What is the maximum term beyond which the CDIC does not cover GICs?

What is the maximum term beyond which the CDIC does not cover GICs?

• A. Ten years
• B. Five years
• C. Seven years
• D. Three years

Answer: (B)

The coverage provided by the Canada Deposit Insurance Corporation (CDIC) specifically relates to Guaranteed Investment Certificates (GICs) and other deposit instruments. The maximum term for GICs to be eligible for CDIC coverage is five years. This means that if a GIC has a term longer than five years, it does not fall under the protection umbrella of the CDIC, potentially exposing investors to risk should the financial institution holding the GIC encounter difficulties. Understanding this coverage limit is crucial for investors to ensure that their deposits are adequately insured. Hence, selecting five years as the correct answer highlights the significance of knowing the eligibility period for deposit insurance and how it impacts investment decisions regarding GICs.

The coverage provided by the Canada Deposit Insurance Corporation (CDIC) specifically relates to Guaranteed Investment Certificates (GICs) and other deposit instruments. The maximum term for GICs to be eligible for CDIC coverage is five years. This means that if a GIC has a term longer than five years, it does not fall under the protection umbrella of the CDIC, potentially exposing investors to risk should the financial institution holding the GIC encounter difficulties.

Understanding this coverage limit is crucial for investors to ensure that their deposits are adequately insured. Hence, selecting five years as the correct answer highlights the significance of knowing the eligibility period for deposit insurance and how it impacts investment decisions regarding GICs.