iA Financial Group was founded in 1892 and is recognized as one of the largest wealth management and insurance groups in Canada. With $346 billion in assets, iA offers a range of investment products, including segregated funds or seg funds. Unlike mutual funds, segregated funds provide guaranteed protection between 75%-100%. In the section below, we take a detailed look at the segregated fund options available with iA Financial Group.

Our iA segregated funds review

iA defines segregated funds as investments that offer significant guarantees on invested amounts. The main segregated fund series offered by iA includes Classic Series 75/75, Series 75/100, Ecoflex Series 100/100, and FORLIFE Series. Also, Classic 75/75 and Series 75/100 are also available in ‘Prestige’ versions. Each series is designed to support a wide range of investors, from those just starting to individuals focused on retirement income and estate planning. 

All four series allow your savings to grow while providing guaranteed protection, despite market downturns. Once you select a preferred series depending on your needs, you will have the option to select from the different fund options available. As of now, iA offers eight categories of funds: Managed and index solutions, Income and Specialty Income Funds, Diversified funds, Canadian Equity Funds, Global Equity Funds, U.S. and International Equity Funds, Specialty Equity Funds, and Socially responsible investment funds. This variety of funds makes it easier for investors to build a well-diversified portfolio.

Overall, iA segregated funds in Canada stand out for their combination of strong guarantee options and broad fund selection. They are best suited for investors who want a balance of market growth potential with built-in protection and estate planning benefits.

What types of segregated funds does iA offer?

iA structures its segregated funds into different guarantee series, each designed for a specific investor need. Here is an overview of the four options available:

1. Classic Series 75/75

The iA Classic Series 75/75 is designed for investors who are looking for long-term growth with basic protection. It is suitable for those who are new to segregated funds and are looking for an option that is equivalent to mutual funds. 

Some of its key features and benefits include:

• Death and maturity guarantee: The Classic Series 75/75 offers a 75% guarantee on both maturity and death benefit. This means that at least 75% of your invested capital is protected after the maturity period or paid out to beneficiaries in case of death, regardless of market performance
• Lower fees: Because the guarantee level is capped at 75%, this series typically comes with lower fees than options like 75/100 or 100/100. This makes it a cost-effective choice for investors who have budget constraints
• Fund selection from an array of options: With the Classic Series 75/75, you get access to a wide range of segregated funds, which lets you build a diversified portfolio aligned with your risk tolerance and goals

2. Series 75/100

This series is designed for those looking for enhanced estate protection. The Series 75/100 lets you leave a guaranteed inheritance to your beneficiaries while still participating in market performance. 

The key benefits and features of Series 75/100 include:

• 100% death benefit: The Series 75/100 offers a 100% death benefit guarantee, ensuring that your beneficiaries receive the full guaranteed amount at death. This makes it a strong option for estate planning 
• Maturity benefit: Like the Classic Series, the 75/100 series also offers a 75% guarantee at maturity, despite any market downsides
• Annual resets: This series allows you to lock in market gains through annual resets, which can increase the guaranteed death benefit over time. This feature helps preserve growth and protect accumulated gains from future market downturns. The reset benefit is available till the age of 85
• No limits on fund selection: With iA Series 75/100, you get access to the full range of iA segregated funds across all categories without any cap or restriction on selection

3. Ecoflex Series 100/100

The iA Ecoflex Series 100/100 is designed for investors who want maximum protection without giving up market growth potential. It is the most secure segregated fund option offered by iA, combining 100% guarantees with the ability to participate in market performance. 

Its key features and benefits include:

• Death and maturity guarantee: The Ecoflex Series offers a 100% guarantee at both maturity and death, meaning your entire invested amount is protected regardless of market performance
• Frequent reset option: This series allows you to lock in gains up to 4 times per year, helping protect accumulated returns from future market downturns. Unlike Series 75/100, the Ecoflex Series offers more frequent reset options, and you can go for resets up to 4 times per year
• Full market participation with protection: Ecoflex is built to let you invest fully in the markets while still benefiting from complete downside protection

4. FORLIFE Series

The iA FORLIFE Series is designed for investors aged 50 to 75 who want to turn their savings into a stable, predictable income stream in retirement, without giving up access to their capital. Unlike other options in the segregated fund series that focus mainly on growth and protection, FORLIFE is built specifically for retirement income planning, combining investment growth with a guaranteed income for life.

