Guaranteed Growth. Protected Wealth. Confident Retirement
What Are Segregated Funds?
Segregated funds are investment portfolios offered by life insurance companies that combine market growth potential with insurance guarantees. They function similarly to mutual funds but provide unique protection features unavailable in traditional investments.
They invest in diversified portfolios of:
- Stocks (equities)
- Bonds
- Balanced portfolios
- Global markets
- Asset allocation portfolios
But unlike traditional investments, segregated funds include insurance guarantees protecting your principal and your family’s financial future.
Why Segregated Funds Are a Powerful Investment Choice
Core Advantages
| Feature | Benefit |
| Principal Guarantee | Protects 75%–100% of your investment at maturity or death |
| Growth Potential | Fully participates in stock and market growth |
| Reset Feature | Locks in gains and increases guaranteed value |
| Estate Planning | Bypasses probate, ensuring faster payout |
| Creditor Protection | Protects wealth from lawsuits or creditors |
| Beneficiary Protection | Direct transfer to loved ones |
| Tax Efficiency | Tax-deferred growth in registered plans |
Segregated funds guarantee 75% to 100% of your investment at maturity or death, ensuring long-term security even during market downturns.
How Segregated Fund Guarantees Work
Let the numbers speak for themselves
In this example we see a 20 year old start with $100 and investing $200 per month for 25 years. After 25 years he just lets his investment grow until he is 65. His total investment is $60,100. The value of his investment after 45 years is over $855,000.
| Year | Contribution | Gains | Balance | Year | Contribution | Gains | Balance | |
|---|---|---|---|---|---|---|---|---|
| 0 | $0 | $0 | $100 | 26 | $0 | $14,692 | $198,345 | |
| 1 | $2,400 | $111 | $2,611 | 27 | $0 | $15,868 | $214,213 | |
| 2 | $2,400 | $312 | $5,322 | 28 | $0 | $17,137 | $231,350 | |
| 3 | $2,400 | $529 | $8,251 | 29 | $0 | $18,508 | $249,858 | |
| 4 | $2,400 | $763 | $11,414 | 30 | $0 | $19,989 | $269,846 | |
| 5 | $2,400 | $1,016 | $14,830 | 31 | $0 | $21,588 | $291,434 | |
| 6 | $2,400 | $1,289 | $18,519 | 32 | $0 | $23,315 | $314,749 | |
| 7 | $2,400 | $1,584 | $22,503 | 33 | $0 | $25,180 | $339,928 | |
| 8 | $2,400 | $1,903 | $26,806 | 34 | $0 | $27,194 | $367,123 | |
| 9 | $2,400 | $2,247 | $31,453 | 35 | $0 | $29,370 | $36,492 | |
| 10 | $2,400 | $2,619 | $36,473 | 36 | $0 | $31,719 | $428,212 | |
| 11 | $2,400 | $3,021 | $41,893 | 37 | $0 | $34,257 | $462,469 | |
| 12 | $2,400 | $3,454 | $47,747 | 38 | $0 | $36,998 | $499,466 | |
| 13 | $2,400 | $3,923 | $54,070 | 39 | $0 | $39,957 | $539,424 | |
| 14 | $2,400 | $4,428 | $60,898 | 40 | $0 | $43,154 | $582,578 | |
| 15 | $2,400 | $4,975 | $68,273 | 41 | $0 | $46,606 | $629,184 | |
| 16 | $2,400 | $5,565 | $76,238 | 42 | $0 | $50,335 | $679,518 | |
| 17 | $2,400 | $6,202 | $84,839 | 43 | $0 | $54,361 | $733,880 | |
| 18 | $2,400 | $6,890 | $94,129 | 44 | $0 | $58,710 | $792,590 | |
| 19 | $2,400 | $7,633 | $104,162 | 45 | $0 | $63,407 | $855,998 | |
| 20 | $2,400 | $8,436 | $114,998 | |||||
| 21 | $2,400 | $9,303 | $126,701 | |||||
| 22 | $2,400 | $10,239 | $139,340 | |||||
| 23 | $2,400 | $11,250 | $152,990 | |||||
| 24 | $2,400 | $12,342 | $167,731 | |||||
| 25 | $2,400 | $13,521 | $183,653 | |||||
Reset Feature: Lock In Growth and Increase Protection
Now see how an investment is protected
Segregated funds offer two core guarantees:
1. Maturity Guarantee
At maturity (typically 10–15 years), you receive:
Higher of:
- Market value
- Guaranteed value (75%–100%)
2. Death Benefit Guarantee
Your beneficiaries receive:
Higher of:
- Market value
- Guaranteed minimum amount
This ensures your legacy remains intact regardless of market timing.
