GIC’s Offer Predictable Investment Returns – And Some Have Insurance Benefits Too

This is a strange question, but many investors are searching for reliable investment products after suffering one of the worst economic downturns in history. This means that many investors are looking for guaranteed investment products such as guaranteed interest contracts issued by insurance companies (GIC) or bank Guarantees Investment Certificates (bank GIC).

Guaranteed investment products that earn interest might not be as attractive or as exciting as investing in emerging market mutual funds or commodity indexes – the variable chili peppers for the investment world. They can be uninteresting investments to some people in the same way as broccoli can seem boring when compared with the latest gourmet food trends. Everyone knows that broccoli is good for you and is highly recommended by nutritionists. It’s common to leave the healthier option out when you have the option of boiled broccoli or roasted garlic “smashed” potatoes.

However, many stock market indexes report negative returns so a little bit of certainty can help you save for retirement. There is more to today’s GIC’s in insurance than most people realize. They are a healthy addition to any well-balanced financial strategy.

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GIC’s – An Addition to Any Financial Plan

Since the beginning, sound financial planning strategies have emphasized diversifying between fixed-income investments, equities and cash. GICs are a great choice for investors who want to increase the certainty in their fixed-income portfolio.

GICs offer one advantage over other fixed-income investments. They offer a guaranteed rate of interest, regardless of what the financial markets do. This can reduce your overall risk of investing while saving for retirement.

The Insurance Advantage

You can buy bank GICs at your local branch, which is a common realization for investors. Did you know that similar products can be purchased from insurance companies at very attractive rates?

GIC’s issued to insurance companies have three distinct features that make them different from bank GICs. They offer an estate planning benefit, greater potential protection from creditors, and tax advantage for contracts not registered. If you have named a beneficiary on your insurance GIC contract other than yourself, your estate will not receive the investment proceeds. This is important because your beneficiaries will be able to receive the proceeds directly and privately, with no estate fees or probate**.

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GIC’s that are insurance-based may help protect your personal savings against professional liability. GIC investments must be made before a business or individual runs into financial difficulties. The proceeds of the GIC are generally protected from creditors by the named beneficiary. This is a great feature for small business owners or anyone in a profession that could be at risk of losing their personal savings.

*Not applicable in Saskatchewan

** In Quebec, probate is not available

Clients 65 years and older can claim the pension income credit and split their pension income if they have interest from a nonregistered GIC.

Say “More please” to Today’s GIC

Talk to your advisor if you’re looking to increase stability in your financial plan. Today’s GICs offer more than just a healthy addition for your financial plan. They also have options that include equity-linked, cashable, noncashable and ladderable.