The key benefits and features of the FORLIFE series include:

• Guaranteed lifetime income: The FORLIFE Series provides a guaranteed income stream for life, regardless of market performance
• Savings and income step: The savings phase is where your investments grow and build a guaranteed income base, while in the income phase, you receive regular payments for life. This structure helps transition smoothly from accumulation to retirement income
• Estate protection: In the event of death, the FORLIFE Series includes a death benefit guarantee, helping ensure your beneficiaries receive a protected amount
• Two fund choices: By selecting one of the two available funds, FORLIFE Guaranteed Maximum Income Fund or FORLIFE Guaranteed Income & Growth Fund, you can align your strategy based on your retirement priorities. The former is composed of 100% fixed income, making it ideal for those who want to maximize stable and predictable income. The Guaranteed Income & Growth Fund, on the other hand, is a mix of 70% fixed income and 30% equity, letting you preserve capital and maximize income growth potential

iA segregated funds pros and cons

What other investment products does iA Financial Group offer?

Beyond segregated funds, iA also offers a range of investment solutions that help investors save, grow, and eventually draw income from their investments.

• Registered retirement savings plan (RRSP): An RRSP is an investment plan that helps you build retirement savings. It offers two tax advantages: your contributions are tax-deductible, and your investments grow tax-deferred until withdrawal
• Tax-free savings account (TFSA): A TFSA allows your investments to grow completely tax-free, and withdrawals are also tax-free. It is a flexible option suitable for both short-term and long-term financial goals
• Annuities (guaranteed income): These are specifically designed for retirees and help them receive a stable, regular income in return for a lump-sum contribution. They offer fixed payments regardless of market volatility. With iA’s annuities, you can choose to receive income for life or for a pre-specified period
• Registered retirement income fund (RRIF): An extension of an RRSP, an RRIF lets you convert your retirement savings into retirement income. You must convert your RRSP into a RRIF (or an annuity) by age 71 and begin withdrawals

Are iA segregated funds worth considering?

The value of iA seg funds depends on how well their features align with your financial goals, timeline, and need for protection versus growth. Here is how they can benefit you:

• When you want flexibility in protection levels: iA offers multiple guarantee structures, from cost-efficient 75/75 to full protection under Ecoflex 100/100. This allows you to choose how much downside protection you need, rather than overpaying
• Estate protection: With options like the 75/100 series, iA is particularly strong for estate transfer. The ability to name beneficiaries directly and potentially bypass probate makes it useful for those focused on efficient wealth transfer
• For retirement income: The FORLIFE Series offers guaranteed lifetime income while still maintaining access to capital. This makes iA relevant not just during the savings phase but also when transitioning into retirement
• When you value fund choice: iA provides extensive fund access across categories with minimal restrictions. The company offers access to eight fund categories, letting investors diversify their portfolios

How to buy iA segregated funds with PolicyAdvisor?

You can get in touch with our expert advisors at PolicyAdvisors who will help you get iA segregated fund. Here are the steps you need to follow:

• Speak to our advisors: Our expert licensed advisors will assess your financial goals, time horizon, risk tolerance, and estate planning needs. Based on this, they will recommend the most suitable iA segregated fund series for you
• Compare the available fund options: Our advisors will also guide you through the available fund options with iA
• Finish your investment setup: Once the investment setup is complete, finalize the contract by naming beneficiaries, choosing your guarantee structure, selecting funds, and deciding your investment amount

RBC Insurance is part of Royal Bank of Canada, one of the largest and most trusted financial institutions in Canada. With a long-standing reputation in banking, wealth management, and insurance, RBC also offers investment products to meet the diverse needs of investors in Canada, including segregated funds.

Unlike traditional mutual funds, segregated funds provide capital protection at maturity and death, along with other features. In this guide, we take a detailed look at RBC segregated funds, the types of investment options available, their key features, and whether they are worth considering for your financial goals.

Our RBC segregated funds review

RBC Insurance offers segregated funds that are structured to cater to a wide range of investors, from beginners just starting their investment journey to those focused on retirement income and estate planning. One of the biggest advantages of RBC segregated funds is how accessible and flexible they are.

RBC Guaranteed Investment Fund (GIFs) also makes it relatively simple to begin investing in segregated funds. You can start with as little as $50 per month by setting up a pre-authorized debit (PAD) plan. This low entry point makes RBC GIFs accessible to first-time and budget-conscious investors. 

