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Segregated Funds

For the uninitiated, Segregated Funds are an investment product with an insurance component. They are very similar to mutual funds and can be aggressive or conservative dependent on the client’s risk tolerance. However they do come with a guarantee usually 75% of capital or in some cases 100% of capital.

Another valuable benefit is that Segregated Funds are creditor proof. A third point is that in the good investment years the value can be reset which then increases the guarantees.

One of the biggest fears of our aging population is that of running out of money before running out of life. The insurance industry has now addressed this concern by developing Segregated Funds with a Guaranteed Minimum Withdrawal Benefit (GMWB). What this means is that no matter how long you live you will still get a guaranteed amount per year. In the years when there is a good rate of return you will receive more money but you will never receive less than the guaranteed amount. Since they are Segregated Funds all the other benefits apply as well.

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