Equitable Life of Canada is a mutual life insurance company that has been serving Canadians for over 100 years. It offers a range of insurance and investment solutions, including segregated funds. Equitable Life’s segregated fund offering is branded as Equitable Guaranteed Investment Funds (Equitable GIF), available in three guarantee classes.

Like other segregated funds, these funds provide guarantees on your invested capital, typically 75% or 100% at maturity or death. The three segregated fund options offered by Equitable Life include Investment Class, Estate Class, and Protection Class. 

In the section below, we provide a detailed review of Equitable Life segregated funds.

PolicyAdvisor’s take on Equitable Life segregated funds

Instead of offering multiple complex series, Equitable Life keeps things structured around three distinct classes: Investment, Estate, and Protection, each aligned to a specific level of risk, cost, and guarantee. These simplified options are good, especially for those who want to make decisions based on outcomes rather than on the multiple products available and their complex features.

A key strength is the variety of investment choices, with access to up to 50 segregated funds across asset classes such as equities, fixed income, and balanced portfolios. At the same time, the availability of reset features in the Estate and Protection Classes adds more benefits, allowing you to lock in market gains over time and gradually increase your guaranteed amounts.

Some of the other benefits include estate planning, probate bypass, creditor protection, and guaranteed death and maturity benefits (75%-100%). Overall, we recommend Equitable Life’s segregated funds for those whose focus is on the growth of invested money, flexibility, estate preservation, and capital protection.

What types of segregated funds does Equitable Life offer?

Equitable Life offers three segregated fund options: Investment Class, Estate Class, and Protection Class. All three provide access to the same underlying investment funds (up to 50 options), but differ in features.

• Investment Class (75/75): Lower cost, basic protection
• Estate Class (75/100): Balanced approach with estate benefits
• Protection Class (100/100): Maximum protection and guarantees

1. Investment Class

The Investment Class is Equitable Life’s basic segregated fund option, designed for investors seeking market exposure with essential protection at a lower cost. It works well for those who want long-term growth potential and flexibility. It offers a broad selection of investment options without additional fees. Here are some of the features and benefits of Investment Class segregated funds offered by Equitable Life:

• Wide investment choice: This option gives you access to a broad and diversified lineup of funds, allowing you to build a portfolio that aligns with your goals and risk tolerance. You can invest across multiple asset classes, including domestic equities, foreign equities, balanced, and fixed income, along with portfolio fund families. The dedicated advisors help you select a fund that best meets your financial needs
• No additional cost: The Investment Class is designed for budget-conscious individuals, which means it avoids the higher insurance-related costs. By offering a base level of protection without additional guarantee features, it keeps management costs relatively lower. The management expense ratios (MERs) are also very competitive
• Death and maturity benefit: At maturity, you will receive either the market value of your investment or at least 75% of your total deposits, adjusted for any withdrawals. A similar guarantee applies in the event of death before maturity, ensuring that beneficiaries receive the greater of the market value or 75% of the invested amount

2. Estate Class

This is well-suited for those looking to preserve wealth for their beneficiaries while still benefiting from long-term investment growth. Compared to the Investment Class, it offers higher guarantees along with additional features that support estate planning. 

Some of the features and benefits of Estate Class are as follows:

• Death benefit guarantee: The Estate Class ensures that beneficiaries receive 100% of the total deposits or the market value, whichever is higher, in the event of death. This provides strong protection for your estate, even during periods of market volatility
• Maturity deposit guarantee: The Estate Class maturity guarantee applies at contract maturity (age 105 of the annuitant), not over 15 years. At that point, clients receive the greater of the market value or 75% of their total deposits
• Flexibility in investment choice: Like the Investment Class, this option offers access to over 50 fund options. You can also switch between funds and fund managers within the same contract, allowing your portfolio to evolve with your financial goals
• Guarantee reset option: The Estate Class allows you to reset your death benefit guarantee once per calendar year. If your investment value increases, you can lock in those gains as the new guaranteed death benefit. Resets are not permitted after the annuitant’s 80th birthday. Note that this reset applies only to the death benefit, not the 75% maturity guarantee
• Transparent fee structure: Since this option includes enhanced guarantees, an additional fee is charged separately from the fund’s management expense ratio. This makes the cost of protection more visible

3. Protection Class

The Protection Class offers the highest level of protection in Equitable Life’s segregated fund options. It is best suited for those who are nearing retirement or investing larger sums and want to maximize protection.

The key features and benefits of Protection Class include the following:

• Growth and principal protection: This option is built to protect your original investment while still allowing it to grow with the markets. It ensures that beneficiaries receive 100% of total deposits or the market value, whichever is higher, in the event of death
• 100% death benefit guarantee: The Protection Class provides a 100% death benefit to beneficiaries, despite any market fluctuations
• Enhanced deposit maturity guarantee: This option includes a 100% maturity guarantee on qualifying deposits, typically applied over a 15-year period. However, when the deposits are made for less than 15 years, you get only 75%
• Higher cost for maximum protection: Due to the enhanced guarantees and added features, this option comes with higher fees compared to the Investment and Estate Classes. These costs reflect the increased level of protection and security provided

Equitable Life segregated funds pros and cons

What other investment products does Equitable Life offer?

In addition to segregated funds, Equitable Life of Canada offers a range of registered savings and income solutions that can be used alongside or independently of its investment products.

• Registered Retirement Savings Plan (RRSP): A retirement-focused savings plan that lets you grow your savings in a tax-efficient manner until you withdraw them in retirement
• Tax-Free Savings Account (TFSA): An account that allows investments to grow tax-free, and withdrawals are also tax-free
• First home savings account (FHSA): An account that combines tax-deductible contributions with tax-free withdrawals when used to purchase a first home in Canada
• Retirement income: Options such as payout annuities and Life Income Funds (LIFs) that help provide a steady retirement income

Are Equitable Life segregated funds worth considering?

