“If I have $600,000 to deposit in a bank and the bank goes bankrupt, I am guaranteed a refund of $100,000. How can I ensure that I am covered for my $600,000? » – Robert Bijoux
A Canadian bank going bankrupt? It’s rare, but it has happened before and could happen again. The Canada Deposit Insurance Corporation (CDIC) says it has handled 43 bankruptcies of financial institutions affecting more than two million depositors since its creation in 1967.
This federal Crown corporation protects anything considered an insurable deposit. Please note, the institution concerned must be a member of the SADC. The complete list can be found on the Company’s website, but the names of the six main banks in the country (Royal Bank, BMO, Scotia, CIBC, TD and National Bank) appear there.
An insurable deposit is protected up to $100,000 per member institution and per category. With regard to Desjardins Group – a cooperative financial group – it is the Financial Markets Authority which protects insurable deposits ($100,000).
If you want to minimize your risks, asset allocation is a lifeline. Senior communications manager at the SADC, Mathieu Larocque points out that there are nine eligible categories.
Insurable categories:
- Filing in the name of a single person
- In common (joint accounts)
- Registered Retirement Savings Plan (RRSP)
- Registered Retirement Income Fund (RRIF)
- Tax-Free Savings Account (TFSA)
- Registered Education Savings Plan (RESP)
- Tax-free savings account for the purchase of a first property (CELIAPP)
- Registered Disability Savings Plan (RDSP)
- Insurable deposits held in trust.
“A person could deposit $100,000 in each of these categories,” illustrates Mr. Larocque. And that’s for each of the member financial institutions. We could therefore repeat the operation in different institutions which are members. »
On its website, the SADC also offers an online calculator that can help savers determine their level of coverage.
Consult the SADC calculator
The SADC spokesperson recalls the importance, for savers, of understanding the notion of “insurable deposit”. These are Canadian dollars and other currencies, guaranteed investment certificates or other term deposits.
Stocks, bonds, mutual funds or virtual currencies that are in non-registered accounts are not insured by the federal Crown corporation in the event of bank failure.
“What are considered investment products are not protected by the SADC,” explains its spokesperson. There are other programs that protect this, but we are not the ones who insure this type of product. »
A depositor should therefore inquire about other measures available, such as the Canadian Investor Protection Fund – which offers limited protection on property that a Dealer Member holds on behalf of an eligible client – if it holds investment products in its accounts.