Another key strength of RBC’s offering is the flexibility in how and where you can hold your investments. RBC GIFs can be placed within a variety of registered and non-registered accounts, including RRSPs, TFSA, RRIF, LIF, or locked-in plans. Moreover, when it comes to investment choice, RBC lets you choose from 28 guaranteed investment funds and 8 portfolio solutions. 

The three popular segregated fund options that the company offers include Invest Series, Series 1, and Series 2. Overall, RBC segregated funds stand out for their combination of ease of entry, broad investment choice, and simplified portfolio options. We recommend RBC segregated funds for those who want flexibility and a structured way to invest.

What types of segregated funds does RBC offer?

RBC offers two broad types of segregated funds that we will discuss in the section below:

1. Invest Series

RBC Invest Series is designed for those investors who are looking for higher growth at lower fees. Some of its key features and benefits include:

• Death benefit guarantee: The Invest Series offers a death benefit guarantee of 75% of your deposit or the market value, whichever is higher. Its maturity guarantee mostly kicks in only at age 100, so for most, the Invest Series is more about the death benefit protection, not a maturity payout
• Lower fees compared to other series: Since the guarantees are more limited, the cost is lower. This makes the Invest Series one of the most cost-effective entry points into RBC segregated funds
• Individual fund choice: With the Invest Series, you can choose from 25 funds, including specialty funds. You can also switch between funds, allowing your portfolio to evolve as your financial goals change. These funds are professionally managed by RBC Global Asset Management, ensuring that investment decisions are backed by research
• Wide portfolio solutions: The Invest Series lets you choose from 8 portfolio solutions. The portfolios are actively monitored, helping manage risk over time without requiring investor intervention

Who is it best suited for?

It is suitable for those who:

• Are looking for long-term growth and flexibility
• Are planning for retirement savings
• Want protection but not keen on maximum guarantees
• Prefer diversification of their investments

2. Series 1

Series 1 offers a middle level of protection and is designed for investors who want a balance between growth potential and stronger guarantees, making it one of the most versatile options within RBC’s segregated fund lineup.

Its key features and benefits include:

• Death benefit: Unlike the Invest Series, Series 1 provides up to 100% of your deposits or the market value (whichever is higher) if death occurs before age 80. After the age of 80, this guarantee reduces to 80%
• Maturity guarantee: RBC GIF Series 1 has a built-in maturity guarantee, which helps protect your investment over the long term while still allowing you to participate in market growth. Under this structure, after a 10-year maturity period, you are guaranteed to receive the higher of 75% of your original deposits or the current market value of your investment
• Investment options: RBC GIF Series 1 also offers diverse options when it comes to fund choice. It lets you choose from 23 available fund options, which include money market funds, fixed income funds, balanced funds, and equity funds. This fund variety allows investors to build a customized portfolio aligned with their risk tolerance
• Balance between cost and security: Fees are higher than the Invest Series due to stronger guarantees, but still moderate compared to higher-protection options like Series 2

Who is it best suited for?

Series 1 is the right choice if you: 

• Want to protect your funds against market fluctuations
• Prefer passing the maximum to your loved ones

2. Series 2

Series 2 is the most protection-focused option within RBC segregated funds. It offers the highest protection and lets you lock in gains even when markets rise. The key features and benefits of Series 2 include:

• Death benefit guarantee: The death benefit guarantee is the same as Series 1, offering 100% protection of your deposits if death occurs before age 80, and 80% protection thereafter. In both cases, if the market value is higher, that value is paid out instead
• Maturity guarantee: Series 2 provides a maturity guarantee that ensures, after a 10-year period, you will receive the higher of 75% of your total deposits or the current market value of your investment. This feature helps reduce the impact of long-term market volatility by protecting a significant portion of your capital, while still allowing you to fully participate in any market growth
• Reset option: Unlike the other two options, Series 2 includes the option to reset your guaranteed values annually, 1 per year until age 90, allowing you to lock in market gains as your investment grows. This means that if your portfolio performs well, you can increase the guaranteed value to reflect the higher market level. Over time, this feature can significantly enhance both your maturity and death benefit guarantees
• Investment options: Series 2 offers a choice of 11 individual funds and 8 portfolio solutions. This combination allows investors to align their portfolios with their risk tolerance

Who is it best suited for?

