With the current economic condition you are hearing more and more about making sure your Financial Institution is a CDIC member.

What is the CDIC ?

The CDIC is a federal Crown corporation created by Parliament in 1967 and reports directly to the federal Minister of Finance. Their sole purpose is to protect the money Canadians deposit in CDIC member institutions, in case of their failure. Eligible accounts are protected up to $100,000.

Who pays the premiums?

The member institutions pay the premiums.

Is my bank a member?

Not all Financial Institutions are members. Please check out the member list on the CDIC website .

What accounts are eligible?

Savings(single name) – The sum of all your savings accounts, chequing accounts, and GIC accounts with terms less than 5 years at a single institution up too $100,000.

RRSP – The sum of all of your RRSP savings accounts and RRSP GIC accounts with terms less than 5 years at a single institution up to $100,000.

RRIF – The sum of all of your RRIF savings and RRIF GIC accounts with terms less than 5 years at a single institution up to $100,000.

Trusts – The sum of all your savings, chequing, and GIC accounts with terms less than 5 years at a single institution up too $100,000. Each trust with a different beneficiary is considered a separate account and is therefore individually insured.

Joint accounts – The sum of all your savings, chequing, and GIC accounts with terms less than 5 years at a single institution up too $100,000. Each joint account pair is considered a separate account and is therefore individually insured.

What about the TFSA account?

As it stands the TFSA account is considered savings and would be bundled with your savings and chequing accounts. However Larry MacDonald indicated that the 2009 Federal budget will be making the TFSA separately insured.

What is not eligible for coverage?

Accounts held in US funds
Mutual funds and stocks
GICs with terms longer than 5 years
Bonds
Treasury Bills

Does this mean my money is safe?

That’s an interesting question. If you look at the CDIC 2008 annual report they state that they have $1.6 billion in assets which covers about 0.35% of their insured deposits. To add some perspective the Royal Bank of Canada states in their 2008 annual report that they have $438 billion in deposits. Most likely this entire amount wouldn’t be eligible for insurance but certainly more than $1.6 billion would be. If one of the big Canadian banks were to fail the CDIC wouldn’t be able to meet its obligations. However the likelihood of this happening is slim as Canada has very strict banking regulations and if a major bank were to fail their would definitely be a bailout as it would be political suicide not to. So even though the functionality of the CDIC doesn’t seem all that practical you’re still better off leaving the money in the hands of a CDIC member.

An example:

Bill is married to Andrea. They have two children, Janet and Mathew. Below are all of the accounts Bill currently has at a single institution. Bill can also have the same accounts at a second institution and they would be entitled to their own separate insurance as well.

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