Like a mutual fund, a segregated fund is a pool of money invested in a variety of securities through professional fund managers. However, unlike mutual funds, segregated funds are only available through an insurance company.  

Because segregated fund plans are life insurance contracts, they have some special benefits and protection features.

Maturity and death benefit guarantees – Segregated fund plans protect part or all of your capital investment. They guarantee the value of the policy on its maturity date, as well as the value received on the death of the last insured person. 

Lifetime income benefit option – On some plans, you can choose to receive a guaranteed income for life. So long as you don’t withdraw more than the guaranteed annual amount, your lifetime income amount will not decrease.

Potential for creditor protection – Because segregated funds are part of the Insurance Act, your policy may be protected from creditors.                 

No trustee fees – If you choose a registered segregated fund plan, there are no trustee fees.  

Estate bypass – If you designate beneficiaries, the proceeds from your segregated fund policy flow to them directly, generally bypassing the estate and potential probate fees.  

Privacy – You can keep the details of your segregated fund policy private. If an estate goes through probate, the details are available to the public. However, with segregated fund plans, the money passes privately to any named beneficiaries.