Segregated Funds
Segregated funds are investments made up of equities, bonds, or money market assets, similar to mutual funds but with guarantees that help protect against market losses. Their assets are kept separate from the company’s general funds to ensure this protection.
Capital Protection
Segregated funds include an insurance feature that helps protect your investments from market declines, allowing you to choose a guarantee of 75% or 100% of your invested amount at maturity or in the event of death, even if the market value falls below that level. This means your capital is safeguarded against significant market downturns, such as recessions or economic crises, providing added financial security.
Investment Gain Protection
Resets allow you to lock in investment gains during strong market performance, helping protect your portfolio during downturns. Depending on the fund, you can reset your guarantee periodically so that it reflects the growth of your investments. This means that, regardless of market fluctuations, the guaranteed value of your investment can increase but not decrease.
Avoiding Probate Fees
A segregated fund contract lets you name a beneficiary, allowing your investment to bypass the estate settlement process and potentially avoid probate fees, which vary by province. As a result, funds are typically paid to beneficiaries quickly—often within two weeks.
Easy & Quick Tax Returns
Tax reporting for segregated funds is simplified, as all calculations are provided on the T3 slip (and Relevé 16 in Quebec), making filing faster and easier while potentially reducing accounting costs. Additionally, losses can be claimed at year-end to help lower your taxable income, and some segregated funds may offer the option of a lifetime guaranteed income.
Death Quick Settlement
In the event of death, the value of segregated funds is paid quickly to beneficiaries, helping ease the financial burden on loved ones. By bypassing the standard estate process, payments are made efficiently, so beneficiaries receive the funds without lengthy delays.
Protection against Creditors
Segregated funds can protect your investments from creditors when a beneficiary is designated, though some conditions apply. This feature helps safeguard assets in cases of bankruptcy or legal disputes, making it especially useful for managing financial risk.