What are segregated funds?

A pool of investments held by the life insurance company and managed separately (i.e. segregated) from its other investments. If you buy a variable insurance contract, sometimes called a segregated fund policy, the value of your policy varies according to the market value of the assets in the segregated funds.

How do segregated funds work?

Unlike mutual funds, segregated funds are structured as an insurance product. Investing in segregated funds provides many insurance backed benefits such as:

  • Maturity guarantee: Upon maturity, 75% to 100% of your investment is guaranteed back to you.
  • Guaranteed death benefit: Your beneficiary is paid a guaranteed amount of money upon your death, even if the value of the asset, at the time of your death, is less than the guaranteed amount.
  • Creditor protection: Your investment may be protected from creditors.