Segregated fund policies and you
Like a mutual fund, a segregated fund is a pool of money invested in a variety of securities through professional fund managers. However, unlike mutual funds, segregated funds are only available through an insurance company. Since banks do most of the advertising for investments most people don’t even know there is another option for them in segregated funds.
Benefits and options
Because segregated fund policies are life insurance contracts, they have some special benefits and protection features.
Maturity and death benefit guarantees – Segregated fund policies protect part or all of your capital investment. They guarantee the value of the policy on its maturity date, as well as the value received on the death of the last insured person.
Lifetime income benefit option – On some policies, you can choose to receive a guaranteed income for life. So long as you don’t withdraw more than the guaranteed annual amount, your lifetime income amount will not decrease.
Potential for creditor protection – Because segregated funds are part of an insurance policy, your policy may be protected from creditors.
No trustee fees – If you choose a registered segregated fund policy, there are no trustee fees.
Estate bypass – If you designate beneficiaries, the proceeds from your segregated fund policy flow to them directly, generally bypassing the estate and potential probate fees. (Probate fees are a tax where the Estate is taxed $14 for ever $1000 in the province of BC.)
Privacy – You can keep the details of your segregated fund policy private. If an estate goes through probate, the details are available to the public. However, with segregated fund policies, the money passes privately to any named beneficiaries.
Are segregated fund policies right for you?
Segregated fund policies could be right for you if:
– You’re attracted to some level of guarantee for the money you invest
– You’re self-employed or a professional, such as an engineer or doctor, who has high potential creditor risk
– You’re an affluent investor looking to preserve your wealth
For a description of specific features you must see the policy’s information folder. Any amount allocated to a segregated fund is invested at the risk of the policy owner and may increase or decrease in value.
I can help you find the right segregated funds to suit your risk tolerance, investment knowledge, the time you have to invest and your investment objective.