Segregated Funds

Grow your moneyProvided through Armstrong & Quaile Associates.

Segregated funds are an insurance product sold only by life insurance companies to Canadians. Segregated funds offer a limited guarantee that protects a portion (typically between 75-100%) of the money you invested. Upon your death, non-registered segregated funds are passed to the beneficiary without probate fees. In registered plans there could be probate depending on the value of the assets.

While segregated funds are similar to mutual funds in that you have many of the same investment choices (bond funds, equity funds, and so on) they differ in a few areas:

  • Maturity date: segregated funds have a maturity date. Provided you hold the segregated fund to that date, you will be guaranteed a certain amount of your money back. The amount of the guarantee typically ranges from 75-100% of the amount invested and may have a reset provision. Long-term investors often find segregated funds to be a better choice than equity mutual funds.
  • Creditor protection: segregated funds are protected from your creditors unlike other non-registered investments.┬áThis can be significant to small business owners and investors nearing retirement.

Note these differences in terms of creditor protection: all RRSPs and RRIFs are creditor protected, GICs and bank products are not creditor protected.

If you are not an experienced investor, we suggest you get some advice from Jacqui McFarlane as to whether or not segregated funds are a good investment for you.