Category Archives: Money Tips

What Will Happen When My Oaken Financial GIC Matures?

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A year ago, we decided to divide our emergency fund into 12 parts, and invest the money in a series of GICs that would mature one per month for a year. We knew we wouldn’t need the emergency money all at once but rather in monthly amounts to replace a pay cheque. We looked for GICs offering a good interest rate with CDIC insurance and easy online purchase access. We chose to buy our GICs from Oaken Financial and now the first GIC is maturing and I wondered what will happen.

Setting the Instructions for a GIC with Oaken Financial

When I purchased a GIC from Oaken, both online and by phone, I was asked what I wanted to happen to the principal and the interest when the term ended. I decided to have both the principal and interest deposited to our Oaken Savings account. This instruction was listed on the confirmation certificate I received in the mail for my GIC.

Why Did I Get a Letter from Oaken Asking Me to Send Them Instructions for My Maturing GIC Investment?

I was a bit surprised to receive a letter in the mail from Oaken a few weeks before my first GIC matured. It correctly described the instructions on file to pay out my GIC at maturity, both principal and interest, to my savings account. But it also said “Please indicate your instructions for your maturing investment.” And in the fine print under PLEASE NOTE it said “If no maturity instructions have been received…the mature investment may be…renewed for the same terms and conditions as the existing investment…”

Red alert! I hate having GICs rollover. I like to re-invest the funds myself if and when I choose.

Were my instructions properly on file? Or did I need to check a few boxes on this form and return it in the provided pre-paid return envelope? I phoned Oaken Financial to check.

The Renewal Letter is a Courtesy to Customers

I was reassured to find out that the renewal instructions letter is primarily a courtesy to customers. It reminds them that they have a GIC maturing (which could be forgotten after 5 years!) and offers them the variety of choices at maturity such as reinvesting at various terms in both cashable and non-redeemable GICs, or re-investing only part of the funds, or sending a partial or total payment by mail.

Because I already have the instructions I want on my file, I do NOT need to send in the letter.

So it’s all good.

I will watch my Oaken Savings account, however, later in the month to see if the principal and interest are paid out as instructed. If so, I will probably just re-invest the principal for another year: but I will enjoy the security of choosing at that time.
UPDATE: The results are in; the first GIC has matured.

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Does your bank or trust company warn you in writing (no annoying phone calls!) that a GIC is maturing? Is it easy to get your instructions on file? Please share your experience with a comment.

Should I Accept BMO’s Offer of $2000 of Free Accidental Death Insurance?

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I’ve been a customer at BMO since my university days. There were no RESPs back then and my parents banked with BMO so they liked being able to transfer money from their account to mine for free from their home branch. No need to worry about lost cheques or late rent payments. (Thanks Mom and Dad!) Even so, I was suspicious when an envelope arrived telling me to open it because they had a free reward they wanted to offer me: When I opened it, the offer was $2000 of accidental death insurance for one year.

$2 000 In Accidental Death Insurance Is Insulting

Frankly, I found the offer more insulting than interesting. BMO requires me to keep half this amount in my bank account just to get free chequing. Even the CPP Death Benefit is $2500 (although that is taxable income to the person who receives it.) This is such an incredibly small amount of money I doubt it would even pay for the refreshments at a wake or funeral service.

Why Did They Offer “Accidental Death” Insurance Not Life Insurance?

It’s another insult: it’s because they know that “accidental” deaths are very uncommon in my age and gender bracket. Deaths from disease are Number One for my group. So they chance they might have to pay out is fairly high for a true life insurance policy and is very very low for an accidental death policy.

Why Is BMO Really Making This Offer?

  • Well, firstly they want you to open the envelope so they can get their advertising in your line of sight.
  • And secondly, they want to remind you that they sell insurance nowadays.
  • Thirdly, they want you to consider buying more coverage from them, either for accidents or for other insurance risks.

I also have a bad feeling about the “for one year” part of their offer. I wonder if the policy will automatically renew with you having to pay for it after the end of the first year if you enroll. The offer already clearly states that if you request additional coverage, you will have the premiums deducted from your bank account, which is partially identified on the offer.

Unfortunately, I can’t find any details about whether there is an auto-renewal or not on the letters they mailed to me. I hope no one finds out the hard way that there is such a scheme in place!

Should I Accept the Offer of $2000 in Free Insurance?

Personally, I’m not interested. In particular, I’ve had trouble getting BMO to properly handle changes in GIC instructions at renewal so I’m not confident that they would cancel this policy at the end of the first year before any premiums became due.

If you really think $2000 is worth it, by all means accept. Be very sure to select the “I opt out of receiving information and offers on BMO Insurance products and services” box on the form, though. If you don’t, I’d be very surprised if you don’t get a phone call or email asking you to increase your coverage.

And make sure to contact BMO a month or so before your coverage is due to expire to ensure it does not get renewed into a contract that costs you an unexpected amount.

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Would you accept an offer like this from your bank? Please share your views with a comment.