Segregated Funds

Segregated funds (also known as seg funds) are investment products that are offered exclusively through insurance companies. They are similar to mutual funds but come with guarantees and protections that make them unique—especially appealing for those who want growth potential with some safety.

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Key Features of Segregated Funds:

1. Investment + Insurance Hybrid
   •    Like mutual funds, they’re invested in stocks, bonds, etc.
   •    But they include insurance guarantees on your initial investment.

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2. Maturity and Death Benefit Guarantees
   •    You can get 75% to 100% of your original investment guaranteed at maturity (usually after 10 years) or upon death.

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3. Creditor Protection
   •    If you name a family beneficiary, segregated funds can be protected from creditors—great for business owners and professionals.

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4. Bypass Probate
   •    Payouts go directly to named beneficiaries, avoiding estate delays and fees.

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5. Reset Option
   •    Some seg funds let you “lock in” gains and reset your guaranteed value to a higher amount.​

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Pros:
   •    Principal guarantees (on death or maturity)
   •    Potential creditor protection
   •    Estate planning benefits (bypass probate)
   •    Tax deferral and efficient transfers

Cons:
   •    Typically higher fees than mutual funds
   •    Minimum holding period for guarantees (often 10 years)​

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Best For:
   •    Conservative investors, business owners, or those seeking protection + investment.