Robert Carducci, RRC®
Financial Planner
Financial Planner
Article Licenses: DL
Advisor Licenses:
Compliant content provided by Adviceon® Media for educational purposes only.
Segregated funds limit the amount of money you can lose in order to protect your investment and your family’s lifestyle. A segregated fund offers the investor fund choices such as equity funds, bond funds, balanced funds and money market funds, etc. Some of your capital is guaranteed by a life insurance company with some advantages.
1. Guaranteed capital upon maturity or if you die. A seg fund has a maturity date after a period of years such as 10-15 years, or at death. Upon the maturity date, an amount of 75% to 100% of your invested capital is guaranteed by the life insurance company. If you die your designated beneficiary is paid a guaranteed sum.
Resetting the capital guarantee. Some companies permit the resetting of the guaranteed capital at a higher value with a new maturity date. Long-term investors may appreciate this safeguard, especially when investing in equity segregated funds, though there may be higher associated fees.
2. Creditor protection. A seg fund with a preferred beneficiary named on the contract might be protected from creditors if an investor faced a lawsuit or bankruptcy. After the policyholder’s death, all beneficiaries are protected against claims made by the policyholder’s creditors. Such protection may be worth the higher management fees of a seg fund where an investor either owns a business or is nearing retirement.
3. Estate exemption from probate and executor fees. When a seg fund policyholder dies with a beneficiary designated on the policy (outside the estate), the fund exempt from probate and executor fees. Your beneficiary receives the policy benefits quickly while the estate remains responsible for any final taxes.
Note: Talk to your advisor about historic or current legislation that may or may not affect your province.
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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investment funds, including segregated fund investments. Please read the fund summary information folder prospectus before investing. Mutual Funds and/or Segregated Funds may not be guaranteed, their market value changes daily and past performance is not indicative of future results. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Talk to your advisor before making any financial decision. A description of the key features of the applicable individual variable annuity contract or segregated fund is contained in the Information Folder. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Product features are subject to change.
Life Insurance policies vary according to contract terms. Please read any Life Insurance policy contract provided, or the segregated fund summary information folder prospectus before the time of purchase. Full details of coverage, including limitations and exclusions that apply, are set out in the policy of insurance. Commissions, trailing commissions, management fees and expenses may be associated with segregated fund investments which may not be guaranteed and their market value changes daily and past performance is not indicative of future results. A description of the key features of a life insurance policy, a segregated fund; and any applicable individual variable annuity contract is contained in information provided by the company from which it is purchased. Talk to your advisor before making any financial decision. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. The information provided is accurate to the best of our knowledge as of the date of publication and is general in nature, intended for educational purposes only, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. Rules and their interpretation may change, affecting the accuracy of the information.