Yes, Equitable Life segregated funds are worth considering, particularly in the following situations:

• Estate planning is a priority: These funds allow you to name beneficiaries directly, which can help bypass probate. When you choose the Estate or Protection Class, you get a death benefit of up to 100%, making it a reliable way to plan your estate
• You want defined protection choices: With clearly defined options like Investment Class (75/75), Estate Class (75/100), and Protection Class (100/100), you can select a level of protection that aligns with your financial goals
• You value diversification with flexibility: With Equitable Life segregated funds, you get access to up to 50 professionally managed funds, which allows you to build a diversified portfolio across asset classes

How to buy Equitable Life segregated funds with PolicyAdvisor?

Listed below are the steps you need to follow to buy Equitable Life segregated funds with PolicyAdvisor:

• Connect with an expert advisor at PolicyAdvisor to discuss your financial goals and identify the segregated fund options available to you
• Our advisors will help you review each available option and compare their features
• Once you select the right option, you will then need to finalize the segregated fund contract with all the required details

Manulife Financial is one of Canada’s largest insurance and wealth management providers, offering a wide range of solutions that sit at the intersection of protection and investment. Among these, segregated funds stand out as a product designed for individuals who want to participate in market growth while still maintaining a level of security.

Understanding Manulife segregated funds

Manulife’s segregated fund offering, most notably through its GIF Select InvestmentPlus contracts, is designed for individuals who are not entirely comfortable with pure market exposure but still want their money to grow over time. The idea is simple on the surface but becomes more nuanced as you explore deeper: you participate in the markets, while limiting long-term downside risk through guarantees that apply at maturity or death.

When you invest in a Manulife GIF Select InvestmentPlus contract, your money is allocated to underlying funds managed by Manulife Investment Management. These funds can include equities, bonds, or balanced portfolios, depending on your risk appetite. However, unlike mutual funds where your returns are entirely dependent on market performance, segregated funds overlay an insurance component that introduces a safety net.

This safety net comes in the form of guarantees, which are contractually defined and apply under specific conditions. The most important thing to understand here is that you are not just investing; you are entering into a long-term agreement that blends wealth accumulation with financial protection.

Our Manulife segregated funds review

Manulife’s segregated fund lineup is quite compelling because it is built around flexibility rather than a one-size-fits-all structure. The company’s contract lineup includes GIF Select InvestmentPlus for retail investors, MPIP Segregated Pools for larger accounts, and the Manulife Segregated Fund RESP for education-focused planning.

The strongest part of the offering is GIF Select InvestmentPlus. Manulife describes it as a wealth-building and wealth-preservation solution that combines segregated funds with Guaranteed Interest Accounts, while also highlighting potential creditor protection and estate-planning advantages. It also emphasizes choice and simplicity by letting investors hold both market-linked and guaranteed options in one contract.

According to us, Manulife segregated funds are particularly relevant for individuals who are already thinking about insurance and want to extend that mindset into their investment strategy.

What types of segregated funds does Manulife offer?

Manulife’s current seg fund lineup is best understood through its three contract options. The first is GIF Select InvestmentPlus, which is the main retail contract and the one most individual investors will encounter. The second is Manulife Private Investment Pools. The third is the Manulife Segregated Fund Registered Education Savings Plan (RESP), which applies the seg fund structure to education planning.

1. Manulife GIF Select InvestmentPlus

Manulife GIF Select InvestmentPlus is the core retail segregated fund contract in the lineup. Manulife positions it as an attractively priced wealth-building and wealth-preservation solution with potential creditor protection and estate-planning advantages. More importantly, it is not limited to one type of investment option. The contract gives investors access to segregated funds along with Guaranteed Interest Accounts, which immediately makes it more flexible than a plain “choose a fund and stay there” product.

a. Guarantee options

Manulife claims that the maturity guarantee is 75% of all deposits made to segregated funds on the contract maturity date, even after market downturns. It also states that the death benefit guarantee will be 75% or 100% of all deposits made to funds, depending on the series chosen. 

For instance, under a 75/75 option, both the maturity and death benefit guarantees are set at 75 percent of your invested capital. If you invest $100,000, you are assured that at least $75,000 will be available at maturity or paid out to your beneficiaries, regardless of how the market performs. The 75/100 option increases the death benefit protection to 100 percent, ensuring your beneficiaries receive at least the full invested amount, even if markets decline significantly.

It is important to note that these guarantees apply to your deposits adjusted for any withdrawals or transfers. This means that accessing funds during the investment period can reduce the guaranteed amount, making the product most effective when held for the long term.

b. Reset feature

Another feature that adds a layer of strategic flexibility is the reset option. Manulife specifically states that InvestmentPlus 75/100 offers automatic annual resets of the death benefit guarantee to market value, if higher, on every series anniversary date, with the last reset occurring on the series anniversary date before the annuitant’s 80th birthday. That means the automatic annual reset feature should be explained specifically in connection with the 75/100 series, rather than described as a blanket feature of every guarantee series.

This is a strong estate-planning feature because it can help lock in growth for beneficiaries over time without requiring the investor to redeem or manually restructure the contract. In plain language, if the market value rises, the death benefit floor can rise with it, within the reset rules Manulife sets. That is a more precise and more useful explanation than simply saying “the product has resets.”

c. Choice between segregated funds, GIAs, and DIAs

A key differentiator of GIF Select InvestmentPlus is its ability to hold multiple types of investment options within the same structure. In addition to segregated funds, investors can allocate to:

• Guaranteed Interest Accounts (GIAs): GIAs provide predictable, fixed returns and are suited for capital preservation within the contract.
• Daily Interest Accounts (DIAs): DIAs offer short-term stability and liquidity, making them useful for managing near-term needs or reducing volatility. 

