIAs are legally life insurance contracts, so they can be structured to avoid probate at death and claims by creditors in the event of personal bankruptcy.

Learn how to buy GIAs.

For those over 65, interest from a non-registered GIA may qualify for pension income splitting and also for the pension income amount if you don’t already have enough pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition or RRIFRRIF See Registered Retirement Income Fund.+ read full definition income to qualify.

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Use this compound interest calculator to see how even small amounts of money saved add up over time.

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