Personal Retirement & Savings:
Similar to mutual funds, Segregated Funds are composed of a large pool of money that is invested in stocks, bonds, or other securities, all with the objective of growing the value of the entire pool. Segregated Funds do differ from mutual funds in that they are structured as insurance contracts, providing some benefits that mutual funds do not offer.
Segregated Funds are only offered by life insurance companies. These funds are kept separate from the general assets of the life insurance company so only investors in the funds have access to their value. Usually, a Segregated Fund contract provides a regular income to their benefactor beginning at a specified future date.
Some unique features of Segregated Funds are:
- Guaranteed investment protection – Segregated Funds offer 75-100% of contributions (minus withdrawals) when the contract matures or upon death
- Potential creditor protection – Segregated Funds are typically protected against seizure by creditors, should the beneficiary you’ve named qualify. This offers business owners and professionals protection against an unexpected lawsuit or bankruptcy
- Right to name beneficiary – The nature of Segregated Funds allows the insured person to name a beneficiary for the fund should anything happen to the insured
Why should I invest in Segregated Funds?
In investing in Segregated Funds, you’re combining the growth potential of investment funds with the guarantees and benefits of a contract with a life insurance company, such as death benefits, tax and estate planning advantages, guaranteed income benefits, and more.
Are there any fees?
There are some fees associated with managing funds and your transactions. These fees are referred to as the MER (Management and Operating Expenses Ratio), which is a percentage of your money that goes toward the annual expenses of the fund.
What happens when I want to access my money?
Redeeming a Segregated Fund is easy, as you can redeem or surrender your contract for cash either in full or in part at any time. If the contract is redeemed at maturity or upon death of the insured person, you or your beneficiary will receive either the amount guaranteed by the contract or the market value of the investment minus any withdrawal fees. The amount paid out will not be less than the contractually guaranteed amount — in fact, it could be more, depending on how well your investment has done.
Segregated Funds: offered by Sun Life Financial Distributors (Canada) Inc.