Series 2 is a good choice for those who:

• Want to lock in their investment in case the market goes up
• Prefer maximum protection against any dip in the market
• Are retirees or near-retirees

RBC segregated funds pros and cons

What other investment products does RBC offer?

In addition to segregated funds, RBC also offers the following investment products:

• Mutual funds and portfolio solutions: Mutual funds and portfolio solutions offered by RBC are designed for investors seeking professional management and diversification. Mutual funds pool money from multiple investors and invest across equities, bonds, and other assets, helping spread risk while aiming for long-term growth. It offers more growth potential than GICs or savings deposits
• Guaranteed investment certificates (GICs): Guaranteed Investment Certificates (GICs) are a low-risk investment option that focuses on capital preservation and predictable returns. This lets you secure investments that can guarantee 100% of your original investment. They are ideal for conservative investors or for short- to medium-term financial goals, offering stability and certainty
• Payout annuities: Payout annuities are designed to convert your savings into a guaranteed income stream during retirement. These annuities can be structured to provide income for life, for you and your spouse, or for a fixed period, depending on your needs. They also support estate and tax planning, as payments can continue to a beneficiary for a guaranteed period and may bypass probate

Are RBC segregated funds worth considering?

RBC segregated funds are worth considering if your financial priorities include capital protection, risk management, and efficient estate transfer. The company offers a structured approach to investing, combining growth with guarantees.

How to buy RBC segregated funds?

To buy RBC segregated funds, you can get in touch with our advisors at PolicyAdvisor. Here’s what you need to do:

• Reach out to our advisors: Our experts at PolicyAdvisor will evaluate your financial goals, time horizon, risk tolerance, and estate planning needs and recommend suitable options for segregated funds
• Review and compare available options: Our advisors will help you choose a suitable RBC segregated fund option, as well as compare options to help you choose the best one
• Complete your investment setup: Once you have selected a plan, you will finalize the contract by naming beneficiaries, choosing guarantee options, selecting funds, and deciding how much to invest

Sun Life Financial is one of Canada’s most established financial institutions, offering a wide range of insurance and investment products, including segregated funds. Sun Life’s segregated funds are also known as guaranteed investment funds (GIFs) and offer more than traditional investment products. Read on to learn more about Sun Life segregated funds.

Our review of Sun Life Financial segregated funds

Sun Life’s seg funds are designed for investment and insurance guarantees, such as capital protection and death benefit guarantees. Sun Life GIF Solutions serves as the flagship offering, providing options to cater to diverse investment needs. You can choose from the Investment, Income, Estate, and Estate Heritage Series, depending on your financial goals, risk tolerance, and life stage. 

Sun Life also offers Sun Lifetime Advantage GIF, which is specifically built for retirement income planning. It focuses on delivering guaranteed income for life, along with features like resets and access to quality portfolio managers.

Sun Life’s segregated funds tend to come with higher fees primarily due to the built-in guarantees and insurance features. However, they offer protection if markets underperform, structured income options, and estate benefits. 

We would recommend Sun Life segregated funds if your goals include retirement income planning or efficient wealth transfer.

What types of segregated funds does Sun Life Insurance offer?

Sun Life offers two broad types of segregated funds that we will discuss in the section below:

1. Sun Life GIF Solutions

Sun Life GIF Solutions is designed in a way that you can align your financial needs across different life stages. Instead of requiring investors to switch products over time, it provides multiple options under one product that caters to different needs, like growth, income, and estate planning. 

Sun Life GIF Solutions offers four guarantee series (Investment, Income, Estate, and Estate Heritage) that can be used individually or combined within the same plan. This structure allows investors to transition from wealth accumulation to retirement income and eventually to legacy planning, within the same product itself.

Here is an overview of the four options available:

Income series (75/75)

The Income Series is built to provide predictable and long-term retirement income with built-in guarantees, making it one of the most ideal options within Sun GIF Solutions for income-focused investors. 

