Investment Grade Insurance Policies in Canada

You have a lot of choices when it comes to investment products. You may already have well-known investment products like Mutual Funds and GICs. Life Guard Insurance offers a wide range of investment products produced by insurance companies, many of which have a very similar look and feel to more well known investments. And some are exactly the same – GICs can be offered by insurance companies the same way the bank offers them to you. Other investment products like an annuity, have a unique flavour only available through an insurance contract.

Life Guard Insurance offers three broad categories of investment products. One of our professional insurance brokers can help you decide which ones maybe right for you.

Guaranteed Investment Certificates
GICs, also called term deposits, are fixed-term investments that pay a guaranteed amount on maturity. These are among the safest investment products. The return may not be high and is dependent on prevailing interest rates and how long a period you invest – three months, one year, two years, five years and up. GICs as insurance contracts are guaranteed by Assuris for up to $60,000 or 85% of the promised guaranteed amounts, whichever is higher.

Accumulation Annuities
Accumulation annuities (AA) are a guaranteed investment very similar to GICs. Because they are only offered by a life insurance company they have different guarantees. They also have the added benefits of a beneficiary designation and potential creditor protection.

Segregated Funds
Like a mutual fund, a segregated or seg fund, is a pool of investors money that is managed by professionals. Seg funds provide a good return over the long-term. They are actually insurance contracts with two components: an investment that produces the return, and an insurance contract that covers the risk. Unlike mutual funds, seg funds guarantee either 75% or 100% of your principal. A very small part of the fund’s assets (about 0.25% per year) goes to insure there will be enough cash to pay that guarantee. Seg funds have some other advantages over mutual funds, including creditor protection. Like all insurance contracts, they allow you to name a beneficiary. After your death the fund is paid to the beneficiary, avoiding probate and legal fees.

GMWBs and GLWBs
Guaranteed minimum withdrawal benefit (GMWB) or guaranteed lifetime withdrawal benefit (GLWB) investment products have recently been receiving a lot of attention in the Canadian marketplace. They have been very successful at helping Canadians transition from saving for retirement to generating income in retirement. Both the GMWB and GLWB offer a guarantee on the withdrawal of a certain percentage of their portfolio each year — in the range of 5% to 7%. The GLWB is a lifetime benefit, while a GMWB is a benefit for 15 to 20 years. With each of these products, you are guaranteed to never lose the principle you invest. If the underlying investment in the market performs well, you could see your asset value rise, giving you increased income distributions from the plan in the future.

Payout Annuities
An annuity is an excellent income generating investment product. Simply put, it is a contract between you and a life insurance company. You invest a sum of capital. The insurance company provides you with a steady income for a fixed term or the rest of your life. This is a popular alternative to Registered Retirement Income Funds, especially for people in their later years who no longer want to follow their portfolios or take any risk. The insurance company invests the money and returns a portion of your capital as well as the interest earned to you. Your annuity income will depend on the amount you invest, the interest rates at the time you purchase the annuity, your gender, your life expectancy, and your age at the time you bought it. There are many variations on annuities, including annuities for a single person, joint annuities for couples, annuities indexed to inflation and guarantees that your heirs will receive an inheritance if you die before exhausting the annuity.