Segregated funds are the common name for an independent variable
insurance contract. They are very similar to mutual funds accept they are only
offered through insurance providers, offer a guaranteed death benefit amount,
and protection from creditors.
Segregated funds are long term investments with a minimum
investment horizon of ten year. Normally the death benefit can be adjusted
twice to lock in gains during the contracts life. This is seen by some
investors as a good way to partake in the stock market while mitigating the
risk.
As with all insurance contracts that have a cash value protection
from creditors is guaranteed by law. People who carry a the potential to be
sued, like Doctors, Lawyers, accountants, may be interested in this feature as
part of sound risk planning.
As mentioned Segregated funds are like mutual funds. Often they
are a clone of the holding in a mutual fund but charge a higher management
expense fee for the guarantees. Segregated funds are also eligible for RRSP,
TFSA, and RESP accounts.
Think that segregated funds might be good for your financial plan?
Talk to your financial advisor. If you don’t have one let me know, I think I know
someone who can help
