Investment Products: Segregated Funds

Segregated funds are very similar to mutual funds in many ways:

• They offer professional money management
• Diversification
• Liquidity- you can purchase or redeem units at any time
• Choice- there is a wide variety of funds with different investment objectives

In addition, segregated funds are offered by insurance companies only and:

• These assets are kept and managed separately from the general assets of a life insurance company
• Technically speaking, segregated funds are a "deferred annuity" meaning there is a promise by the insurance company to pay an income at some future date
• Segregated funds are insurance based products, and therefore offer guarantees and other benefits not available with mutual funds

Guarantees

At maturity (10 years) investors are guaranteed to receive at least 75% (with some companies 100%) of their initial investment (less withdrawals) at maturity regardless of market conditions

In the event of death, your beneficiaries will receive 75% (with some companies 100%) of your initial investment (less withdrawals) regardless of market conditions

Other Benefits

• No probate fees- at death, the funds are paid directly to the named beneficiary and totally bypass the estate. This helps avoid probate fees and any delays. (time and money). For this reason, segregated funds provide valuable estate benefit benefits
• Potential creditor protection. Investments held with a life insurance company offer a certain level of creditor protection when a preferred beneficiary is named. This protection applies to both registered and non-registered funds
• COMPCORP Similar to CDIC insurance, COMPCORP is the insurance company version that ensures that the Maturity and Death Benefit are honoured (within certain limits)

For this reason, segregated funds provide valuable estate benefits:

• People who are retired or nearing retirement
• Business owners and professionals who have higher personal exposure to liability and may wish to protect their assets
• Estate planning- For those that wish to maximize the value of their estates, the death benefit guarantees and lack of probate fees may be particularly attractive
• Conservative investors- For those who want to have the potential for growth, while securing their principal in volatile markets

Although we have access to segregated funds from almost every insurance company in Canada, we usually recommend the funds from Manulife Financial.

For more information about Manulife’s Insured Portfolio Funds, visit www.insuredportfoliofunds.com