What are Segregated Funds?
Segregated fund contracts are a popular investment option, available only from life insurance companies. Similar to mutual funds, segregated funds are large pools of money invested in stocks, bonds or other securities. These contracts have higher fees than mutual funds because they also offer guarantees and some of the additional benefits of a life insurance contract.
Who are Segregated Funds Best Suited For?
Individuals Approaching Retirement: Those nearing retirement who wish to safeguard their accumulated savings against market downturns, ensuring financial stability during their retirement years.
Estate Planning: Individuals aiming to simplify the transfer of their assets to heirs, as segregated funds can bypass probate, allowing for a quicker and potentially fee-free settlement.
Self-Employed Professionals and Business Owners: Entrepreneurs and professionals seeking protection from potential creditors, since segregated funds may offer creditor protection under certain conditions.
Conservative Investors Seeking Capital Protection: Those who prefer investment options that offer guarantees protecting a portion (75% to 100%) of the invested capital at maturity or upon death, providing a safety net against market volatility.
Individuals Seeking Financial Peace of Mind: Anyone looking for investment solutions that combine growth potential with protective features, offering reassurance in uncertain market conditions.
What are Key Benefits of Segregated Funds?
Guarantees
Protect the value of the premiums undefined you paid on the contract maturity date and on death. The guarantees are 75% to 100% of your premiums (reduced for any withdrawals). Some segregated fund contracts also offer income guarantees.
Beneficiaries
You can name a beneficiary to receive a death benefit from your registered or non-registered accounts. Your beneficiary will receive the death benefit when you die. The death benefit is the contract value at death, or the guaranteed amount, whichever is higher. The death benefit undefined bypasses your estate and goes directly to them. You can also control how your beneficiary gets the benefit: as a lump sum or in the form of a payout annuity.
Potential creditor protection
This means that creditors may not be able to take the funds you have in your segregated fund contract.
Guaranteed income options
Some segregated fund contracts offer lifetime guaranteed income. This can help provide you with a guaranteed income for life.
