Estate Planning with Segregated Funds

Segregated funds are similar to mutual funds, however what sets them apart is the guarantee they offer of investment protection against possible market downturns. Distributed exclusively by Insurance companies, segregated funds are comprised of stocks, bonds or market securities and are managed by investment experts. Some of the unique features of segregated funds include:

  • Maturity and death benefit guarantee options to protect your investment
  • Bypass probate and associated fees by naming a beneficiary
  • No early redemption fees at death
  • Quick payment to beneficiaries after you pass away
  • Private and confidential beneficiary designations
  • Creditor Protection may be available in the event of bankruptcy or lawsuit

Case Study

JOE and MARY are two individuals, both in retirement, each with $250,000 of non-registered savings. JOE decides to invest mutual funds, MARY decides to invest in segregated funds with a 100% death benefit guarantee. JOE and MARY pass away unexpectedly after their funds experienced a 10% decline in market performance.


JOE’s investment was paid to his estate since his investment was not eligible to have a beneficiary designation. As a result his estate incurred a number of fees, and took nearly a year to settle.


MARY’s investment was privately paid to her beneficiaries within a couple of weeks of her passing away. Her beneficiaries received more than the market value because of the death benefit guarantee, and avoided the costs and delays of the payout going through the estate.

JOE's Mutual Funds MARY's Segregated Funds
Amount deposited $250,000 $250,000
Market Value at death $225,000 $225,000
Death benefit top up N/A $25,000
Surrender fees (5%)** $12,500 N/A
Probate fees** $2,875 N/A
Legal fees** $10,000 N/A
Accounting fees** $10,000 N/A
Paid to beneficiaries $189,625 $250,000

Insurepedia Expert can assist you with your beneficiary designation and determining
if segregated funds are right for you !

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