Segregated Funds

Combine investment growth potential with valuable guarantees, potential creditor protection and estate planning advantages.

Investment Growth with Added Protection and Peace of Mind

Segregated Funds are investment products offered by life insurance companies that combine the growth potential of professionally managed investments with valuable insurance benefits.

Similar to mutual funds, segregated funds invest in diversified portfolios of stocks, bonds and other securities. However, as insurance contracts, they may offer additional advantages, including maturity and death benefit guarantees, potential creditor protection and estate planning benefits.

These features can make segregated funds worth considering for investors seeking investment opportunities alongside additional financial and estate protection.

Key Benefits of Segregated Funds

Segregated funds combine investment opportunities with insurance features designed to support different financial objectives, retirement plans and estate planning needs.

Investment Growth Potential

Access professionally managed investment portfolios suited to different financial objectives and risk tolerances.

Maturity Guarantee

Eligible contracts may guarantee 75% of eligible contributions at the maturity date, subject to contract conditions.

Death Benefit Guarantee

Eligible contracts may provide a 100% death benefit guarantee based on the applicable guaranteed amount and contract terms.

Potential Creditor Protection

Certain contracts may qualify for creditor protection, depending on beneficiary designations and applicable legislation.

Estate Planning Advantages

Direct beneficiary designations may allow proceeds to bypass the estate and probate process, potentially reducing delays and estate administration costs.

Flexible Investment Choices

Choose from available investment portfolios based on your financial goals, investment horizon and risk tolerance.

How Do Segregated Fund Guarantees Work?

Contractual guarantees can provide an additional layer of protection, although the applicable percentages, dates and conditions vary by product.

Maturity Guarantee

Some segregated fund contracts guarantee a specified percentage of eligible contributions at a defined maturity date, generally after a minimum holding period.

If the contract’s market value is below the guaranteed amount at maturity, the insurer may pay the difference according to the contract terms.

Death Benefit Guarantee

A death benefit guarantee may protect a specified percentage of eligible contributions if the insured person dies while the contract is in force.

The amount payable depends on the contract’s guarantee, investment value, applicable conditions and beneficiary arrangements.

Guarantee Reset Feature

Certain contracts offer reset features that may lock in an increase in investment value for maturity or death benefit guarantee purposes.

Resets may affect the maturity date, fees or other contract conditions, so the available options should be reviewed carefully.

Guarantees are provided by the issuing insurance company and are subject to contract terms, fees, eligibility requirements and the insurer’s ability to meet its obligations. Withdrawals may reduce guaranteed values.

Estate Planning and Beneficiary Protection

Segregated funds allow beneficiary designations where permitted by the contract and applicable law. This may enable proceeds to be paid directly to designated beneficiaries rather than through the estate.

Depending on the circumstances, direct payment may help simplify the distribution of assets, reduce probate-related delays and provide greater privacy than assets distributed through a will.

Probate requirements and fees vary by province and estate circumstances. Beneficiary designations do not automatically eliminate every estate expense, tax liability or legal obligation.

Potential Creditor Protection

Segregated funds may offer creditor protection when the relevant legal requirements are met. This feature may be particularly valuable for business owners and self-employed professionals looking to protect certain financial assets.

The availability and extent of protection depend on applicable provincial and federal legislation, beneficiary relationships, contract details and individual circumstances. Creditor protection is not guaranteed in every situation.

Registered and Non-Registered Investment Options

Segregated funds may be available through different registered and non-registered investment arrangements, depending on the product and insurer.

Registered Retirement Savings Plans (RRSPs)

Build retirement savings with tax-deferred investment growth within an eligible registered plan.

Tax-Free Savings Accounts (TFSAs)

Access eligible investment options within a TFSA, where supported by the provider and account arrangement.

Registered Retirement Income Funds (RRIFs)

Hold eligible investments while drawing retirement income according to applicable RRIF withdrawal requirements.

Registered Education Savings Plans (RESPs)

Explore eligible segregated fund options for education savings where supported by the product and plan.

Non-Registered Investment Accounts

Consider investment options outside registered plans, subject to the contract’s availability and tax implications.

Explore Segregated Fund Investment Solutions

InsureBizz offers segregated fund solutions from leading Canadian life insurance companies, helping individuals evaluate investment opportunities, insurance guarantees and estate planning benefits.

Contact us to discuss your financial goals and explore segregated fund options suited to your investment needs and long-term plans.

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