Some of its benefits include:

• Provides a stable income stream that lasts for life, regardless of market performance. This ensures financial certainty in retirement and helps reduce the risk of outliving your savings
• Even if markets decline, your guaranteed income remains stable, offering peace of mind during uncertain times
• You can delay withdrawals until you need income, and for each year you defer, your guaranteed income base increases, helping you maximize retirement payouts
• While designed for income, the plan still offers access to your funds if needed, giving you liquidity alongside long-term security
• This makes it easy to shift from saving to income, allowing you to start withdrawals when your retirement phase begins

Investment series (75/75)

The Investment Series focuses on long-term growth potential with insurance guarantees. It provides access to a wide range of fund categories.

Its benefits include:

• Offers access to a wide range of investment options, from money market and fixed income funds to 100% global equity portfolio
• Investors benefit from the expertise of leading global portfolio managers, helping improve diversification and long-term performance potential
• This allows you to adapt your investment strategy as your life stage changes, including the ability to transition into Income or Estate Series late
• Includes capital protection and death benefit guarantees, helping reduce downside risk while still participating in market growth

Estate series (75/100)

It offers a death benefit guarantee of up to 100%, along with features like annual resets that can lock in market gains for beneficiaries. It suits investors aged 50-80 years. 

Some of its key benefits include:

• Ensures that your beneficiaries receive the higher of your total deposits or current market value, offering 100% death benefit guarantee
• The death benefit guarantee is automatically increased each year if markets perform well, helping preserve gains
• Combines market-linked growth potential with insurance guarantees, allowing you to build your estate value while reducing downside risk
• Offers a broad selection of funds, including options up to 100% equity
• Provides flexibility to choose how beneficiaries receive the payout, either as a lump sum or structured income payments, depending on your estate planning goals

Estate Heritage Series (75/100)

The Estate Heritage Series is tailored for older investors, typically the 81 to 85 age group, who are focused on preserving and transferring wealth. It provides strong estate protection features, similar to the Estate Series, but is specifically structured for those undertaking estate planning later in life.

While it is almost similar to the Estate option, here are a few of its distinctive features:

• It allows new deposits at later stages of life, making it suitable for investors who still want structured estate planning solutions in their 80s
• Includes access to an MFS Diversified Conservative Balanced Fund specifically designed for this series, offering an investment approach suited to older investors

2. Sun Lifetime Advantage GIF

Sun Lifetime Advantage GIF is a retirement-focused segregated fund solution. This contract is built for investors who want predictability and control over retirement income, while retaining market participation and insurance guarantees, and still benefiting from market growth potential. With flexibility around when to start withdrawals and features that can increase future income, it is particularly suited for those approaching or already in retirement. Some of the key features of Sun Lifetime Advantage GIF include:

• Lifetime guaranteed income: Provides a predictable income stream that can last for life, regardless of market conditions, helping ensure you don’t outlive your savings
• Flexible withdrawal timing: You can choose when to begin withdrawals, helping optimize income based on retirement timing and potentially increase future payouts by delaying withdrawals
• Income resets: Offers the ability to lock in market gains through resets, which can increase your guaranteed income base over time when markets perform well
• Market participation with protection: Combines exposure to market growth with downside protection through guarantees, helping you benefit from upside potential while limiting risk
• Estate planning support: Provides structured payout options for beneficiaries, allowing them to receive funds as a lump sum or as continued income, depending on your estate planning goals

Sun Life segregated funds pros and cons

What other investment products does Sun Life offer?

Here is a list of other investment options offered by Sun Life:

• Mutual funds: Sun Life provides mutual funds through Sun Life Global Investments, covering equity, fixed income, balanced, and income-focused strategies. These funds are actively managed by global asset managers and can be tailored to different risk profiles. Popular solutions include Granite Managed Portfolios, Milestone Funds, Emerging Market Funds, MFS Funds, and a few more
• ETFs: Sun Life provides ETFs through Sun Life Global Investments, offering a mix of equity and fixed income strategies designed for growth, income, and diversification. These ETFs are actively managed by global asset managers
• GICs: Sun Life offers both Insurance GICs and Trust GICs, providing guaranteed returns with full capital protection. Insurance GICs combine fixed growth with estate planning and insurance benefits, while Trust GICs offer simple, low-risk investing with fixed interest rates. You can explore a plethora of GICs, including Superflex, Income Master, Sun GIC Max, and SLF Trust GIC
• Annuities: Annuities help you convert your savings into guaranteed, regular income payments for life or a fixed period, helping cover essential retirement expenses. These products protect from market risk, provide tax-efficient income, and offer customizable options such as joint life coverage, guaranteed periods, and indexed payments

Are Sun Life segregated funds worth considering?

