The Benefits of Segregated Funds
Offer your clients the best of both worlds: growth and security.

The benefits of segregated funds provide you with a valuable relationship-building opportunity by helping you offer your clients the right solution for their needs. Segregated funds are insurance products, also known as Guaranteed Investment Funds (GIFs), that combine the growth potential of mutual funds with the security of a principal guarantee. While segregated funds share many features of a mutual fund, they offer additional unique features that may benefit your clients.

Maturity and death benefit guarantees.
All segregated fund contracts include a maturity and a death benefit guarantee. The maturity guarantee protects a percentage of the value of an investment (typically 75%) at the end of a specified term (typically at least 10 years). Your clients can invest knowing that they will receive at least the guaranteed amount upon maturity, less withdrawals and fees. The death benefit guarantee protects a specific percentage of the value of an investment upon the death of the person whose life is insured under the contract (known as the annuitant1). Even in down markets, the original investment (less withdrawals and fees) will be passed on to the named beneficiaries in the event of the annuitant’s death.

Resets.
When the market value is in excess of the book value, segregated funds with a reset option allow your clients to benefit from their investment gains by resetting their guaranteed value. Generally, when the reset feature is used, the maturity date will also be reset. If a reset occurs two years into a standard 10-year segregated fund contract, for example, the maturity date would be moved forward by two years. Resets allow clients’ guaranteed values to keep pace with the market value of their investment.

Ability to bypass probate.
If the annuitant dies, the proceeds of an insurance contract pass directly to a named beneficiary without going through probate. As an insurance contract rather than a conventional investment, segregated funds have this special feature. A benefit for your clients is that segregated funds assets are not impacted by the cost of probate. Since a probated will is a public document, bypassing probate ensures that personal information, such as how much money was passed on and to whom, remains private. Furthermore, the named beneficiary will receive the proceeds without extended delays – a considerable benefit during a time of need.

Potential for creditor protection.
It is important to protect your clients in case of a bankruptcy, especially for business owners and self-employed professionals. Since segregated funds are life insurance contracts, governed by insurance legislation, they offer the possibility of creditor protectionthat other investments may not.