Protect yourself: A guide to financial safety

Okay, it’s far fetched, but still we can’t help wondering if the downturn may result in some financial institutions going under. If that happens, is your money safe? Here is what stands behind various investments:

• If you have a savings account or chequing account with a Canadian bank, a federal crown corporation called the Canada Deposit Insurance Corp. (CDIC) covers you for losses of up to $100,000 if the bank goes bust. Same goes for GICs of five years or less. But note that the coverage may not extend to Canadian branches of foreign banks — check at www.cdic.ca to find out if your institution is covered. Note, too, that the $100,000 limit is for all your non-registered accounts with a single bank. So if you have $80,000 in a savings account and another $80,000 in a chequing account, you are covered for only $100,000 — not the $160,000 total.

You can stretch your coverage if you divvy up your money between registered and non-registered accounts. While you are only covered for up to $100,000 of losses on all your non-registered accounts with a single bank, the CDIC will cover you for another $100,000 in RRSPs and yet another $100,000 in RRIF accounts. You are also covered for up to $100,000 on non-registered joint accounts.

• If you have a life insurance policy with a Canadian insurance company, your benefits are protected by Assuris, a not- for-profit organization funded by the life insurance industry. Deposits are covered for up to $100,000. (www.assuris.ca)

• If you have an account with an investment dealer, the Canadian Investor Protection Fund will cover you for up to $1 million in cash and securities, provided the dealer is a member of the Investment Industry Regulatory Organization of Canada. (For a list of members, go to www.cipf.ca.) • If you’re a member of a defined benefit pension plan and your company goes bankrupt, you may have reason to worry. Most pension plans come under provincial jurisdiction and provinces vary widely on their rules. If your pension plan is underfunded, your monthly payments may be less than anticipated. Ontario is the only province to insure the pensions of bankrupt companies through its Pension Benefits Guarantee Fund (PBGF), which backstops the first $1,000 per month in pension benefits per plan member if a company goes bust