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Segregated Funds

Life insurance companies can sell investment fund insurance products, called individual variable insurance contracts or segregated fund policies. This investment and insurance product deserves attention when both short-term and long-term investing is considered.


On the one hand, segregated fund policies are investment vehicle that pooled investments of many people, like mutual funds. When investor buys segregated fund policy, he/she places his/her capital on deposit in a life insurance contract, and then this money is invested in units of one or more of the “family” of segregated funds offered by the insurer. In turn, each of the segregated funds invests in a range of investments - a broader range than individual investor could buy on his/her own. The assets of these funds must be kept and managed separately (segregated) from the general assets of the life insurance company.


On the other hand, segregated fund policies are insurance contracts, therefore, they offer a variety of benefits that mutual funds do not have: maturity guarantee, death benefit guarantee, probate bypass opportunity, potential creditor protection, insurer insolvency protection.


As segregated funds have benefits mentioned above this kind of  investments may meet requirements of different investors:

  • Conservative investors - Even the most adverse investors can participate in the growth potential equity market while of the keeping in mind that their principal investment has a measure of protection.

  • Business Owners, Executives, Professionals - The personal assets of many business owners face exposure to potential creditors. Professionals may also be subject to personal liability.

  • Investors in Poor Health - Traditional life insurance may not be obtainable. Usually, segregated funds guarantee 100% of the investor's premiums upon death without asking any health related questions.

  • Retirement Savings and Income Options - Segregated fund guarantees may help to ensure that the investor's retirement savings will be there when it is needed.

To purchase units of segregated fund technically means to make a deposit or premium payment according to a contract that an investor must establish with insurer. Lump sum and periodic investment plans as low as $50 per month are available for some segregated funds. Each fund has a unit price that generally changes daily. Your invested money buys a certain number of units that is determined by the unit price on the day your purchase takes effect.


Depending on your risk tolerance, financial situation and investment goals, you can invest in segregated funds that vary a lot in terms of the safety of your money and potential return. There are some of them:


Money market funds invest in very safe, short-term investments such as government bonds and treasury bills. Because they are very safe, you can't expect to earn a lot.


Fixed income funds buy investments that pay a fixed rate of return. The products include bonds, debentures, mortgages, and corporate shares that make regular payments. They are riskier than money market funds and the price can go up and down. But they are still a pretty safe investment.


Growth or equity funds invest in a variety of stocks. Some funds invest more in the 'blue-chip' companies - larger companies that have a good track record. Other equity funds may invest in smaller, younger companies that look promising. Because they are designed to "grow" faster than money market or fixed income funds, you have to accept a bigger risk that you could lose some of your money.


Balanced funds invest in a mix of equities, fixed income, and money market. They try to balance the desire to see money grow against the risk of losing some of the money. Most of these funds will have a target split among the different types of investments, and they will stick pretty close to that split.


Specialty funds focus on investing in a certain part of the world (for example, Asia), or in a certain industry (for instance, high tech companies). They may focus on an "emerging market", like Eastern Europe. These funds sometimes have very high returns. At the same time, you have to accept that they are the most likely to lose money.


Commodity Funds the most speculative of funds, invest in such derivatives as stock options and futures. These funds are highly volatile and offer investors the highest potential for returns – with the highest element of risk.


Index funds will match the changes in a certain market, such as the Toronto Stock Exchange (TSX), or in a certain grouping of stocks. The value of the units in the fund will change, up or down, as the exchange index goes up or down. There are many index funds available. These funds may track a large number of stocks (such as all the companies listed on the TSX), or they may track a selection of companies. For example, the S&P/TSX60 tracks the 60 biggest companies on the TSX.




Registered Education Savings Plan

RESP: An affordable savings vehicle that can help parents to save money for their children’s post secondary education. Take advantage of :

Canada Education Savings Grant

Canada Learning Bond


Registered Retirement Savings Plan

RRSP: Your retirement program

Money invested in RRSP is tax deductible and can help you to purchase your first home or pay for your education.

Home Buyer‘s Plan

Lifelong Learning Plan

Spousal RRSP


Segregated Funds

Segregated funds: A wide choice of professionally managed invest-ment funds with the security of maturity and death guarantees as well as other benefits.

Segregated Fund Guarantees







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Revised: March 11, 2021