Segregated Funds

What is a “segregated” fund?

It is a fund held by an insurance company, in which the funds are separate from the other assets of the insurance company; hence segregated. Commonly known as “seg funds”.

Investment firms have mutual funds and insurance companies have seg funds. The idea behind both is the same: investment growth potential for clients.

Like all funds, there is an endless variety to suit all types of clients. Like all investments, funds fall into different risk categories.

However, seg funds are designed as insurance contracts. Herein lies the difference that allows seg funds to offer benefits that mutual funds cannot.

Firstly – seg funds can offer principal guarantees at 75% – 100%. Now you can participate in the growth potential of the market without worrying about any downturn! That is called “a maturity value guarantee.” It protects your investment in all markets.

Secondly – there is a death benefit guarantee. After all, it is an insurance contract. Your beneficiaries will receive 100% of your net deposits or the market value of your seg fund – whichever is greater and bypass probate.

Thirdly – you can lock in profits with the “reset” feature. If the market value of your segregated fund investments is higher than your net deposits, you can reset your maturity and death benefit guarantees based on the higher value.

Lastly – if you name your spouse, child, parent or grandchild as the beneficiary of your policy or if you name an irrevocable beneficiary (a beneficiary that cannot be changed), your seg fund investment may be protected from creditors. This varies by province.

Above are many powerful reasons to look at seg funds as a Retirement Solution for your investment dollars.

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