This is a meaningful feature because it changes the product from being just a market-linked insurance contract into something that can be used for portfolio construction. An investor can hold growth-oriented seg funds and also park money in GIAs or the DIA for stability and lower volatility, all under one contract. That is useful for investors who want to gradually shift risk levels over time without moving across multiple products or providers. 

d. Comprehensive fund selection

The GIF Select InvestmentPlus offers a comprehensive selection of segregated funds and portfolios across asset categories ranging from fixed income to specialty equity. That matters because it keeps the product from feeling overly conservative. Even though seg funds are often discussed mainly for guarantees and estate planning, Manulife still positions InvestmentPlus as a legitimate wealth-building solution with broad market exposure options.

In practical terms, this means the product is not just for people who want to hide in guaranteed products. It can also work for investors who still want diversified market participation but want a more structured wrapper around it. That is one of the main reasons the product feels more balanced than many generic seg fund summaries make it sound.

e. Flexibility as financial needs change

Manulife puts a lot of emphasis on flexibility, and this is one of the most valuable parts of the contract. Investors can move from the 75/75 to 75/100 series or move between segregated funds and GIA and DIA investments as financial needs change or during periods of volatility. This flexibility deserves more than a passing mention because it is one of the reasons the contract may appeal to people who do not want a rigid product. However, note that fund switches, and transfers may be subject to fees and charges, can result in tax consequences, and can impact segregated fund guarantees.

f. Estate-planning advantages and the probate benefit

Manulife explicitly states that, at death, contract proceeds can pass quickly and privately to designated beneficiaries, other than an estate, without legal, estate administration, and probate fees. This is one of the most meaningful real-world benefits of seg funds because it goes beyond investment performance and directly affects how efficiently wealth reaches the next person.

This is where the product becomes especially relevant for insurance-minded investors. In many traditional investment accounts, assets may have to move through the estate process before beneficiaries receive them. With a named beneficiary on an insurance-based contract, the proceeds can often move more directly. 

Manulife also gives an important disclosure: in Saskatchewan, jointly held property and insurance policies with a named beneficiary are included on the application for probate even though they do not flow through the estate and are not subject to probate fees; and in Quebec, the probate process and fees do not apply, though there is a verification process for certain wills. Those details are worth noting because they keep the probate explanation accurate rather than overgeneralized.

g. Potential creditor protection

Manulife seg funds also have creditor protection as a feature that may appeal to professionals and small business owners who are interested in protecting personal assets from creditors. This is another example of why segregated funds appeal to a different kind of investor than standard mutual funds. The value proposition is not just return; it is return inside a structure that may offer planning advantages that conventional products do not.

2. Manulife Private Investment Pools (MPIP)

Manulife Private Investment Pools or MPIP Segregated Pools are aimed at investors with an investment of at least $100,000 per contract. The product features a comprehensive suite of segregated pools, portfolios, and Guaranteed Interest Accounts, along with competitive fees, tiered management fee reimbursements, and built-in estate-planning advantages of guaranteed investment contracts.

This is an important distinction because MPIP is not just “GIF Select for richer investors.” It is presented as a more exclusive program with broader customization and fee-related advantages for higher account sizes. For most individuals, GIF Select InvestmentPlus remains the more relevant product, but MPIP becomes a consideration at higher investment levels.

3. Manulife Segregated Fund Registered Education Savings Plan (RESP)

Manulife also offers segregated funds within a Registered Education Savings Plan (RESP), allowing investors to combine education savings with insurance-based guarantees. This structure is particularly relevant for parents and grandparents who want to balance long-term growth with a degree of capital protection.

Unlike a traditional RESP invested in mutual funds, the Manulife Segregated Fund RESP integrates the same underlying investment approach used in GIF Select InvestmentPlus, while adding features such as maturity and death benefit guarantees. Typically, these guarantees are set at around 75 percent of the invested capital, which means that even in unfavourable market conditions, a portion of the savings remains protected over time.

At the same time, all standard RESP benefits continue to apply. Contributions grow on a tax-deferred basis, and government incentives such as the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB) can significantly enhance the total value of the plan. When funds are withdrawn for education, the taxable portion is generally taxed in the student’s hands, often resulting in minimal tax liability.

What makes this structure particularly interesting is its application in long-term planning. Education savings typically follow a defined timeline, which means market downturns closer to withdrawal years can be especially disruptive. By embedding guarantees within the RESP itself, Manulife attempts to reduce this risk without requiring investors to actively shift strategies over time.

Manulife segregated funds pros and cons

What other investment products does Manulife offer?

In addition to segregated funds, Manulife Financial offers a broad suite of investment solutions that cater to different financial goals and risk profiles.

1. Mutual Funds: Manulife provides mutual funds through its investment management division, covering a wide range of strategies including equity, fixed income, and balanced portfolios. These funds are actively managed and offer flexibility for investors who are focused primarily on growth.

2. ETFs: The company also offers exchange-traded funds, which combine diversification with lower costs, making them attractive for cost-conscious investors. For those seeking stability, Manulife’s guaranteed investment certificates provide fixed returns with full capital protection.

3. Annuities: These are another key offering, designed to convert savings into a predictable income stream during retirement. These products complement segregated funds by focusing on income security rather than accumulation.

Together, these options allow investors to build a diversified financial strategy, with segregated funds acting as a bridge between investment and insurance.

