Segregated Fund (Seg Fund) Policies

Segregated Fund Policies are insurance products with investment features. Almost any mutual fund available in Canada is available as a Seg Fund offering the protection features that are integral to this most unique product.

How They Work

  • Premiums are paid into a Segregated Fund policy, and then allocated to the investment options that you and your advisor select based on your risk tolerance, investment objectives and time horizon. 
  • The investment manager makes investments in stocks, bonds or other assets, depending on the fund's investment objectives as stated in its prospectus or information folder
  • There are unique features of Segregated Funds that allow you more security and flexibility and can remove some of the uncertainty that is inherent in the unpredictable financial world.

 

Segregated Fund Policies - A Range of Features 

Option to Guarantee Lifetime Income  
Longevity, inflation and market volatility...these are all things that can upend even the most carefully crafted retirement plan.  Most segregated fund policies have an option that will protect you from the chance you will outlive your money, minimize the ravages of inflation, and tame the volatile markets that we have recently experienced. 

Maturity and Death Benefit Guarantees 
Segregated fund policies provide a maturity guarantee after a certain period (usually 10 years) and a principal guarantee upon death (usually 75% or 100% of the premiums paid less redemptions).  

Creditor Protection 
In the event of bankruptcy or a legal judgement against you, Segregated Funds may provide protection from creditors.  The laws vary from province to province, and there are often cases before the court challenging under which circumstances creditor protection may apply.  You should speak to your advisor in order to make sure that this will apply in your case   

Naming a beneficiary can lead to fast settlement of your estate 
Segregated fund policies allow you to name a beneficiary (which you can't do at all on non-registered investments that are not segregated funds).  This means that the proceeds of the segregated fund policy are paid directly to your named beneficiary, bypassing probate and mostly avoiding costly executor, legal, and accounting fees that could cost five to ten percent of the value of the asset.  Also, bypassing probate can save a lot of time and get the proceeds of your estate to the intended beneficiaries much more quickly. 

 

Features vary by age and product. Ask your advisor for more information.