What are Segregated Funds? Segregated Funds are life insurance company investment products. They are named for the fact that their holdings are kept separate from the insurance company’s assets. Segregated Funds offer a collection of money market investments, equities, and bonds giving you the opportunity to increase your investment capital. Many Segregated Funds offer Mutual Fund Investments or Pension Investment with an additional insurance guarantee.
Simply – Segregated Funds are investment funds with an insurance life jacket.
What are the benefits of Segregated Funds?
- Mature Benefit Guarantees – When your policy matures you will receive at least a percentage of the premiums that you paid into your policy, less the adjusted cost base of previous withdrawals. Segregated Funds offer up to a 75% to a 100% maturity date guarantee which must be at least 10 years from the date of deposit
- Death Benefit Guarantee – Upon your death your beneficiaries will receive at least part of or all of the premiums paid to your policy. Some Segregated Funds offer up to a 100% guarantee at death
- Reset Option – Some Segregated Funds provide a Reset Option which allows you to lock in any gains your investments have made by resetting your payout guarantees to the current market value of your investments. Resets restart the clock on any maturity date
- Creditor Protection – A Segregated Fund can be protected from creditors if you have designated a preferred class beneficiary.
- Probate Bypass – Probate fees are not charged on Segregated Funds if you have a designated beneficiary in your policy because the asset will not go into your estate. This is not applicable in Quebec because wills prepared by a notary do not need to be probated
Some Segregated Fund Products offer a Payout Guarantee. You will receive income payments of at least a set amount of your premiums, less any scheduled retirement income payments made over the lifetime of your policy.