Protect and Grow: Segregated Funds for Your Financial Goals
The legal term for a segregated fund is an Individual Variable Insurance Contract or IVIC. This term is rarely used and segregated funds are most often simply called segregated or seg funds. Segregated funds are created and sold by life insurance companies. Insurers keep their segregated funds separate from other company assets, which is why the funds are called segregated.
People buy segregated funds to benefit from the guarantees they offer for return of capital. This makes segregated funds less risky than mutual funds. Segregated funds are also highly valued because, in the event of the death of the policy owner, the proceeds bypass probate. Probate fees are charged in all provinces except Quebec on assets of a deceased. They can pose a significant charge to an estate.
Money is pooled in the fund from the deposits of policyowners. Deposits are made by individuals and groups. Those deposits are invested by the segregated fund manager according to the type of fund that has been created.
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