Segregated Funds

What is Segregated Fund?

A Segregated funds is an insurance investment product that functions similar to a mutual fund. The difference between mutual funds and segregated funds is they offer guarantees such as maturity and death benefits. The management expense ratio is usually higher than that of a mutual fund because of these guarantees. Segregated funds investor may qualify for RESP, TFSA, RDSP and RRSP. 

Benefits

Potential Creditor Protections

Diversity in Portfolio

Privacy

Guaranteed Savings Protection

Pros

  • The principal investment is guaranteed after maturity
  • Death Benefit is Guaranteed
  • Creditor Protection for self-employed business owners

Cons

  • Higher Fees
  • Money is Locked-in
  • Early Withdrawal Penalties

Segregated funds are market-based investments similarly like mutual funds, where large sums of money from various investors are invested in securities with financial goals. Segregated funds gives you control on how you want benefits to be paid out such as an annuity payout or lump sum.

Source: Canadalife, Investopedia, RBC Insurance

Important disclosures:

The articles posted on 3i Financial are not intended to provide specific advice or recommendations for any individual and for general information only. All contents and information are believed to be from verified sources; 3i Financial makes no representation as to its completeness or accuracy.

Contact a 3i Financial Group Advisor today to learn more.

Segregated Funds

What is Segregated Funds?

Segregated funds are insurance investment products that are similar to mutual funds; however, segregated funds must be issued in conjunction with a life insurance contract. Segregated funds investor may qualify for RESP, TFSA, RDSP and RRSP. 

IVIC’s (Individual Variable Insurance Contracts)

IVIC’s are deferred annuity contracts between the policy owner and the insurance company.  The policy owner makes deposits and the insurance company then invests the money in segregated funds.

Some Benefits Includes:

  • Guaranteed maturity values from 75-100% of your principal after 10 years.
  • Some segregated fund contracts also offer income guarantees.
  • Segregated funds investment may also be protected from creditors.
  • Provide a broad range of investment options similar to mutual funds.
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