Are Manulife segregated funds worth considering?

Manulife segregated funds are most suitable when your priorities extend beyond pure return maximization. They are particularly valuable in scenarios where protection, predictability, and estate efficiency play a central role in financial planning.

For individuals approaching retirement, the guarantees can help preserve accumulated wealth while still allowing for some level of market participation. For those focused on estate planning, the ability to transfer assets quickly and privately to beneficiaries adds significant value.

However, if your primary objective is to achieve the highest possible returns at the lowest cost, these funds may not be the most efficient option. The higher fees and long-term commitment required mean they are better suited for investors who are willing to trade some growth potential for added security.

How to buy Manulife segregated funds in Canada?

Purchasing Manulife segregated funds involves working with a licensed advisor, as these products fall under insurance regulations rather than standard investment channels. An advisor will assess your financial goals, time horizon, and risk tolerance before recommending a suitable contract and guarantee option.

The process typically involves selecting your guarantee level, choosing the underlying funds, and naming beneficiaries. You can invest through a lump sum, periodic contributions, or a combination of both, depending on your financial strategy.

Platforms like PolicyAdvisor simplify this process by allowing you to compare options, understand trade-offs, and set up your investment with expert guidance.

When it comes to investing your money in Canada, most people immediately think of mutual funds. What if you could invest in the market and still protect a majority of your capital? That’s exactly where segregated funds (also called guaranteed investment funds) come in.

Unlike traditional mutual funds, segregated funds are offered by insurance companies and combine investment growth with built-in protection features like maturity guarantee and death benefits. How do you decide between the two?

This guide breaks down segregated funds vs mutual funds in Canada, helping you understand which option aligns better with your financial goals.

What are segregated funds?

Segregated funds (often called guaranteed investment funds or GIFs) are insurance contracts offered by Canadian life insurance companies. Your money is pooled into a professionally managed investment portfolio (similar to a mutual fund). Unlike a mutual fund, a segregated fund includes insurance guarantees: you can choose a guarantee level (e.g. 75% or 100%) of your invested capital at contract maturity or on death.

For example, a 100% guarantee means that if you invested $100,000, the insurer promises to pay you at least $100,000 back at the contract’s maturity date, even if the fund’s market value has dropped below that. This guarantee comes at a cost. Segregated funds have higher fees (MERs) than comparable mutual funds.

Segregated funds typically have fixed terms (commonly 10–15 years). At the end of the term, you receive either the market value or the guaranteed amount, whichever is higher. Many contracts offer resets: if the fund grows, you can “lock in” higher guaranteed values for future years. Withdrawals before maturity are allowed, but they reduce the guarantees: if you cash out early, you only get the current market value (which may be less than you invested) and may incur a surrender fee.

What are mutual funds?

Mutual funds are securities investments managed by investment companies. Each fund sells units or shares to the public, pooling the money into a portfolio of stocks, bonds or other assets. The fund’s value rises or falls with the market. Mutual funds have no principal protection: if markets drop, the NAV of your investment drops and you can lose money.

Mutual funds come in many varieties (equity, bond, balanced, sector, index, etc.) and typically have lower fees than segregated funds because no insurance feature is included. Investors in mutual funds generally pay management fees and sometimes sales commissions, but these are usually smaller.

Liquidity is a mutual fund strength: you can buy or sell mutual fund units on any trading day at the current NAV, often without penalty (some funds have early redemption fees, but these are relatively rare, especially in passive/index funds). Regulatory disclosure for mutual funds is robust: they publish fund facts and performance in standardized format under CSA rules. However, unlike segregated funds, they do not offer death benefit guarantees or creditor protection.

Segregated funds vs mutual funds in Canada: Key differences

While both options pool your money into professionally managed portfolios, they differ significantly in how they handle risk, guarantees, fees, and estate planning benefits. Understanding these differences is essential to choosing the right strategy for your long-term financial goals.

1. Capital guarantee

The biggest advantage of segregated funds is their guarantees. By contract, they promise a fixed percentage of your principal back at maturity or death. If you invest $100,000 with a 100% maturity guarantee, and 10 years later the fund is worth $80,000, the insurer will pay you $100,000. This safety net removes downside risk on your guaranteed portion (provided you hold the fund to term). Mutual funds have no guarantees: you get only the market value when you cash out.

2. Creditor protection

Another benefit is creditor protection and estate planning. Because guaranteed funds are insurance contracts, in most provinces any funds with a named spouse/family beneficiary are exempt from creditors (for example, in bankruptcy or lawsuit). Furthermore, upon the owner’s death, segregated fund proceeds go directly to the beneficiary and bypass the estate. This means no probate fees and quicker settlement.

In contrast, mutual funds held outside a registered plan typically must pass through the estate, be probated, and can be seized by creditors (unless locked inside an RRSP/RRIF with a spouse beneficiary).

3. Estate planning

You can name beneficiaries on your segregated fund policy. On death, the death benefit (higher of market value or guaranteed amount) is paid directly to beneficiaries, not through your estate. This allows for privacy and speed. Beneficiaries pay no tax on this payout, and your estate avoids probate fees. This feature is particularly valuable for estate planning, blended families, or business owners who want to direct assets to heirs outside of wills.

If held outside a registered plan, mutual fund units pass to the estate of the deceased. The estate’s executor then liquidates or distributes the fund as directed by the will, which can involve probate delays/costs. Alternatively, a mutual fund held in an RRSP/RRIF can have a named beneficiary (spouse, for example) who will receive the value tax-deferred. But mutual funds themselves offer no death benefit guarantees.