Resets allow you to increase your guaranteed value when markets rise, protecting your gains permanently.
Each reset:
- Locks in higher values
- Raises your guaranteed protection
- Secures your investment gains forever
Here is a visual example of how resets keep your investments safe
Types of Segregated Funds Available in Canada
| Type of Fund | Fund Features |
|---|---|
| 1. Equity Segregated Funds | >Highest growth potential >Invests in global stock markets >Ideal for long-term retirement growth |
| 2. Balanced Segregated Funds | >Mix of stocks and bonds >Moderate growth and moderate risk |
| 3. Fixed Income Segregated Funds | >Invests primarily in bonds >Lower volatility >Stable retirement income planning |
| 4. Asset Allocation Segregated Funds | >Professionally diversified portfolios >Automatic risk management |
| 5. Guaranteed Investment Portfolios (GIPs) | >Fully managed diversified portfolios >Designed specifically for retirement planning |
Insurance companies offer broad selections of professionally managed segregated fund portfolios for every risk level.
Segregated Funds vs Mutual Funds vs ETFs
Comparison Table
| Feature | Segregated Funds | Mutual Funds | ETFs |
| Principal Guarantee | Yes (75%–100%) | No | No |
| Death Benefit Guarantee | Yes | No | No |
| Reset Feature | Yes | No | No |
| Estate Bypass Probate | Yes | Limited | No |
| Creditor Protection | Yes | No | No |
| Professional Management | Yes | Yes | Yes |
| Growth Potential | High | High | High |
| Risk Protection | Strong | None | None |
| Insurance Protection | Yes | No | No |
| Best Use | Retirement, estate planning | Growth investing | Low-cost investing |
Segregated funds combine market performance with insurance protection unavailable in mutual funds or ETFs.
Why Segregated Funds Are Ideal for Retirement Planning
Segregated funds are specifically designed for retirement security and wealth preservation.
They can be held in:
- RRSP (Registered Retirement Savings Plan)
- TFSA (Tax-Free Savings Account)
- RRIF (Retirement Income Fund)
- Non-registered accounts
- Locked-in retirement accounts
Benefits of Funds in RRSPs
- Tax-deferred growth
- Retirement income protection
- Principal guarantees
- Protection from market crashes
Benefits of Funds in TFSAs
- Tax-free growth
- Tax-free withdrawals
- Guaranteed capital protection
- Ideal for retirement savings
Perfect for long-term retirement planning.
Estate Planning Advantages
Benefits include:
- Avoid probate fees
- Immediate payout to beneficiaries
- Private estate transfer
- Faster settlement of estate
Segregated funds bypass probate and transfer directly to beneficiaries, saving time and legal costs.
Creditor Protection: Safeguard Your Wealth
Segregated funds may protect your investment from creditors if a qualified beneficiary is named.
This is especially valuable for:
- Business owners
- Professionals
- Entrepreneurs
- Self-employed individuals
Growth Potential: Participate Fully in Market Gains
Segregated funds invest in the same markets as mutual funds and ETFs.
This means:
- Full exposure to stock market growth
- Long-term wealth accumulation
- Retirement income potential
Segregated funds combine growth potential with guaranteed protection.
Example: Retirement Growth Scenario
Example: 30-Year Retirement Investment
Initial investment: $10,000/year
Average growth: 6%
Years invested: 30
Final Value:
$790,581 total retirement value
With guarantees, your principal remains protected even during market downturns.
Who Should Invest in Segregated Funds?
Segregated funds are ideal for:
- Retirement-focused investors
- Risk-conscious investors
- Business owners seeking creditor protection
- Individuals planning estate transfers
- Investors wanting guaranteed protection
Why Segregated Funds Are a Smart Investment Choice
Segregated funds offer a unique combination of:
- Market growth potential
- Principal protection
- Estate planning advantages
- Guaranteed retirement income security
- Creditor protection
- Long-term financial stability
No other investment combines insurance guarantees and market growth potential in one vehicle.
Still have questions or would like to get started?
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Thank you for your inquiry.
