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Email this1:42 am
August 5, 2014
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I was just browsing around for different GIC rates and similar fixed rate investments and I found a 3.00% rate from an Canadian insurance company.
It is Equitable Life of Canada but the catch is it is for 15 years. It is for RRIF's and GIA's. GIA's are guaranteed investment accounts and are like GIC's for insurance companies in Canada.
The only other rate close to 3.00% was a 2.90% GIA and RRIF rate by Standard Life of Canada which has this rate for 10, 12, 15, 19, 20 year terms. It looks like 3.00%, 5 year TFSA, RRSP's and 3.00% 7 year GIC's are the highest rates for now.
Unless you can get membership to a Manitoba credit union like Caisse Financial Group that has 3.00%, 5 year RRIF's, RRSP's, TFSA's and GIC's.
Canadian life insurance company's deposits are backed by Assuris for $100,000, http://www.assuris.ca.
11:12 am
June 24, 2014
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I won't seek investment with insurance companies. They are for protection purpose.
12:05 pm
October 21, 2013
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I understand that their GIAs are creditor-protected, but recommend that people check into that and not take my word for it if it is a condition that appeals to you.
9:37 pm
August 5, 2014
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Loonie, I heard of similar information that GIA's at Canadian life insurance companies have credit protection but I also heard that no financial products or investment products are creditor protected against the CRA.
I am not sure about creditor protection against other tax authorities in Canada like municipal and provincial authorities.
9:40 pm
August 5, 2014
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James1900, this maybe why their interest rates paid on GIA'a and RRIF's are not in line or competitive with other fixed rate investments such as GIC's and government bonds, government zeros with selected terms only.
12:26 am
August 5, 2014
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Just to make a comparison to other similar 15 year fixed rate investments, 15 year provincial zero coupon bond rates are anywhere from 3.50% to 3.60%. These could be compared to compound interest GIA's only.
These would work in a TFSA, RRSP and RESP depending on ones circumstances. It will not work for everyone.
Provincial bond rates are anywhere from 3.25% to 3.40% which pay interest every 6 months. These could be compared to GIA's that payout interest but in their case it is annually. These could work in RRSP's and TFSA's if one needs income bit it also depends on their particular circumstances.
As for comparing these 2 above fixed rate investment options to 15 year RRIF's, it will not work for zero coupon bonds because they are compound interest only and provincial bonds will not work either because their principal will fluctuate up and down unlike GIC's, GIA's in RRIF's.
I am just making a comparison on their higher interest rates with similar 15 year fixed rate investments. I am in no way suggesting, advising to anyone of what they should be doing with their own money and that is their decision or decisions entirely. It is just my opinions and that is it.
1:35 am
August 5, 2014
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Comparing 10 year fixed rate investments, provincial zero coupon bond rates are anywhere from 3.10% to 3.20%. These compared to 10 year 2.90% compound interest GIA's are clearly higher fixed rate investment options. These would work in RRSP's, RESP's and TFSA's.
Compound interest 5 year 3.00% GIC's in RRSP's, TFSA's are higher fixed rate investment options at half the term length than 10 year, 2.90% GIA's.
As for 10 year 2.90% RRIF's, provincial coupon bond rates are anywhere from 2.85% to 3.05% but are not feasible in RRIF's as principal values go up and down. For 5 to 7 year GIC's that are RRIF eligible at 2.80% to 3.00% rates would work as there are no problems of possibly losing any principal value.
Provincial coupon bonds would work for someone that needs income in a TFSA, RRSP plus they payout interest every 6 months compared GIA's and GIC's that payout interest annually. Everyone's particular circumstances are different so provincial zero coupon bonds and provincial bonds may not work for them.
I am in no way giving any advice, suggestions on what anyone should do with their own money. This is entirely their own decision or decisions of what they want to do with their own money.These are just my opinions and that is it.
9:20 am
April 6, 2013
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Loonie said
I understand that their GIAs are creditor-protected, but recommend that people check into that and not take my word for it if it is a condition that appeals to you.
I suspect that there's some creditor protection but not as much as some insurance agents suggest.
This Ontario case described in the article Fiscal Agents: The ex-spouse, child support and the insurance policy by lawyer Suzanne Michaud, from the Mississauga firm of Pallet Valo, indicates that the protection is not full:
A mother and father separated in 1991 and divorced in 1992. The mother received custody of there 3 children. The father agreed to pay child support. In the separation agreement, he agreed to protect the support payments by life insurance policy on his life in the sum of $150,00 with his children designated as beneficiaries.
The father did not pay the child support and did not take out the life insurance as promised. He did take out a new insurance policy on his life for $300.000, naming his new common-law law wife the beneficiary.
In 1995, the father was driving with all 3 children in his vehicle. There was an accident. He and one child were killed. The other 2 children were badly hurt but survived.
As a result of his death, the common law wife was to receive benefits of $118,000 from the car insurance policy and $300,000 from the new life insurance policy. The mother, who had custody of the 2 surviving children and who was owed over $60,000 in unpaid child support and interest, was to receive nothing. Thus, on her behalf and on behalf of the 2 children, she sued the 2 insurance companies, the common law wife, and the estate for the child support arrears and the proceeds of the policy described in the separation agreement. Over a year later, a judge ruled in her favor.
The [child support] arrears were ordered to be paid from the 2 polices. The policies were charged with $150,000 to provide for the surviving children's support, the amount they would have received if their father had livid up to the terms of the separation agreement. The designation of his common law spouse as beneficiary [of his new life insurance policy] did not protect the proceeds from claim, as some might expect.
....
2:13 pm
August 9, 2014
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Norman, that doesn't seems that surprising because his ex-wife is basically the creditor, just like bank will require you to pay back the mortgage when the person that make it is ceased to exist if no other people is willing to inherent the house and the debt that follow it.
11:29 pm
August 5, 2014
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Norman1 and Jon, I don't think that a common law spouse has the exact same rights as a married spouse. This may have been a factor but since there is a separation agreement involved that most likely took precedence over anyone named as the beneficiary that was not his original spouse.
12:22 am
August 5, 2014
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Norman1 and Jon, I am in no way a legal or asset protection expert but I would think that a trust of some type would give more flexibility and choice of what investments could be in the trust and would be more protective against lawsuits, creditors, debts etc.
I doubt it would much help against CRA and other tax authorities and unpaid taxes or tax disputes.
3:29 pm
April 6, 2013
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Jon said
Norman, that doesn't seems that surprising because his ex-wife is basically the creditor, just like bank will require you to pay back the mortgage when the person that make it is ceased to exist if no other people is willing to inherent the house and the debt that follow it.
I surprised because I was told, many times before, that life insurance was "creditor proof". I've read articles written by insurance agents that say the same. Obviously, that's not actually the case or there's some limitations to the creditor protection.
I think that's a commonly misconception about mortgages. If the mortgage borrower's estate continues to make the mortgage payments, then nothing changes. The mortgage lender can ask nicely, but not claim against anyone who didn't sign the mortgage, for the money owing.
The most the lender can do is foreclose should the mortgage payments start bouncing.
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