SEGREGATED FUNDS; WHAT ARE THEY?

Segregated funds are investment funds that you hold within an insurance contract. The term "segregated" refers to the fact that your investment is separated from the general assets of the insurance company. Segregated funds are an insurance contract that provide you investment management plus a guarantee of the return up to 100% of your capital, at death or maturity.

Professional Management
Segregated funds, like mutual funds, are run by professional money managers who have access to economic data, company research reports and technology that may not generally be available.

Diversification
Segregated funds like mutual funds provide you with access to diversified investment portfolios. Diversification- or spreading your assets among a variety of different investments, is an investment strategy designed to lower a portfolio's overall risk while enhancing returns over time.

Maturity and Death Guarantees
Depending on the contract, an investor is guaranteed up to 100% of the total amount of investment less withdrawals at death or maturity.

Potential Creditor Protection
This feature is of primary concern for business owners or professionals as their assets may be exposed to creditors. You may be able to achieve potential creditor protection by naming a "preferred or "irrevocable" beneficiary.

Estate Planning
Proceeds of your contracts are paid directly to your beneficiary, avoiding the time and expense of probate. By helping your heirs bypass probate, investing in segregated funds ensure that your personal decisions remain personal.

Consumer
Segregated funds are eligible for coverage by the Canadian Life and Health Insurance Compensation Corporation (Compcorp). This plan protects Canadian policyholders, within limits, from loss of benefits in the event of the insolvency of the company.