Q: What’s the difference between a mutual fund and a segregated fund contract?

The main difference between a mutual fund and a segregated fund contract is that a segregated fund contract includes insurance benefits that can help protect your investment. Segregated fund contracts guarantee 75% to 100% of your premiums being returned (reduced for any withdrawals) when you die or when the contract matures. Mutual funds don’t offer this benefit.

Q: Can a segregated fund contract be held in an RRSP?

Yes, segregated funds can be held in your registered retirement savings plan (RRSP) .

Q: Can a segregated fund contract be held in a TFSA?

Yes, segregated funds can be held in your tax-free savings account (TFSA)

Question 1

Do segregated fund contracts pay dividends?

Accepted Answer

Similar to mutual funds, segregated funds and mutual funds can earn interest, dividends, capital gains (or losses), and foreign income.  A mutual fund distributes these amounts to the investor in the fund. In almost all cases, these amounts are immediately reinvested back into the fund to buy more units. In contrast, with a segregated fund, these amounts remain in the fund. They increase the value of the investment without increasing the number of units the investor owns.

Question 2

Do segregated fund contracts offer creditor protection?

Accepted Answer

Segregated fund contracts are potentially protected from the claims of some creditors in the event of bankruptcy and legal proceedings. Creditor protection depends on court decisions and applicable legislation, which can change. It can also vary from province to province. Keep in mind,  creditor protection can never be guaranteed. Talk to a lawyer to find out more about the potential for creditor protection.

Question 3

When can I withdraw from a segregated fund contract?

Accepted Answer

You can request withdrawals from a segregated fund contract at any time depending on the registration type. Any withdrawals you take will reduce the guarantees on the contract. Some withdrawals may be subject to early withdrawal charges. Withholding tax may also apply in some cases, and some or all of the withdrawal may be taxable.

Question 4

What’s the difference between a mutual fund and a segregated fund contract?

Accepted Answer

The main difference between a mutual fund and a segregated fund contract is that a segregated fund contract includes insurance benefits that can help protect your investment. Segregated fund contracts guarantee 75% to 100% of your premiums being returned (reduced for any withdrawals) when you die or when the contract matures. Mutual funds don’t offer this benefit.

Question 5

Do segregated fund contracts have higher fees than mutual funds?

Accepted Answer

In general, segregated funds have higher fees than mutual funds due to the guarantees. However, fees will vary depending on the funds, and products you choose.

Question 6

Can a segregated fund contract be held in an RRSP?

Accepted Answer

Yes, segregated funds can be held in your registered retirement savings plan (RRSP).

Question 7

Can a segregated fund contract be held in a TFSA?

Accepted Answer

Yes, segregated funds can be held in your tax-free savings account (TFSA)

Question 8

What happens to a segregated fund contract after death?

Accepted Answer

When the annuitant undefined on the segregated fund contract dies, the death benefit is paid to the beneficiary named on the contract.
The proceeds can be paid in different ways, either through:
1. lump-sum payments or
2. our legacy settlement option, which lets you make customized decisions for your beneficiaries.

The legacy settlement option can help address complex family dynamics, allowing you to maintain some control over your assets after death. For example, perhaps there’s a beneficiary or dependent who’s not responsible with money. In this case, you can set up a monthly payment plan that lasts for their life or a specific time period.

Segregated Funds

Guaranteed Investment Certificate (GICs)

Mutual Funds

Annuity Products

Group Investments

Our segregated fund products

GIF Solutions

Lifetime Advantage GIF

Benefits of segregated fund contracts

Guarantees

Beneficiaries

Potential creditor protection

Guaranteed income options

Frequently Asked Questions