Segregated
Funds; What Are They?
Author:
Ivon T. Hughes
Segregated
funds are investment funds that you hold within an insurance contract. The
term "segregated" refers to the fact that your investment is separated
from the general assets of the insurance company. Segregated funds are an
insurance contract that provide you investment management plus a guarantee
of the return up to 100% of your capital, at death or maturity.
Professional
Management
Segregated funds, like mutual funds, are run by professional money managers
who have access to economic data, company research reports and technology
that may not generally be available.
Diversification
Segregated funds like mutual funds provide you with access to diversified
investment portfolios. Diversification- or spreading your assets among a
variety of different investments, is an investment strategy designed to lower
a portfolio's overall risk while enhancing returns over time.
Maturity
and Death Guarantees
Depending on the contract, an investor is guaranteed up to 100% of the total
amount of investment less withdrawals at death or maturity.
Potential
Creditor Protection
This feature is of primary concern for business owners or professionals as
their assets may be exposed to creditors. You may be able to achieve potential
creditor protection by naming a "preferred or "irrevocable"
beneficiary.
Estate Planning
Proceeds of your contracts are paid directly to your beneficiary, avoiding
the time and expense of probate. By helping your heirs bypass probate, investing
in segregated funds ensure that your personal decisions remain personal.
Consumer
Segregated funds are eligible for coverage by the Canadian Life and Health
Insurance Compensation Corporation (Compcorp). This plan protects Canadian
policyholders, within limits, from loss of benefits in the event of the insolvency
of the company.
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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: [email protected]
Web: http://www.trustco.ca
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