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Segregated Fund

Segregated Fund

 This type of investment is in fact a combination of several types of stocks that are selected and put together according to the type of investment of individuals and their goals, which in addition to diversity, reduce risk, can increase return on profit. People who need the benefits of investing with peace of mind should consider the Segregated Fund.

  In other words, the Segregated Fund, like the Mutual fund, is like a pool where the money and capital of different people are collected and through which Bond or Equity or in fact different shares of companies in various industries are bought.
 Most of the features of Mutual fund and Segregated Fund are almost the same, and only in some cases Segregated Fund is more attractive and a more suitable option.

They are also professionally managed like the Mutual Fund. They have different interests and their movements and changes are recorded and examined in the official media.

 General features in Segregated Fund:

  • The original money is under warranty until the maturity date of the contract, which is usually 10 years, and is also between 75% and 100% in the event of the death of the account holder.
  • Capital is safe from creditors, even the government and banks. (Creditor Protection). This capital does not enter the State process, it is so-called Buy Pass and goes directly to the heirs (Beneficiary) and is not entitled to the probate fee.
  • Under the option called Reset, it is generally possible to add money growth to the initial capital each year and cover the entire new amount under the insurance guarantee.

Segregated Funds, like Mutual fund, are managed by Money Managers (financial and investment specialists) and therefore you have to pay MER or Management Expense Ratio to use their services.
There are two warranty models in this type of product:

  • Death Benefit Guarantee
  • Maturity Guarantee

 In the Death benefit guarantee option, the guarantee amount is usually 2% or 4%. That is, if a person has $ 120,000 in Segregated Fund and 100% has Death Benefit Guarantee and dies in the meantime, while the initial investment amount has reached $ 90,000 due to market fluctuations, the heirs of the deceased whose name is in the contract It is mentioned that they will receive the same initial amount, which will be $ 120,000, because the product that was purchased had a 100% guarantee, and vice versa, if during this period the amount of personal capital, for example, $ 130,000, the heirs They will receive $ 130,000, which, of course, will be subject to Capital Gains Tax, in contrast to the contract amount, which in this example is $ 10,000.


 Who is eligible to invest in the Segregated Fund?

  • People who have a business and may face bankruptcy or certain complaints. If these people invest in Segregated fund, they have a better chance to protect their property and assets, because in this investment model, the possibility of using the Creditor Protection option is active and people’s capital will be safe from the creditors.
  • Investors who are older. Segregated fund allows older investors to access the stock market while retaining their original capital, even if the stock dies at the same time as the market falls and the value of the stock does not fall, the initial capital value does not fall.

In this case, the transfer of the principal and its benefits to the beneficiary (heirs) is guaranteed, and this is an imaginary relief for older people, because even if the will is not available to the heirs, the transfer is based on the terms of the contract. Applicable to the names listed as Beneficiary.

Meanwhile, in case of increasing the value of capital with appropriate interest, the total amount of capital and its added value will be kept at the highest level according to the individual agreement, which is called Reset, which investment in banks and mutual funds do not have this advantage.

 Advantages of Segregated Fund:

Guarantee of principal at the end of the investment period, protection of property and assets in this account in case of bankruptcy, transfer of capital to heirs at no government expense, guarantee of principal in case of investor death and market decline are the main advantages of segregated funds.


Comparison and differences of investments in Segregated Fund and: Mutual Fund

  • In Mutual Fund, keeping the original money is not guaranteed, but in Segregated Fund, depending on the type of fund, between 75-100% of the original money is guaranteed at a certain maturity called Maturity Date.
  • After the death of the person, his capital in the Mutual Fund enters the State process, while the Probate Fee must be paid and also the share of creditors such as the government, the bank, etc. must be settled. In fact, the amount of debts and loans will be deducted from the individual assets and the rest will be paid to the Beneficiary or heir, while in the Segregated Fund, the money goes directly to the Beneficiaries and is safe from creditors and there is no need to pay Probate Fee.
 Due to the great variety of conditions and facilities in preparing and maintaining segregated funds accounts, it is recommended that you consult with one of our insurance advisors before making any decision. Our expert team at Forever Insure is always ready to provide the right consultation to you and thus help you make the right choice.
For more information, feel free to contact us at Forever Insure for a free consultation.
For more information, please contact one of our advisors at Forever Insure for a free consultation.
  • 647-518-1390
  • info@foreverinsure.ca

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