Maximizing CDIC coverage (2024)

FAQs

How do I maximize my CDIC coverage? ›

CDIC insures eligible deposits separately up to $100,000. Deposit insurance covers the following types of deposits: savings and chequing accounts. Guaranteed Investment Certificates (GICs) and other term deposits.

Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.

An account that contains more than $250,000 at one bank, or multiple accounts with the same owner or owners, is insured only up to $250,000. The protection does not come from taxes or congressional funding. Instead, banks pay into the insurance system, and the insurance provides their customers with protection.

The CDIC is self-funded by premiums paid by its members. It is calculated annually as a percentage of the total eligible insured deposits that are held by the institution as of April 30 each year. Increasing the limit would therefore require an increase in the premiums paid by the banks.

Through CDIC, member financial institutions, like banks are able to insure up to $100,000 CAD per beneficiary, per institution, per deposit category. At Wealthsimple, we instead hold any balance in your Cash or Save account(s) in trust for you (which is a fancy way of saying, on your behalf) with members of the CDIC.

CDIC coverage does not apply to stocks, bonds or mutual funds, so those investments, which amount to $180,000 of the total $290,000 in the category, are not eligible to be insured by CDIC.

Are my U.S. funds held at a U.S. bank covered by CDIC? No. Foreign currency deposits at foreign financial institutions are not covered by CDIC. American currency in U.S.-based banks may be covered, however, by the Federal Deposit Insurance Corporation (FDIC).

How do rich people get around FDIC limits? ›

Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank. Other millionaires have safe deposit boxes full of cash denominated in many different currencies.

Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the FDIC for bank accounts or the NCUA for credit union accounts. Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance.

Of all the financial institutions reporting, including commercial banks and federal savings banks, there are approximately 860 million deposit accounts (not including retirement accounts). But fewer than one percent–just 0.83 percent–of these accounts have more than $250,000.

It indicates an expandable section or menu, or sometimes previous / next navigation options. Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution.

NOTE ON BENEFICIARIES: WHILE SOME SELF-DIRECTED RETIREMENT ACCOUNTS, LIKE IRAS, PERMIT THE OWNER TO NAME ONE OR MORE BENEFICIARIES, THE EXISTENCE OF BENEFICIARIES DOES NOT INCREASE THE AVAILABLE INSURANCE COVERAGE.

The FDIC refers to these different categories as “ownership categories.” This means that a bank customer who has multiple accounts may qualify for more than $250,000 in insurance coverage, if the customer's funds are deposited in different ownership categories and the requirements for each ownership category are met.

In the event of a member institution failure, a depositor's chequing account, savings account, and any unregistered term deposits in single name would be considered as deposits held in one name and would therefore be combined for a maximum coverage limit of $100,000, per CDIC member institution.

Purchase another Health Plan along with your Existing Plan

This way, the total coverage is the total of both sums assured. For example, if the sum assured by your current health policy is Rs. 3 lakhs, you can take another health plan for Rs. 3 lakhs.

Opening accounts with different ownership categories, such as joint accounts or trusts, can also increase FDIC insurance coverage. Other options for insuring excess deposits include brokerage accounts and credit unions.