Segregated funds and mutual funds often have many of the same benefits such as:

  • Both are managed by investment professionals.
  • You can generally redeem your investments and get your current market value at any time.
  • You can use them in your RRSP, RRIF, RESP, RDSP, TFSA or non-registered account.

So what’s the difference? Who offers these products?

  • Segregated funds: Life insurance companies
  • Mutual funds: Investment management firms and banks

Why is this important?

  • Since segregated funds are offered by life insurance companies, they are individual insurance contracts. Which means….
  • Maturity guarantees
  • Death benefit guarantees
  • Ability to bypass probate
  • Potential creditor protection
  • Resets
  • Mutual Funds do not have these features.

What are these features?

Maturity and death benefit guarantees mean the insurance company must guarantee at least 75%, and up to 100%, of the premium paid into the contract after 15 years (referred to “upon maturity”), or upon your death with no time restrictions.

Resets means you have the ability to reset the maturity and death benefit guarantee at a higher market value of the investment.

Bypass probate: since you name a beneficiary to receive the proceeds on your death, the proceeds are paid directly to your beneficiary which means it bypasses your estate and can avoid probate fees.

Potential creditor protection is available when you name a beneficiary within the family class, there are certain restrictions associated with this.

What are the fees?

  • Segregated funds: Typically slightly higher fees (MERS)
  • Mutual funds: Typically slightly lower fees

I can help you decide what makes sense for your financial situation.

Important information about mutual funds is found in the fund facts document. Please read this carefully before investing. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Mutual fund values are not guaranteed in any way, their values change frequently and past performance may not be repeated. Unit values and investment returns will fluctuate.

A description of the key features of the segregated fund policy is contained in the information folder.

Any amount that is allocated to a segregated fund is invested at the risk of the policy owner and may increase or decrease in value.