Sun Life segregated funds can be worth it when you value protection, guarantees, and estate planning benefits over low costs and pure market returns. These products are designed to combine investment growth with insurance features, offering guarantees such as 75%-100% capital protection at maturity or death, potential creditor protection, and the ability to bypass probate (if beneficiary is named) for faster wealth transfer. But if your goal is simply maximizing returns at the lowest cost, they may not be the most efficient option.

How to buy Sun Life segregated funds?

Here is how you can buy Sun Life segregated funds with PolicyAdvisor:

• Talk to a licensed advisor: Segregated funds are insurance-based investments and can only be sold by licensed advisors. A PolicyAdvisor expert will assess your financial goals, investment timeline, risk appetite, and estate planning needs before recommending suitable options
• Compare plans from leading Canadian insurers: Your advisor will help you evaluate different segregated fund offerings by Sun Life, including guarantee levels (75%-100%), fee structures, fund choices, and reset features. This ensures you understand and select a plan that fits your priorities
• Set up your contract: Once you have chosen a plan, you will have to complete the setup by naming beneficiaries, selecting guarantee options, choosing funds, and deciding your investment amount. You can invest through a lump sum, ongoing contributions, or a combination of both, depending on your financial strategy

When it comes to investment options in Canada, segregated funds often remain a popular choice because they offer a combination of protection and growth for your investments. This hybrid nature also sometimes becomes confusing, especially for those who are first-time investors.

Are they too expensive? Do they always underperform? Are the guarantees even useful? There are many myths around segregated funds, and not all are true. In this blog, we break down the most common myths and facts about segregated funds so you can evaluate them based on how they actually work, rather than assumptions.

Segregated funds in Canada: The facts behind the myths

Segregated funds are insurance-based investment products offered by life insurance companies. They provide exposure to market growth while offering features such as capital guarantees and estate-planning benefits.

However, because they differ from traditional mutual funds, several misconceptions persist about their costs, performance, and flexibility.

Common myths about segregated funds explained

Myth 1: Seg funds are only for retirees

Why this myth exists: 

Their guarantees and estate planning benefits are often more useful for older investors.

The reality: 

While retirees benefit from capital protection and estate transfer features, segregated funds can also suit:

• Conservative or risk-averse investors
• Individuals nearing financial goals
• Business owners seeking creditor protection
• Investors prioritizing wealth transfer

Myth 2: Guarantees are always 100%

Why this myth exists: 

Segregated funds are often discussed in the context of guaranteed returns. There’s a common misconception that these guarantees are 100%. 

The reality:

Segregated fund guarantees are not always set at 100%, and the level of protection depends on the specific contract you choose. Most standard segregated funds offer a 75% guarantee on your invested capital at maturity or death, while some premium options may provide a 100% guarantee. However, it is important to note that a higher guarantee may come at a higher cost.

Myth 3: They are very expensive

Why this myth exists:

Segregated funds typically have higher management expense ratios (MERs) than mutual funds. This leads to the assumption that they are overpriced without understanding what those fees include.

The reality:

Segregated fund fees include both investment management and insurance guarantees. When compared purely on investment cost, they may seem expensive. However, when viewed as a bundled product combining insurance and investment, the pricing reflects additional protections not typically available in other investment products, such as mutual funds. 

Myth 4: You can’t access your money easily

Why this myth exists: 

Segregated funds are insurance contracts, so many investors assume that they do not offer flexibility and are locked in.

The reality:

Depending on the contract, most segregated funds allow you to withdraw at any time. Typically, the maturity period for segregated funds is 10 years. In case you withdraw before the maturity date, there can be potential penalties, fees, and reduced guarantees. To maximize benefits, wait until the maturity date before withdrawing.

Myth 5: They are too complicated

Why this myth exists:

Segregated funds are often confused with both insurance and investment products. There are certain insurance terminologies, like maturity guarantees, death benefits, and insurance contracts, that can feel unfamiliar to investors who are used to mutual funds or stocks.

The reality:

While segregated funds have a core structure that is quite similar to mutual funds, investors still select funds based on their risk tolerance and financial goals, and returns are driven by the market performance of the underlying assets, such as equities or bonds. There are fees associated with other investment products. The main difference is the added layer of insurance features, such as capital guarantees and estate planning benefits, which enhance protection but do not fundamentally change how the investment itself works.

