Segregated Funds

Financial growth meets protective insurance benefits, enabling you to enhance your wealth through investments with the added security of a safety net for your savings.

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What are segregated funds?

Segregated funds are a unique type of investment product that combines the growth potential of opportunities found in equity and fixed-income markets with the security features of an insurance policy. Essentially, when you invest in a segregated fund, you're putting your money into a pool of investments such as stocks and bonds, managed by professional fund managers. This allows you to benefit from the potential for market growth. However, what sets segregated funds apart is the added layer of protection they offer. Each investment in a segregated fund comes with certain guarantees, such as the protection of a portion of your invested capital upon the contract's maturity or in the event of your death.

This blend of investment and insurance means that segregated funds can be an attractive option for those who are looking for ways to grow their savings but are cautious about the ups and downs of the market. The insurance component provides a safety net, ensuring that even in volatile times, a predefined percentage of your investment is protected. Additionally, segregated funds often include estate planning advantages, such as bypassing probate fees and ensuring a swift transfer of assets to your beneficiaries. This makes them a strategic choice for investors who are also thinking about how to efficiently transfer their wealth.

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Growth Potential

Invest in a diverse range of assets for the opportunity to increase your savings.

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Capital Guarantee

Receive a guaranteed minimum amount of your investment back, regardless of market conditions.

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Estate Benefits

Quickly and directly transfer wealth to your beneficiaries privately, and without legal delays.

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Probate Avoidance

Bypass the time-consuming and costly probate process, ensuring your heirs receive their inheritance more efficiently.

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How do segregated funds work?

  • Collective Investment: When you purchase segregated funds, your money is pooled with that of other individuals and invested collectively in a variety of assets like stocks and bonds.

  • Choice of Funds: Investors can choose from different fund types, each with its own strategy and fees, to match their risk tolerance and financial goals.
  • Professional Management: Expert fund managers handle buying and selling of assets with the goal of maximizing returns.

  • Safety Net: Segregated funds offer guarantees to recover a portion of the initial investment if the market declines.

  • Death Benefit Guarantee: Upon the policy owner's death, beneficiaries receive a predetermined percentage of the investment's value or the guaranteed amount, whichever is higher.
  • Probate Bypass: The death benefit is paid directly to beneficiaries, avoiding the probate process and ensuring quick, private access to funds.
  • Estate Planning Tool: Simplifies the transfer of assets to beneficiaries, providing financial security, privacy, and easing estate planning.

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Are segregated funds right for you?

Segregated funds are well-suited for investors who are looking for growth opportunities with a protective layer against market downturns, those with specific estate planning and wealth transfer needs, and individuals who value the combination of investment management with insurance benefits for added peace of mind.

Risk-Averse Investors

Those who are cautious about market volatility and prefer having a safety net for their investments. The guarantee features of segregated funds make them appealing to individuals who prioritize capital protection.

Retirement Planners

Individuals nearing retirement or in retirement who seek growth opportunities but cannot afford significant losses. The death benefit guarantees and potential for creditor protection also make segregated funds a strategic component of retirement planning.

Estate Planning Focused

People interested in efficient wealth transfer to beneficiaries. Segregated funds bypass probate, offering a quicker and private transfer of assets upon the policyholder's death, which is particularly attractive for those concerned with estate planning and leaving a legacy.

High Net Worth Individuals

Those with substantial assets who may be concerned about creditor protection, privacy, and estate taxes. Segregated funds can offer a layer of protection against creditors in certain jurisdictions, making them a strategic choice for asset protection.

Investors Seeking Simplicity

Individuals who appreciate the convenience of having professional fund management combined with insurance benefits. This demographic values the simplicity of a managed investment that aligns with their risk tolerance and financial goals without requiring constant oversight.

Philanthropically Inclined Individuals

People looking to leave a portion of their estate to charitable organizations may find segregated funds useful for specifying beneficiaries and ensuring their philanthropic goals are met efficiently and privately.

Get in touch

Talk to an advisor who can understand your situation, answer your questions and help you build an insurance plan appropriate for you and your family.

Frequently asked questions

Answers to key questions about Segregated Funds

How do segregated funds differ from mutual funds?

Unlike mutual funds, segregated funds provide a guarantee to protect a portion of your investment (e.g., 75% or 100% of your initial investment) at maturity or on death, and they often include estate planning benefits like bypassing probate.

What guarantees do segregated funds offer?

Segregated funds typically offer Maturity and Death Benefit Guarantees, ensuring you or your beneficiaries receive a minimum percentage of your initial investment regardless of market performance.

Are segregated funds protected from creditors?

In many jurisdictions, segregated funds offer creditor protection under certain conditions, making them an attractive option for business owners and professionals seeking to protect their assets.

The legal structure of segregated funds as insurance products underpins this creditor protection. Governed by insurance legislation, these funds allow policyholders to designate beneficiaries directly, ensuring assets bypass the policyholder's estate upon death and go straight to the beneficiaries, thereby generally shielding these assets from creditors.

Can I name beneficiaries in a segregated fund?

Yes, segregated funds allow you to name beneficiaries directly, enabling the investment to bypass probate and be transferred quickly and privately upon your death.

How do resets work in segregated funds?

Resets allow you to lock in gains, adjusting the guaranteed amount to a higher value if the fund's market value increases, which can protect your investment from future market declines.

What are the fees associated with segregated funds?

Segregated funds typically have higher fees than other investment funds due to the insurance features they offer, including management fees and insurance costs related to the guarantees and estate planning benefits.

Still have questions?

Please contact our office and we'll be happy to address any questions you may have.