Segregated Funds

Are you a conservative investor who is tired of seeing the returns generated by GIC's reduced by inflation and taxes? Or are you a small business owner who wants to make sure your personal savings remain protected in the event of bankruptcy? Perhaps you are in poor health and want to make sure that your savings are there for your loved ones, should you pass on. In all of these cases, you could benefit from investing in Segregated funds.
What are they?
  Segregated funds (or "segregated funds") are basically the insurance industry's version of a mutual fund with a few twists. Both mutual and segregated funds are pooled investments where the investor deposits money with a professional money manager in return for units of the fund. However, there are a few key benefits to segregated funds that you can't get with their mutual fund counterparts.
  Segregated funds are technically insurance products, and therefore must offer insurance protection in the form of guarantees. There are two types of guarantees - a guarantee at maturity, and a guarantee at death. When you invest in a segregated fund, you get a maturity date (generally at least 10 years from the date of investment). On this date, you are entitled to the greater of the maturity value, which is 100% of your initial investment, or the actual market value of your fund. The guarantee at death provides the same benefit at the death of the annuitant, regardless of its period, if it occurs 10 years or 10 days after the initial investment.
  Every insurance company has different ways of calculating the guarantees. Most companies will also allow you to reset the guaranteed value if your investment performs well. It is important to make sure you know the details of your particular fund guarantees before investing.
Creditor Protection
  Unlike mutual funds, an investment in a seg. fund can also be shielded from creditors in the event of bankruptcy. This can be quite beneficial to small business owners. For the creditor protection to apply however, you must name a beneficiary who is a direct family member, and you must be able to prove that your investment in the segregated fund was not made solely for the purpose of shielding assets from creditors.
No Probate Fees
  Since a segregated fund is an insurance contract, you do no have to pay provincial probate fees which can be quite high depending on where you live. Your seg fund holdings will pass directly to your named beneficiaries instead of going to your estate.
Death Benefit and Maturity Guarantees:
  Segregated funds offer death benefit and maturity guarantees. The death benefit guarantee ensures that if the contract holder dies, a specific percentage of the principal of the investment – normally 100% - is payable to the named beneficiary.
  The maturity guarantee ensures that after a specific number of years – often 10 years – there is a guaranteed residual principal value – normally 75%.
Bypass Probate Fees:
  Segregated fund contracts have the ability to bypass probate. In the event of death of the contract holder, the proceeds pass directly to the named beneficiary, bypassing probate. This means that these assets are not subject to probate and estate administration fees, and the beneficiaries receive the proceeds without extended delays – and without costly fees.
To know more about the program give us a call at 416-283-8899 and one of our friendly customer service representatives will put you in contact with a authorized representative.