Segregated funds

Yes. You can generally withdraw at any time at the current market value. Keep in mind that withdrawals reduce your guarantees, and the maturity guarantee only applies if you hold the contract until the maturity date.

Inside a registered plan (an RRSP, RRIF or TFSA), the normal rules for that plan apply. In a non-registered contract, income and capital gains earned by the fund are allocated to you each year and reported on a tax slip, as with a mutual fund.

Unlike mutual funds, segregated funds can also allocate capital losses to you, which may be used to offset gains. If a guarantee tops up your value at maturity or on death, the top-up is generally taxable. We recommend confirming the tax implications with your accountant.

A segregated fund invests much like a mutual fund: your money goes into professionally managed funds of stocks, bonds or both, and its value rises and falls with markets. The difference is the wrapper. A segregated fund is an insurance contract, governed by insurance legislation rather than securities legislation, offered only by life insurance companies and sold only by licensed life insurance advisors.

That contract adds a maturity guarantee and a death benefit guarantee, and lets you name beneficiaries who are paid directly, outside your estate. The protection costs more: fees are usually higher than for a comparable mutual fund. Segregated funds can also allocate capital losses to you, which mutual funds can’t.

Yes. You can typically name several primary beneficiaries with set percentages, as well as contingent beneficiaries who would receive the benefit if a primary beneficiary has died.

You receive the greater of the market value or the guaranteed amount. Depending on the contract, you can then withdraw the money, renew into a new guarantee period, or move it elsewhere.