What is a segregated fund?
A segregated fund is an investment fund that you hold within an insurance contract. The term "segregated” refers to the fact that your investment is separated from the general assets of the insurance company. Your insurance contract dictates the insurance protection you receive. So segregated funds are an insurance contract that provides you investment management plus protection.
Segregated Funds – Unique Advantages
Segregated funds are similar to mutual funds in many respects but provide a number of additional features and benefits.
Benefits Beyond Mutual Funds
Maturity, Death and Income Guarantees
Depending on the contract, an investor can choose from a number of options that guarantee a minimum of 75% of the total amount you paid to the contract upon death or contract maturity*. Certain segregated funds, commonly referred to Guaranteed Minimum Withdrawal Benefits, provide an income guarantee either for a set period of time or life. There are numerous combinations available with a wide variety of terms and conditions.
Potential Creditor Protection
This is of primary concern for business owners or professionals as their assets may be exposed to creditors. You may be able to achieve potential creditor protection by naming a "preferred” or "irrevocable” beneficiary. The key relationship is between the life insured (the annuitant) and the beneficiary. Creditor protection is never guaranteed. Segregated funds held in a brokerage account may not be afforded creditor protection. It is recommended that you consult independent legal counsel.
Estate Planning Made Easy
Proceeds of your contract are paid directly to your beneficiary, avoiding the time and expense of probate. Also, probate is a public process and information associated with it is accessible to the public. By helping your heirs bypass probate, segregated funds can ensure that your personal decisions and information remain the way they were meant to be…personal.
Segregated funds are eligible for coverage by Assuris. This plan protects Canadian policyholders, within limits, from loss of benefits in the event of the insolvency of the company.