Myth 6: They are only for wealthy people

Why this myth exists:

Segregated funds are often positioned as an investment tool for high-net-worth individuals. This misconception can make other investors assume the product is out of their reach or not relevant to their needs.

The reality:

Segregated funds are accessible to a broad range of investors and are not limited to high-net-worth individuals only. They can be a good choice for those looking for estate planning and capital protection, and for families planning wealth transfer.

Myth 7: Their performance is not as good as that of mutual funds

Why this myth exists: 

Segregated funds typically have higher fees than mutual funds, which leads many investors to focus on net returns after costs and assume they consistently underperform. The cost comparison does not take into account the added protection features, creating confusion that their overall performance is poor.

The reality:

The performance of segregated funds depends on the underlying investments, which are often similar to those in mutual funds. Like mutual funds, their performance is also dependent on factors like asset allocation, fund manager decisions, and overall market conditions.

Myth 8: Guarantees make them risk-free

Why this myth exists:

The term “guarantee” often creates the impression that risks are completely eliminated. The capital protection feature sometimes gets highlighted in a way that how the guarantees actually apply often gets missed. 

The reality:

Segregated funds are still market-linked investments, which means their value can fluctuate based on market performance. The guarantees apply at maturity or upon death; early withdrawals can result in receiving less than your original investment. This means you are still exposed to market risk, and guarantees are just a safety net. They do not make the investment completely risk-free.

9. Estate benefits are not significant

Why this myth exists:

Estate-related costs like probate fees are often overlooked. This leads to the perception that the estate benefits of segregated funds don’t add significant value.

The reality:

Segregated funds are a crucial estate planning tool, allowing assets to bypass probate in most cases and flow directly to named beneficiaries. This can result in faster payouts, reduced administrative delays, and greater ease compared to assets that pass through a will. It is also important to note that the probate fee varies depending on the province.

Are segregated funds worth it?

Segregated funds can be a valuable investment option for individuals seeking a combination of market growth, capital protection, and estate planning benefits. They can be a good choice for those who:

• Want some level of capital protection (75%-100% protection of investment at maturity or death)
• Are planning for estate transfer to named beneficiaries
• Prefer a balance between growth and protection
• Need creditor protection (for business owners)

To understand and get a suitable segregated fund in Canada, you can get in touch with our advisors at PolicyAdvisor. Our expert advisors will help you evaluate guaranteed investment funds and determine whether they align with your needs. Schedule a free call and get personalized advice today!

When it comes to investment options in Canada, popular choices often include ETFs and mutual funds. However, there is another option too, segregated funds that combine dual benefits. 

Segregated funds provide a mix of investment growth and protection, ensuring that you receive at least 75% of the invested amount at maturity or death. The guarantee options offered by most insurers in Canada include 75/75, 75/100, and 100/100. 

We recommend segregated funds for those looking for long-term protection and want the benefits of estate planning, creditor protection, annual resets, and more.

Understanding segregated funds in Canada

Segregated funds, often called seg funds, are investment funds offered by insurance companies. When you invest in a segregated fund, you enter into a contract where your money is pooled with other investors and allocated across professionally managed portfolios, typically including equities, bonds, or other securities.

A key feature of segregated funds is the inclusion of guarantees. Most contracts provide a 75% or 100% guarantee of your original investment at maturity or death. This means that even if the chosen investment funds lose their value, the guarantee feature ensures you receive a minimum guaranteed portion of your investment.

The working mechanism behind segregated funds

Every segregated fund contract has two components: a market-linked investment and an insurance contract.

• Investment: When you invest, you purchase units within a segregated fund through an insurer, and your money is allocated to a professionally managed portfolio based on your chosen investment strategy. You can choose from different fund types based on your risk tolerance, time horizon, and financial goals. The value of your investment fluctuates with market performance, similar to mutual funds, allowing you to participate in potential market gains over time
• Insurance: The insurer guarantees 75% or 100% of your original investment at maturity or upon death. If markets decline, the insurer tops up your investment to the guaranteed amount. If markets perform well, you retain the full upside

What do guarantees mean in segregated funds?

