SEGREGATED FUNDS

Segregated funds are an investment that is exclusively created by life insurance companies. Segregated funds are offered through an insurance contract and they come with guarantees that protect their value. They are a suitable investment for those who want investment income or growth through exposure to the financial markets and, yet, want to limit risk.

Factors to consider when investing in Segregated Funds:

  • Guarantees;
  • Growth secured by reset;
  • Funding flexibility through ongoing deposits;
  • Guaranteed income;
  • Professional management;
  • Diversification;
  • Tax benefit of allocations;
  • Switches between funds;
  • Ability to withdraw (redemption);
  • Exemption from probate fees;
  • Investor protection;
  • Protection from creditors;
  • Absence of medical underwriting;
  • Right of rescission.

The types of mutual funds available parallel the types of segregated funds available.

The Canadian Investment Funds Standards Committee (CIFSC) categorizes funds into five broad asset classes:

1 Cash including funds in the money market;

2 Fixed-income;

3 Equity;

4 Commodity;

5 Other.

Funds are further assigned a geographical classification or identified as a developed or emerging market.

Funds Types – Money market funds, Bond funds, Equity funds, Equity funds by market capitalization, Income funds, Balance funds, Dividend fund, Mortgage funds, Real estate funds, Index funds, Fund of funds, Specialty funds, Industry funds, Geographically funds, etc.

3 Types of RRSP Accounts to Purchase the Funds: a managed account, a self-directed account, a fully managed account.

The segregated fund account can be non-registered or registered. Registered accounts are further categorized as locked-in or non-locked-in. There may be age restrictions at which certain types of locked-in accounts can be established; however, there are no age restrictions for opening a non-registered account.

The account in which the IVIC investment is made must be accurately selected. For example, an investor who believes he will be enjoying the tax deferral of a registered account may be financially disadvantaged if the account is set up in a non-registered form.

Rider election form of the (segregated) funds: GMWB, GLWB.

The ability to withdraw from segregated funds use FEL.

Annuity Recommendation Best Suited to the Clients: Payout or Accumulation.

Every annuity recommendation should include the following elements:

  • Type of annuity and its characteristics;
  • Timing of payments;
  • Annuity rate;
  • Value of guarantees;
  • Principal risks of annuity recommendation;
  • Annuity penalties.

Insured Life Annuity is the Combination of Permanent Life Insurance and Life Annuity.

Rider of Annuity: Return of Premium Guarantee

There is No Annuity Penalty if the Withdrawal is Made from an Interest-Bearing Investing Option.

Group Retirement and Investment Plans Available to Attract New Talents (Valuable Employee) and Create Loyalty to the Company.

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