What is a GIA and how does it work?

A guaranteed interest annuity (GIA)Guaranteed interest annuity (GIA) Like a GIC, but you buy them from a life insurance company, so you get different guarantees. And, you can name a beneficiary. The value grows as you deposit money and earn interest. Also called an accumulation annuity.+ read full definition is an insurance contractContract A binding written or verbal agreement that can be enforced by law.+ read full definition that provides a buyer with a fixed rate on their deposits.

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What is a GIA?

A guaranteed interest annuityAnnuity A contract usually sold by life insurance companies that guarantees an income to you or your beneficiary at some time in the future. An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed…+ read full definition (GIA) works similarly to a guaranteed investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition certificate (GIC). It is a life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition contract that provides a buyer with a fixed rate on their deposit for a set period of time. It’s sometimes called a guaranteed interest accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition, guaranteed interest contract or accumulation annuity.

How do you buy a GIA?

Consider following these steps before you investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition in a GIA:

Decide how much to invest and for how long

Do you think you might need to redeem your GIA early? GIAs can be redeemed early, but the market valueMarket value The value of an investment on the statement date. The market value tells you what your investment is worth as at a certain date. Example: If you had 100 units and the price was $2 on the statement date, their market value would be $200.+ read full definition adjustment could reduce (or increase) the payout. This depends on how interest rates move after your purchase.

Some GIAs require a minimum depositMinimum deposit The lowest number of dollars you have to put in a bank account or other investment.+ read full definition.

Shop around for interest rates

GIA rates are comparable to GIC rates, but they can fluctuate.  Compare GIA rates online for the termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition you’ve chosen. Talk to the people who sell GIAs. Ask if you can get a better rate than the one posted. Rates may also depend on the amount of money you’re investing.

Choose an insurance agent or deposit broker

You can buy GIAs from advisors licensed to sell life insurance, as well as insurance companyInsurance company A company that sells insurance products. Some companies sell only life insurance. Some sell only property insurance. Others sell all types of insurance.+ read full definition

agents. This includes many advisors at full-service investment dealers and independent deposit brokers. You can find an independent deposit brokerBroker A registered person who brings together someone who wants to buy investments with someone who wants to sell. Brokers often charge a fee or commission for buying and selling investments for you.+ read full definition through the Registered Deposit Brokers Association (RDBA).

How do GIAs compare to GICs?

GIAs are different than GICs in a few key areas, including early redemption, naming a beneficiaryBeneficiary The person(s), institution, trustee or estate you choose to give money, property or other benefits when you die. You may name beneficiaries in your will, insurance policy, retirement plan, annuity, trust or other contracts.+ read full definition, creditorCreditor A person or institution that lends money. To borrow from a bank or finance company, you must sign a legal contract that gives them the right to claim your car, home or other assets if you don’t pay back the loan.+ read full definition protection, and bankruptcy protection.

Early redemption Can often be redeemed early with a market value adjustment Normally locked in until maturity
Naming a beneficiary Can name a beneficiary GICs become part of estateEstate The total sum of money and property you leave behind when you die.+ read full definition assets
Creditor protection Can be structured to avoid probateProbate Fees to settle your estate after your death. The probate process includes reviewing your will to ensure it’s valid. Also includes paying any debts and giving your money and property to the beneficiaries you have named in your will.+ read full definition at death and avoid creditor claims No creditor protection
Bankruptcy protection
  • Insured up to $100,000
  • Covered by Assuris
  • Covered for terms over 5 years
  • Protected up to $100,000
  • Protected by CDIC
  • Protected for terms up to 5 years

If you’re over age 65, interest from a your non-registered GIA may qualify for pension income splitting and also for the pension income amount. That’s 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.

Try our compound interest calculator to see how saving even small amounts of money can add up over time.


GIAs are life insurance contracts. They are similar to GICs. With GIAs, you can:

  • Shop around to compare rates and ask a broker for the most favourable rate.
  • Name a beneficiary for your GIA.
  • Understand how market fluctuations can affect your GIA upon redemption.
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