In segregated funds, guarantees determine how much of your original investment is protected at maturity and upon death. Broadly, there are three guaranteed options that most insurance companies offer. Here’s a table illustrating the death and maturity benefits you will receive for the three options:

Let’s understand one of the guarantee types with an example:

If you invest $100,000 into a 75/100 segregated fund and the market value drops to $70,000 at the time of death, your beneficiary will still receive $100,000 because the contract provides a 100% death benefit guarantee.

However, if you invest in a 75/75 segregated fund under the same market conditions, your beneficiary would receive $75,000, since the death benefit guarantee covers only 75% of the original investment.

Benefits of segregated funds

Listed below are some of the reasons why you can choose segregated funds in Canada:

• Estate bypass: Segregated funds allow you to name a beneficiary directly within the contract. This helps avoid probate fees and ensures a seamless transfer of wealth to your beneficiaries
• Flexible investment options: These funds offer a wide range of investment choices, including equity, fixed income, and balanced portfolios. This flexibility allows you to align your investments with your risk tolerance and financial goals
• Professional management: Segregated funds are managed by experienced investment professionals who handle asset allocation, diversification, and ongoing portfolio monitoring. This makes them ideal for investors who prefer an expert-driven investment strategy
• Creditor protection: Segregated funds may offer protection against creditors when you name a spouse, children, or parents as the beneficiary. This can be particularly valuable for those who face higher liability risks, helping safeguard their personal investments from creditors
• Capital guarantee: Most investment contracts guarantee 75% or 100% of your original investment at maturity or upon death. This means that even if markets decline, you won’t lose your entire investment
• Reset feature: There is a reset option that allows you to lock in gains when the market performs well. If your investment value increases, you can reset the guaranteed amount to this higher value, effectively protecting your profits from future market downturns

Pros and cons of segregated funds

What is the cost of segregated funds?

Segregated funds generally cost more than mutual funds because they combine both investment growth and protection. The main cost associated with segregated funds is the management expense ratio (MER), which includes:

• Investment management fees
• Insurance guarantee costs
• Administrative and operating expenses

In Canada, segregated fund MERs typically range between 0.5% and 1% higher than a mutual fund that is comparable. The extra cost is worthwhile for the built-in protection, probate bypass, creditor protection, and estate planning advantages. ETF has the lowest MER, typically around 0.05% – 0.75%.

Moreover, based on the guarantee level, the fees will vary.

Who should consider segregated funds?

Segregated funds can be highly effective for the following group of people:

• Pre-retirees and retirees: If you are approaching or in retirement, preserving your capital becomes important. Segregated funds offer downside protection through guarantees, helping ensure that market volatility does not significantly impact your retirement savings
• Investors focused on estate planning: If your goal is to transfer wealth efficiently, segregated funds can be a strong fit. The ability to bypass probate and directly pay beneficiaries ensures faster access to funds
• Low-risk appetite investors: If you are uncomfortable with market fluctuations but still want exposure to potential growth, segregated funds provide a balance. The capital guarantees act as a safety net, making them suitable for conservative investors who want reduced downside risk
• Business owners: Those exposed to financial risks may benefit from the potential creditor protection. This can help safeguard personal investments from business-related liabilities under certain conditions

Risks of segregated funds

A segregated fund comes with the benefits of creditor protection and estate planning, although it has some limitations, too. One of the biggest drawbacks is the higher management fees compared to mutual funds or ETFs. Although the fees are high, it is important to note that these additional fees pay for the insurance guarantees included in the contract.

There is another downside to segregated funds when you choose early withdrawals. Withdrawing funds early may reduce guarantees and market losses. This is the reason why segregated funds are recommended for those looking for long-term investments.

How are segregated funds different from mutual funds?

Listed below are the differences between segregated funds and mutual funds:

Best segregated funds companies in Canada

Here is a list of companies offering segregated funds in Canada

Is a segregated fund worth it?

Segregated funds can be worth considering if you want to participate in both market growth and protection against uncertainties. They are particularly useful for investors focused on retirement planning or efficient wealth transfer.

However, these benefits come at a higher cost, so it is important to evaluate how segregated funds align with your financial goals, risk tolerance, and long-term strategy.

You can get in touch with our expert advisors at PolicyAdvisor, who will help you compare segregated fund contracts from multiple insurers in one place. If you are considering segregated funds, exploring our platform can help you determine whether they truly fit into your overall financial strategy and help you select the right one.