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.
Potential Creditor Protections
Diversity in Portfolio
Guaranteed Savings Protection
- The principal investment is guaranteed after maturity
- Death Benefit is Guaranteed
- Creditor Protection for self-employed business owners
- 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
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