The Money Management Newsletter: Choosing Financial Services
Segregated Funds versus Mutual Funds

"While on one side of the coin they appear to be similar investments in many respects."

They are both pools of financial assets managed by investment professionals, they cover all of the different asset categories which are designed to fit a wide variety of investment objectives. Flip the coin over and you will find a number of differences which are worth noting. Segregated Funds, which are available only from Life Insurance Companies, provide investors with a number of benefits which are simply not available from Mutual Funds:

To explain, most life insurers offer 80% of the above noted benefits, the stock market guarantee is unique to segregated funds.

Here's how they work:

Maturity Guarantee:

The insurer provides a Maturity Guarantee which ensures that investors will receive no less than 75% of their net deposit to any of the segregated funds on their annuity date, regardless of market performance.

Death Benefit:

At plan issue, this benefit protects 75% of an investor's net deposits. Each year, the guarantee increases by 5% until either it reaches 100% or the investor reaches age 80.

Creditor Protection:

Investments held with a life insurance company are afforded a degree of creditor protection when an irrevocable or preferred beneficiary such as a spouse, parent or child is named.

Probate Bypass:

Annuity policies with a named beneficiary bypass the delays and expense of probate.

Stock Market Guarantee:

Here we illustrate Maritime Life's product, The Stock Market Guarantee protects investors from downturns which happen to coincide with an investor's maturity or retirement date. It does this by effectively locking-in the highest value obtained by an investor's applicable investments in the period ending ten or more years from his/her annuity date. In the final ten years, an investor's guaranteed value is further increased by 75% of net deposits. Some funds are excluded from this type of guarantee such as the Global Equities, Pacific Basin and Eurasia funds.

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