4. Fees and management expense ratios (MERs)

Guaranteed investment funds generally carry higher MERs because they include insurance features. These fees cover the guarantee costs, mortality charges, etc. It’s common for GIF MERs to run 1-3% or more annually. Many mutual funds also charge management fees and commissions, but overall mutual fund costs are usually lower because no guarantee component is added. Mutual funds, especially passively managed or index funds, often have MERs below 1%.

Higher MERs mean that, all else equal, mutual funds can outperform similar segregated funds over time. The trade off is that the segregated fund’s guarantees may save you from losses (at a cost). It’s important for a person to compare net returns.

Below is a typical illustration of MER differences for hypothetical funds (the actual values vary by provider):

5. Returns and risk profiles

Both segregated funds and mutual funds invest in market securities, so their potential returns depend on underlying assets. A high-equity mutual fund may have high long-term growth (with high volatility), whereas a guaranteed fund might invest more conservatively to ensure it can meet the guarantee.

In general, mutual funds can pursue any strategy (e.g. all-stock, bonds, balanced, sectors) and fully participate in markets. Their returns over many years are typically higher on average than a guaranteed fund of similar asset allocation, because no funds are spent on guarantees. However, mutual funds bear full market risk: returns can be negative and you can lose capital if you sell at a low point.

Segregated funds often hold a mix of equities and bonds as well, but with the built-in feature that the insurer absorbs downside risk up to the guaranteed floor. Your principal is “safe” at maturity/death even if markets fall, and you might lock in gains with resets. Importantly, if you hold a segregated fund to its maturity date (and don’t withdraw early), you are essentially guaranteed to get back what you put in (75–100%) plus any upside if investments did well. So risk to your principal is much lower than a comparable mutual fund, which could go very low in a worst-case market crash.

6. Tax treatment

a. Registered accounts (RRSP/TFSA/RESP): Segregated funds and mutual funds enjoy the same tax benefits in registered accounts. In an RRSP or RRIF, neither is taxed until withdrawal. In a TFSA, all growth is tax-free regardless of product. In a RESP, growth is tax-deferred and taxed in the beneficiary’s hands later. There is no special tax difference between GIFs and mutual funds inside these vehicles.

b. Non-registered accounts: Both produce taxable distributions annually (interest, dividends, capital gains). You must report these on your tax return each year. Upon selling or maturing:

• Mutual Funds: Any sale above your ACB is a capital gain (taxed at 50%).
• Segregated Funds: The insurer’s guarantee top-up is treated as a capital gain. If on maturity or death the insurer pays the guaranteed amount, you report a capital gain if that amount exceeds your ACB. If the guarantee just brings you back to your ACB, there is effectively no gain.

Note: A key advantage of guaranteed investment funds is that the death benefit paid to a beneficiary, is not taxed to the beneficiary. A mutual fund in a non-registered account is similarly disposed of at death (deemed disposition) and taxed in the estate.

7. Liquidity and redemption rules

Guaranteed funds typically require a long-term commitment. To keep the full guarantee, the contract must run its term (often 10+ years). If you withdraw money before maturity, you receive only the current market value (which might be below what you put in) and you forfeit some or all guarantees. Insurers may charge a redemption fee for early cashouts.

Mutual funds, in contrast, are highly liquid. You can redeem units for the current NAV on any business day (no minimum hold, no charges in most no-load funds). This flexibility means you can access money or rebalance frequently, unlike a GIF. For emergency funds or short-term savings, mutual funds or high-interest savings can be better suited; segregated funds are meant for long-term savings with guaranteed outcomes.

8. Regulatory oversight

Segregated funds are regulated as insurance. Federally, the Office of the Superintendent of Financial Institutions (OSFI) requires insurers to hold reserves for segregated fund guarantees. Provincially, regulators like FSRA (Ontario), FCAA (Alberta), etc., apply insurance laws. In 2023 the Canadian Council of Insurance Regulators (CCIR) released guidance on segregated funds, affirming that they are insurance contracts with statutory guidelines. Ontario’s FSRA will also require insurers to report total cost and performance of each segregated fund (aligning with mutual fund style reporting) starting in 2027

Mutual Funds are regulated as securities. The Canadian Securities Administrators (CSA) governs fund disclosure, sales practices, etc. CIRO (Canadian Investment Regulatory Organization) oversees the firms that sell mutual funds (formerly IIROC for dealers, MFDA for mutual fund advisors). Mutual funds must file fund facts and reports with provincial regulators. Investor protection rules (like KYC, suitability, conflict of interest) apply to mutual funds through CIRO’s rules.

Segregated vs mutual funds: Comparison table

Who should choose segregated funds vs mutual funds in Canada?

While both segregated funds and mutual funds have their place, the better choice ultimately depends on how you balance growth with protection.

Segregated funds may be the better choice if you:

• Want 75%–100% protection of your investment at maturity or death
• Care about ensuring your family receives a guaranteed payout
• Want to bypass probate and simplify wealth transfer
• Need creditor protection, especially as a business owner
• Prefer a more secure, insurance-backed approach to investing

Mutual funds may work better if you:

• Are focused purely on maximising returns
• Are comfortable with market ups and downs
• Prefer lower fees and full liquidity
• Don’t need estate or protection-focused features

If your goal is simply to grow wealth, mutual funds can do the job. But if you’re looking to grow your money while also protecting it, and ensuring it reaches the right hands when it matters, segregated funds offer a more well-rounded solution.

Get expert advice on segregated funds in Canada

At PolicyAdvisor, our licensed advisors can guide you through segregated funds (guaranteed investment funds) and help you understand how they fit into your overall financial plan, whether you’re planning for retirement, protecting your savings, or thinking about how your wealth will be passed on.

