As a Canadian, you may have heard of deposit insurance, but do you really know what it is and how it works? In this article, we’ll explore everything you need to know about deposit insurance in Canada.
What is Deposit Insurance?
Deposit insurance is a type of insurance that protects depositors against the loss of their deposits if their financial institution fails. In Canada, deposit insurance is provided by the Canada Deposit Insurance Corporation (CDIC).
How Does CDIC Deposit Insurance Work?
The CDIC is a federal Crown corporation that was created in 1967 to protect depositors in case of a bank failure. The CDIC insures eligible deposits up to a maximum of $100,000 per depositor per insured category at each member institution.
What Types of Deposits are Covered?
CDIC insurance covers many types of deposits, including savings accounts, chequing accounts, term deposits, and money orders. However, not all deposits are eligible for CDIC insurance. For example, investments such as stocks, bonds, and mutual funds are not covered by deposit insurance.
How to Know if Your Deposits are Insured?
To check if your deposits are insured by CDIC, look for the CDIC logo on the financial institution’s website, statements, or promotional material. You can also verify if your deposits are insured by checking with the financial institution directly.
Are Credit Unions Covered by CDIC?
No, credit unions are not covered by CDIC deposit insurance. Instead, credit unions in Canada are typically insured by provincial deposit insurance programs.
What Happens if Your Financial Institution Fails?
If your financial institution fails and is a member of CDIC, you’ll be reimbursed for eligible deposits up to a maximum of $100,000 per depositor per insured category. The CDIC will contact you directly to arrange for the reimbursement of your insured deposits.
Deposit insurance is an important protection for Canadian depositors. The CDIC provides peace of mind for Canadians by insuring eligible deposits up to $100,000 per depositor per insured category at each member institution. Make sure to check if your deposits are insured by CDIC, and always do your due diligence before investing or opening an account with a financial institution.