Investment

Segregated funds

Segregated funds are the insurance industry’s answer to mutual funds. How they differ from Mutual Funds:

  • The most significant and most important difference is the Guarantee, which often varies from one insurer to another. Most guarantees range from 75% to 100% of your original investment in the event of death or at maturity. Maturity means that you must hold the contract for 10 years
  • Creditors Protection: Named beneficiaries of segregated funds are protected from creditors
  • Estate Planning: Segregated funds with named beneficiaries are exempted from Probate fees upon death of contract holder

Most segregated funds are RRSP eligible and as such are subject to the present RRSP rules and regulations.

Annuities

An annuity is a contract issued by a life insurance company that generally meets one of the two needs:

  1. Deferred Annuities provide a way for savers and investors to accumulate assets for the future, much like bank deposit products or mutual funds.
  2. Immediate Annuities provide a guaranteed stream of payments, often for as long as an individual (or an individual and spouse) lives.

An annuity is a contract issued by a life insurance company that generally meets one of the two needs:

A.Deferred Annuities provide a way for savers and investors to accumulate assets for the future, much like bank deposit products or mutual funds.

B.Immediate Annuities provide a guaranteed stream of payments, often for as long as an individual (or an individual and spouse) lives.

Deferred Annuities are packaged in two basic types:

1. Fixed Annuities

Fixed annuity contracts generally guarantee all deposits less any applicable surrender charges. Under this contract, the owner locks in an interest rate for a period, typically one year. At the end of this period, the insurance company offers a new interest rate that reflects the current rate which is at or above a minimum guaranteed rate specified in the contract.

2. Variable Annuities

Variable annuities do not offer a guarantee rate. Earnings are based on the return of managed investment portfolios selected by the contract holder. The contract holder bears the investment risk and has the opportunity to earn the returns of stock or bond markets.

Immediate Annuities provide a guaranteed income stream that is available in several payment choices:

  • Single Life:
    This choice pays income as long as the annuitants live. No payments remain at death.
  • Joint & Survivor:
    This choice pays income as long as either of two named joint annuitants is alive and no payments remain at death of both annuitants.
  • Period Certain:
    This choice pays income for a fixed period of time, such as 10 or 15 years. No payments remain at death.