Schedule a free call today and get personalized advice on building a strategy that’s designed not just to grow your money, but to protect it too.

Empire Life is a well-established name offering a range of investment and insurance solutions to Canadians. For over 100 years, Empire Life has been offering investment solutions that are helpful in building wealth, generating income, or achieving financial security. Segregated funds (also called Guaranteed Investment Funds, or GIFs) are insurance contracts that invest in underlying funds and add protection for your capital at maturity and/or death.

Empire Life segregated funds provide guarantees ranging from 75% to 100% of your invested capital at maturity or death. Let’s take a detailed look at the segregated fund options available with Empire Life.

Our Empire Life segregated funds review

Empire Life defines its segregated funds through a simple, protection-based structure, offering three options: 75/75, 75/100, and 100/100. When you invest in an Empire Life segregated fund, your money is allocated to underlying funds. These fund options include balanced funds, Canadian equity, global and international equity, U.S. equity, and income funds. These funds are managed by established asset managers, including Empire Life Investments, Vanguard, Canoe Financial, and others. These asset managers help you build a diversified portfolio based on your risk tolerance and financial goals.

The key feature of Empire Life segregated funds is the flexibility to choose how much protection you need. Whether you prioritize lower fees with basic guarantees or higher protection with added features like resets, Empire Life allows you to align your investment strategy accordingly.

Overall, Empire Life segregated funds are a good choice for a diverse range of investors, from conservative to aggressive, and for those planning for their retirement or estates.

What types of segregated funds does Empire Life offer?

Empire Life, also a leading life insurance company in Canada, structures its segregated funds into three options: 75/75, 75/100, and 100/100. Instead of offering multiple series, Empire Life keeps its segregated fund options straightforward, with each option defined by how much protection it provides at maturity and death, along with added features such as resets and estate benefits.

All three options share common features: they provide insurance guarantees, a wide range of fund choices, and automatic annual death-benefit resets up to a certain age. However, the key difference lies in how much protection you get and who it suits best. In the section below, let’s take a closer look at the three segregated fund options offered by Empire Life.

1. Series 75/75

The Empire Life 75/75 option is designed for investors who are focused on long-term growth with basic protection. It is suitable for those who want creditor protection with guaranteed benefits at competitive fees.

Some of its key features and benefits include:

• Death and maturity guarantee: The 75/75 option offers a 75% guarantee at both maturity and death, ensuring that at least 75% of your invested capital is protected regardless of market performance
• Lower fees: Since the level of protection is lower compared to other options, this structure typically comes with lower fees, making it more cost-effective for growth-oriented investors
• Access to a wide range of funds: You can choose from a broad lineup of funds across asset classes such as equity, fixed income, and global equity funds, allowing you to build a diversified portfolio. These funds are offered by leading managers, including Empire Life Investments, Fidelity Investments, Vanguard, and Canoe Financial
• Reset feature: This series lets you protect market gains by increasing the death benefit guarantee until age 80

2. Series 75/100

The 75/100 option is designed for investors who want market growth with enhanced estate protection. It is particularly relevant for those who want to maximize their legacy.

Some of its key features and benefits include:

• 100% death benefit guarantee: This option ensures that your beneficiaries receive 100% of the invested amount or market value, whichever is higher upon death, making it a strong tool for estate planning
• 75% maturity guarantee: Like the 75/75 option, it also offers a 75% guarantee at maturity, despite any market fluctuations
• Balanced fees: While fees are higher than the 75/75 option, they remain moderate compared to the 100/100 option, offering a balanced approach between cost and security
• Reset options: The series 75/100 also comes with an automatic annual death benefit reset until age 80. This means that if your investment value increases over time, your guaranteed death benefit can be locked in at higher levels

3. Series 100/100

The 100/100 option is designed for investors who want maximum protection. It is particularly suitable for those nearing retirement or prioritizing estate protection.

Some of its key features and benefits include:

• Death benefit: The death benefit is 100% of deposits if the policy is issued before the annuitant’s 80th birthday, and 75% of deposits if issued after age 80.
• Maturity benefit: The maturity guarantee is structured differently compared to other options. If there are more than 15 years until maturity, 100% of your deposits are guaranteed. However, if there are less than 15 years until maturity, the guarantee reduces to 75% of the deposits
• Reset options: Automatic annual death benefit resets until age 80, which helps lock in market gains and increase the guaranteed value over time. 
• Maturity benefit guarantee resets: This series also has two client-initiated maturity benefit resets per calendar year, provided there is at least 15 years to the maturity date, up to age 90. This lets you to enhance your maturity guarantee
• Higher fees for enhanced protection: Because of the higher level of guarantees and added features, this option generally comes with higher fees than the others
• Maturity date: The maturity date is at least 15 years after the initial deposit, unlike the other two options, which have the same date as policy maturity

Empire Life segregated funds pros and cons

What other investment products does Empire Life offer?

Apart from segregated funds, Empire Life also offers the following investment options:

• Guaranteed Interest Contract (GIC): Empire Life GICs are fixed-income investments that provide guaranteed principal and predictable returns. They come with flexible term options ranging from short-term to long-term and can be held in both registered and non-registered plans. These products are suitable for conservative investors who want stability, capital protection, and steady growth without exposure to market volatility
• Immediate Annuities: Empire Life offers immediate annuities that provide a secure and predictable income stream in exchange for a lump-sum investment. You can choose from multiple options, including single life, joint and last survivor, and term-certain annuities, with or without guaranteed payout periods. The minimum deposit is $7,500, while the maximum deposit can be $1,000,000
• Option Plus Group RSP: The Option Plus Group RSP is a flexible retirement savings plan designed primarily for small businesses and their employees. The plan provides access to a mix of segregated funds, Guaranteed Interest Options (GIOs), and treasury interest options, giving members the flexibility to choose investments based on their risk tolerance

Are Empire Life segregated funds worth considering?

