Segregated Funds

Segregated Funds

Take a mutual fund and wrap it in an insurance contract.  Segregated funds are provided not by mutual fund companies, but by insurance companies.

This can provide significant advantages.

A segregated fund is considered to be creditor proof.  In other words, creditors cannot attack segregated fund assets in the event of financial dispute or financial distress. This is most valuable to self-employed individuals or those in a position of authority where the prospect of a legal action against assets is a possibility.  A segregated fund may well protect those assets.

Because the segregated fund is an insurance contract a beneficiary can be appointed and on the death of the account holder the money will flow to the beneficiary within 7 to 10 days of death.  This bypasses probate therefore no probate fees are payable and confidentiality is maintained.

It can take a long time, sometimes many years, to wind up an estate. Distributions to the beneficiary may be delayed and money may not be available for final expenses and other associated costs.

The segregated fund also carries guarantees of which the most important is the Death Benefit Guarantee.  As mentioned above, the segregated fund is like a mutual fund in an insurance wrapper.  The value may well go up and down with the market but at the time of the account holders death the beneficiary will receive the HIGHER of the market value or the death benefit guarantee (which is the original amount invested, less any withdrawals).

All good reasons to consider segregated funds.