Key advantages of segregated funds

A segregated fund is an investment product offered by insurance companies that combines investment growth potential with insurance guarantees. Segregated funds are only offered by life insurance companies.

The maturity guarantee ensures that at the end of a specified term (often 15 years), the investor will receive at least 75%–100% of the original investment, or the higher market value.

Reset options allow investors to lock in market gains by increasing the guaranteed amount to the current higher market value.

Reset options allow investors to lock in market gains by increasing the guaranteed amount to the current higher market value.

If a family member (such as a spouse, child, or parent) is named as beneficiary, the investment is protected from creditors in certain circumstances.

Fees are higher because segregated funds include insurance guarantees and additional benefits, which increase administrative and insurance costs.

They are taxed similarly to mutual funds. Investors may pay tax on interest, dividends, and capital gains distributed by the fund. Gains are taxable when withdrawn in non-registered accounts.

They allow direct transfer to a named beneficiary without going through probate, potentially saving time, legal fees, and maintaining privacy.