Segregated Funds

Segregated funds, also known as seg funds, are investment products that offer a combination of investment growth and insurance protection. They are similar to mutual funds, but with the added benefit of guarantees and creditor protection. In this blog post, we will explore why segregated funds are good and the benefits they offer.

Guaranteed Death Benefit – One of the primary benefits of segregated funds is the guaranteed death benefit. This means that if the policyholder passes away, their beneficiaries will receive a minimum guaranteed payout, regardless of market performance. This provides peace of mind for the policyholder and their loved ones, knowing that their investment will not be lost.

Creditor Protection – Segregated funds offer protection against creditors in the event of bankruptcy or other financial difficulties. This means that if the policyholder faces financial challenges, their investments in segregated funds are protected from creditors. This is an important feature for small business owners, professionals, and other high net worth individuals who may be at a higher risk of facing legal or financial challenges.

Potential for Investment Growth – Like mutual funds, segregated funds offer the potential for investment growth. They invest in a diversified portfolio of securities such as stocks, bonds, and other assets, with the goal of maximizing returns while minimizing risk. This allows investors to benefit from the expertise of professional fund managers, who can help navigate the ups and downs of the market.

Capital Guarantee – Seg funds offer a capital guarantee, which means that a portion of the investment is protected from market fluctuations. This means that even if the market performs poorly, the policyholder is guaranteed to receive a minimum percentage of their investment back at maturity. This provides peace of mind for investors who are concerned about market volatility.

Estate Planning – Seg funds can be an effective tool for estate planning. They offer the ability to name beneficiaries directly on the policy, which means that the proceeds will bypass probate and be paid directly to the designated beneficiaries. This can help avoid delays and legal fees associated with the probate process, and ensure that the policyholder’s wishes are carried out.

In conclusion, segregated funds offer a unique combination of investment growth and insurance protection. They offer a guaranteed death benefit, creditor protection, potential for investment growth, capital guarantees, and estate planning benefits. However, it’s important to note that segregated funds come with fees and charges that can be higher than those of other investment options, and the insurance protection is subject to certain limitations and exclusions. As with any investment, investors should do their due diligence and consider their investment objectives, risk tolerance, and financial situation before investing in segregated funds. It’s also recommended to seek the advice of a financial advisor who can help assess the suitability of segregated funds for individual investment needs.

Click Here for more information.

Click Here for information form the Canada Revenue Agency.

Posted in