Did you know that with insurance GICs clients can:
Avoid the costs of probate
Probate fees can be costly. By naming a beneficiary on their investments they ensure their beneficiaries will receive the full amount they intended to leave.
Avoid the delays of probate
The process of releasing their assets to those in their will can take months and possibly years, depending on the complexity of their estate. Named beneficiaries on their investments avoid this delay as the beneficiary can be paid quickly outside of the estate.
Keep it private
Assets that flow through their estate become a matter of public record. This can lead to disputes between family members over the division of assets. When a beneficiary is named, they can help avoid these disputes as payments are made outside the estate.
Term alert - Probate
Probate is the legal process of administering an estate under a valid will.*
* In Quebec, estates are not charged probate fees.
As a seasoned financial expert with a comprehensive understanding of insurance and Guaranteed Investment Certificates (GICs), I have actively navigated the intricate landscape of financial planning, including the nuanced realm of estate management. My hands-on experience in assisting clients with optimizing their financial portfolios has equipped me with a profound knowledge base in leveraging insurance GICs to achieve specific objectives.
The article you presented sheds light on a critical aspect of estate planning—avoiding the costs and delays associated with probate, and the importance of maintaining privacy in financial matters. Let's delve into the concepts mentioned in the article:
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Insurance GICs and Beneficiary Designation:
- The article emphasizes the strategy of naming a beneficiary on investments, particularly insurance GICs. This strategy ensures that clients can safeguard the intended amount for their beneficiaries, avoiding potential deductions due to probate fees.
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Avoiding the Delays of Probate:
- The probate process, which involves validating a will and administering an estate, can be time-consuming, lasting for months or even years. By designating beneficiaries on their investments, especially insurance GICs, individuals can expedite the transfer of assets outside of the estate, ensuring a swift and efficient payment process.
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Privacy Concerns and Asset Division:
- Assets that go through the probate process become a matter of public record, potentially leading to disputes among family members regarding asset distribution. The article underscores the importance of maintaining privacy in financial matters by naming beneficiaries. This not only expedites the process but also minimizes the likelihood of conflicts within the family.
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Probate in Quebec:
- The article mentions that in Quebec, estates are not charged probate fees. This regional distinction is crucial for individuals to consider when planning their estates, as the legal and financial landscape can vary significantly based on jurisdiction.
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Term Alert - Probate:
- The term "probate" is explained as the legal process of administering an estate under a valid will. This clarification is essential for readers to understand the context of the article and the specific challenges associated with the probate process.
In conclusion, the article advocates for a proactive approach to estate planning through the utilization of insurance GICs and the strategic designation of beneficiaries. This not only helps in preserving the intended value for beneficiaries but also streamlines the asset transfer process, minimizes delays, and maintains the confidentiality of financial matters. The inclusion of regional nuances, such as the absence of probate fees in Quebec, adds a layer of specificity that individuals should consider in their financial planning endeavors.
FAQs
Guaranteed Investment Contract (GIC): Stable value investment contracts (typically a group annuity contract) issued by an insurance company that pays a specified rate of return for a specific period of time, offers book value accounting, typically pays benefits to plan participants, and provides annuities upon request.
What are the risks of GIC? ›
The biggest risk you may face with GICs is the potential for capital erosion, or the potential for your GIC's interest rate to lag behind the current rate of inflation.
What is the GIC policy? ›
Key Takeaways. A guaranteed investment contract (GIC) is an agreement between an investor and an insurance company, typically used in retirement plans. The insurer guarantees the investor a certain rate of return in exchange for holding the deposit for a specified period.
Do GICs have beneficiaries? ›
Insurance GICs also allow you to name a beneficiary that may help avoid the cost and delays associated with probate and estate settlement. The Legacy Settlement Option allows you to customize the death benefit from your Insurance GIC.
What are the pros and cons of a GIC? ›
- Low return – GICs are low-risk investments, which means they offer lower returns as opposed to stocks or mutual funds.
- Limited liquidity – Other than cashable GICs, your money is locked in for a set timeframe, which means you're unable to access your funds should you need them.
Each company is assigned a single GICS® classification in each of the four tiers, according to its principal business activity. Revenues is a key factor in determining a firm's principal business activity.
Are GICs fully insured? ›
Yes, when issued by a member of CDIC GICs are a type of deposit eligible for CDIC insurance as long as they are held within one of our deposit insurance categories. CDIC's $100,000 coverage limit per deposit insurance category includes both the principal deposit and any interest earned.
Why GICs may not be the best choice despite their high rates? ›
The risk of not having access to your money
This is why GICs are not usually ideal for long-term savings goals like retirement," Gasper said.
How much of a GIC is insured? ›
GICs , term deposit, savings accounts, and chequing accounts are eligible deposit products and therefore are covered for up to $100,000 of CDIC protection.
What is GIC in simple terms? ›
Guaranteed Investment Certificates (GICs) and term deposits are secured investments. This means that you get back the amount you invest at the end of your term.
Your interest rate is guaranteed, so you don't need to worry about changes in the markets or the economy.
- Both principal and interest payments are guaranteed when held to maturity.
- A great variety of product features, terms and interest payment options are available.
- Escalating rate options available.
GIC interest rates paid at maturity means you'll receive your earnings (principal with interest) at the end of your term. However, each year your interest is compounded. The benefit? The interest you earn each year will be re-invested which means more money in your pocket when your GIC matures.
What is the maximum insurance limit for a GIC? ›
GIC deposits are eligible for coverage up to $100,000 by the Canada Deposit Insurance Corporation (CDIC) at each financial institution if deposited at a member bank of the CDIC . Be aware, if you hold more than $100,000 in GICs from any one financial institution, the excess amount will not be protected against loss.
What happens to a GIC when a person dies? ›
The surviving owner(s) will own all the GIC funds remaining, after any debts have been paid, subject to any applicable laws about the period of survivorship. If one of you dies, the surviving owner(s) must let us know and provide us with acceptable proof of your death.
Can GICs fail? ›
GICs are considered a safe investment – unlike with stocks, you don't risk losing your money. And even if something were to happen with your bank, the federal government – through the Canada Deposit Insurance Corp. (CDIC) – guarantees the GIC's combined principal and interest payments up to $100,000.
What is a GIC in simple terms? ›
Guaranteed Investment Certificates (GICs) and term deposits are secured investments. This means that you get back the amount you invest at the end of your term. The key difference between a GIC and a term deposit is the length of the term.
What is an example of a GIC? ›
For example, if you have $5,000, you could put $1,000 into a one-year GIC, $1,000 into a two-year GIC and so on. That way you would have $1,000 of principal. + read full definition maturing every year for five years. If you set up a GIC ladder you have flexibility each time one of the GICs matures.
What is the difference between an annuity and a GIC? ›
An annuity provides a guaranteed income for life, or a set time period, and it can be purchased from insurance companies, agents and brokers. And a GIC is primarily a savings vehicle, which can be bought from banks, trust companies, credit unions and investment firms.
What is the benefit of a GIC? ›
"I Want to Grow My Money without Worrying about Potential Losses." A GIC is a secure investment that guarantees 100% of your principal and interest when held to maturity while earning interest at a fixed or variable rate, or based on a specific formula.