Yes, Empire Life segregated funds are worth considering. They become useful when:

• Estate planning matters: Segregated funds allow you to name beneficiaries directly, which can help bypass probate and ensure faster wealth transfer. Combined with death benefit guarantees (up to 100%), this makes them effective for preserving and passing on wealth
• You prefer flexibility: With options like 75/75, 75/100, and 100/100, you can choose how much protection you need instead of overpaying for features you may not use
• You want growth with a safety net: These funds provide exposure to a wide range of investments, while still offering built-in guarantees. This allows you to participate in market growth without taking on full market risk

How to buy Empire Life segregated funds with PolicyAdvisor

Want to buy Empire Life segregated funds with PolicyAdvisor? Here are the steps you need to follow:

• Connect with an advisor: Our expert advisors at PolicyAdvisor will help you understand your financial goals, investment timeline, risk comfort, and estate planning priorities. Based on this, we will help identify which Empire Life guarantee option (75/75, 75/100, or 100/100) fits your needs the best
• Review and compare your options: We will guide you through the different segregated fund choices available under Empire Life, including underlying fund options, guarantee levels, and features like resets
• Complete your investment setup: Once you have selected the right option, we will help you finalize the contract by choosing your guarantee structure, selecting funds, naming beneficiaries, and deciding how much you want to invest

If you are trying to balance growth with security while investing, the two popular low-risk options are guaranteed investment certificates (GICs) and guaranteed investment funds (GIFs). The latter are essentially segregated funds offered by insurance companies in Canada. While both promise some form of capital protection, they work very differently. This blog will help you decide which is right for your financial goals.

What is a guaranteed investment certificate (GIC)?

A GIC is a fixed-term deposit issued by banks and federally regulated trust/loan companies. When you buy a GIC, you lock in your money for a fixed term (e.g. 1-5 years) and earn interest at a fixed or variable rate. The key features are:

• 100% Principal Protection: Your original investment (principal) is guaranteed if you hold the GIC to maturity
• Interest Income: You earn interest (often fixed) over the term. Basically, you get “100% of your principal and interest”
• CDIC Insurance: Eligible GICs are protected by the Canada Deposit Insurance Corporation up to $100,000 per depositor per institution. This means even if the bank fails, you won’t lose your covered deposit.
• Term Length: Typical GIC terms offered are from 30 days (or a few months) up to 10 years. Terms beyond 10 years are uncommon.
• Fixed Returns: GIC returns are moderate. You know your rate upfront. Hence, GICs are popular as “low-risk investments” guaranteeing your principal and a fixed interest.

Because of these features, GICs are ideal for risk-averse investors who want guaranteed returns and safety of capital. They’re commonly used for short- or medium-term savings, emergency funds, or portions of a retirement portfolio where certainty is paramount.

What is a guaranteed investment fund (GIF)?

A guaranteed investment fund (GIF) in Canada is an insurance-based investment. GIFs are essentially a form of segregated fund contract sold by life insurance companies. Key features include:

• Market Exposure + Guarantees: GIFs invest your money in portfolios (similar to mutual funds), so you can grow with the markets. At the same time, they carry an insurance guarantee on your principal, typically 75% or 100% of your investment at contract maturity or on the death of the policyholder

• Death Benefit: GIFs include a guaranteed death benefit. Your named beneficiaries receive at least the guaranteed amount or the market value at death, whichever is higher

• Creditor Protection: Segregated funds can offer creditor protection if a qualified beneficiary is named (for example, your spouse or child). This makes GIFs attractive for business owners and professionals.

• Probate Bypass: Naming beneficiaries directly on the contract means GIF assets often bypass probate. The beneficiaries are paid directly within weeks after necessary documentation, avoiding lengthy estate settlement. However, exact timing varies by insurer and claim processing.

In sum, GIFs are suited to those who want some market growth but still value guarantees and estate-planning features. They carry more risk than a GIC (because of market exposure) but can potentially earn higher returns, especially if markets do well.

How GICs and GIFs compare: Guarantees, risk & protection

1. Liquidity and redemption

Traditional GICs come in redeemable and non-redeemable forms. A cashable/redeemable GIC lets you take out money early (often with a lower interest rate or no interest if you withdraw within a minimum holding period). A non-redeemable GIC must be held until maturity (with a few exceptions, like death of the holder). If you withdraw a cashable GIC early, you may incur a penalty or lose interest. Thus, GICs offer predictability but potentially limited access.

You can usually withdraw money from a GIF (segregated fund) at any time (subject to normal transaction processing). However, withdrawals reduce the guaranteed value of the contract. For example, if you pull out funds before maturity, the insurance guarantee (e.g., 75% of original principal) shrinks proportionately. In other words, you get liquidity but at the cost of lowering how much is protected by the guarantee.

2. Fees and returns

GICs offer fixed returns (usually quoted annually) with no ongoing fees. The bank locks in an interest rate. For example, as of 2026, a 1‑year non‑redeemable GIC rate at major banks commonly ranges around 3.5% – 5.0% (varies by issuer and account type). Over a decade of low rates, GIC returns have been modest. However, GIC interest is fully taxable (so after tax, real gains can be low if you’re in a high bracket).

For GIFs (seg funds), returns depend on market performance of the underlying funds. Over time, GIFs can outperform GICs if markets do well. However, that extra potential comes with fees. GIFs have management expense ratios (MERs) typically 1–3% or more (vary by fund). However, some insurance companies offer “low fees” for fixed-income-heavy portfolios and even lower fees at higher account sizes.

