Segregated Funds: The ideal option for certain specialized financial planning strategies
Segregated funds can play an integral role as part of a comprehensive financial plan. Classified as insurance products, segregated funds (sometimes referred to as Guaranteed Investment Funds or GIFs) offer several unique characteristics, such as:
- Ability to lock in gains Principal guarantees Death benefit guarantees, and
- Potential creditor protection
These characteristics make segregated funds an ideal option under certain circumstances. HollisWealth Insurance Agency Ltd. can help you evaluate the potential benefits of adding segregated funds to your portfolio. HollisWealth Insurance Agency Ltd. offers a variety of segregated funds from Canada's leading insurance companies.
Talk to Richard today for more information.
What is a segregated fund?
A segregated fund combines the performance potential of a mutual fund with the security of an insurance product. Like a mutual fund, a segregated fund is a collection of stocks, bonds and other investments that provide you with an opportunity to "grow" your investment capital. However, a mutual fund is a security, while a segregated fund is an insurance product.
The segregated fund advantage
Bypass Probate Fee's
Probate bypass: Probate is a legal process that certifies a will and transfers assets to heirs. It can be time consuming and expensive, as most provincial governments charge a probate fee.
- Segregated funds don’t flow into the estate if you have a designated beneficiary in the contract. This means they can bypass the probate process and the money goes directly to the beneficiaries, avoiding costly fees and delays
- This may also result in bypassing legal and accounting fees associated with probate, and keep even more money for beneficiaries
Maturity Benefit Guarantee
Guarantees that when your series matures, you are guaranteed to receive all (100%) or a portion (75%) of your invesment back, depending on the options you choose
Death Benefit Guarantee
Guarantees that on death, your beneficiaries will receive all (100%) or part (75%) of the deposits, reduced proportionally for withdrawals – even if there are market downturns.
Privacy: Once a will is probated, it becomes a publicly available record in the province of residence.
- Segregated funds with a named beneficiary don’t form part of an estate
- Beneficiaries can receive their inheritance quickly and privately
Potential for creditor protection
If you go bankrupt or are exposed to a lawsuit, having a preferred class beneficiary can protect the money held in a segregated fund from being seized.
- If you are a professional or business owner, we suggest that you explore this further
- You should consult a legal advisor since there are circumstances where the protection may not apply (such as existing legal issues you may have)