Still, expect costs higher than a bank GIC. The trade-off is that you pay to transfer some investment risk to the insurance company (via guarantees) and get the insurance benefits. The bottom line is that GICs give predictable, modest returns with no fees. GIFs may deliver higher returns over time, but charges eat into performance.

3. Tax treatment (registered vs non-registered)

a. Registered accounts (RRSP, TFSA): Both GICs and segregated funds can be held inside RRSPs or TFSAs, where growth is tax-deferred or tax-free. In an RRSP or TFSA, interest, dividends, and gains accumulate without annual tax, so both products are effectively sheltered. (Withdrawals are taxed normally from an RRSP, or tax-free from a TFSA.)

b. Non-registered (taxable) accounts: Interest from a GIC is fully taxed as income at your marginal rate. There is no favourable rate. For example, if you earn $1,000 interest on a GIC, you must add that entire amount to income and pay tax accordingly. GIFs behave like mutual funds for tax purposes. Any interest earned by the fund is taxed as income, Canadian dividends get the dividend tax credit, and capital gains are taxed at 50% inclusion. So the portion of your return coming from capital gains is more tax-efficient.

Note that if a segregated fund realizes a capital loss, that loss can be passed through to you to offset gains (unlike a mutual fund, where losses stay in the fund). In practice, this means GIFs can produce lower net tax than a GIC if a significant part of the returns is capital gains.

4. Estate and creditor protection

One of the main advantages of segregated funds over GICs (and other investments) is their insurance protection features:

• Beneficiary Payout: A segregated fund lets you name a beneficiary (spouse, child, etc.) who will receive the fund’s death benefit directly. In fact, death benefits “pass quickly and directly to the named beneficiaries”, without going through probate.
• Probate Bypass: Because the funds are paid outside your estate, the usual delays and fees of probate are avoided. This can save your heirs time and money.
• Creditor Protection: If you name a preferred beneficiary (usually a spouse or child), the segregated fund assets are generally protected from creditors. Certain GIF plans offer protection from creditors during life and after death. 
• Estate Planning: Segregated funds are often used as estate-planning tools. The guaranteed death benefit can be structured to pay 75% or 100% of premiums to heirs. Some GIFs for retirees and estate transfer even reset guarantees to lock in market gains for beneficiaries.

In contrast, GICs do not offer any special estate or creditor benefits. A GIC in a non-registered account forms part of your estate; it will be distributed according to your will and may incur probate fees. There is no death benefit beyond the owner’s estate. Also, except for RRSP-held GICs, GICs have no extra creditor protection beyond general exemptions.

GICs vs GIFs: Comparison table

Pros and cons of GICs and GIFs

1. GICs (Guaranteed Investment Certificates)

Pros:

• 100% capital protection at maturity
• CDIC insurance (up to $100,000) adds security
• Simple and transparent: you know the exact return in advance
• No fees or maintenance
• Flexible terms, including cashable options for liquidity

Cons:

• Low returns (often barely above inflation)
• Interest is fully taxable at your rate
• No additional benefits (no death benefit, no estate perks)
• If interest rates rise, you might miss out (though laddering GICs can help)

2. Guaranteed Investment Funds (Seg Funds/GIFs)

Pros:

• Market-linked growth potential (higher returns possible)
• Partial principal guarantees (75–100%) at maturity/death
• Death benefit to beneficiaries, bypassing probate
• Potential creditor protection if structured properly
• Can reset guarantees to lock in gains in some contracts
• Allow exposure to equity/bonds via one insurance product

Cons:

• Higher fees (MERs and insurance fees) reduce net returns
• Returns are not guaranteed and can be volatile in the short term
• Withdrawals reduce guarantees
• More complex products (contracts can be complicated)
• Tax treatment can be less favourable for interest or dividends compared to a GIC’s full interest (though capital gains help)

Who should consider GICs vs GIFs?

Choose GICs if you:

• Are highly risk-averse and primarily want capital preservation (e.g. saving for a known future expense)
• Need funds within a few years (short/medium term horizon). Short GICs (e.g. 1-year) add some liquidity
• Want a guaranteed interest rate locked in (especially if you expect rates to fall)
• Are already in a low tax situation or hold them in a TFSA/RRSP so taxation on interest is not a big concern
• Have smaller investment amounts (CDIC still applies, and high-net-worth features of GIF may not be needed)

Choose GIFs if you:

• Want market growth potential but still want downside protection on most of your principal
• Are thinking about estate planning and want a tax-efficient, fast way to pass wealth 
• If you’re a business owner or professional who needs creditor protection
• Are comfortable with slightly higher fees in exchange for guarantees and insurance benefits
• Have a longer investment horizon (often 10+ years for full maturity guarantees to vest) and don’t need frequent liquidity
• Want insurance-backed products and possibly to allocate part of your portfolio to conservative but slightly higher-yielding assets

Often, Canadians use both in a portfolio: a GIC ladder for short-term needs and cash reserves, and seg funds for money earmarked for retirement/estate that can afford higher fees for insurance features.

Get expert advice on guaranteed investment funds (GIFs) in Canada

Navigating guaranteed investment funds can feel overwhelming, especially when you’re trying to balance growth, protection, and long-term financial goals. At PolicyAdvisor, our licensed advisors can help you understand GIFs. Whether you are looking for market-linked growth with creditor protection or added estate planning benefits, we will help you choose a GIF tailored to your needs.

Schedule a free call today and get personalized guidance on how guaranteed investment funds can fit into your financial plan.

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.

Myth 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.