What are the advantages over mutual funds?
- Maturity and death benefit guarantees (up to 100% principal protection)
- Resets to lock in your market gains
- Asset inheritance (the beneficiary directly obtains the assets, eliminating the inheritance procedures and fees)
- Creditor and liability protection (protection from creditors’ claims and liquidation)
- Privacy protection (prevent others from viewing)
Of course, while the principal is guaranteed, the management fee (MER) of the segregated fund is 0.2-1% higher than that of the mutual fund. In addition, the contract period generally takes 10 years, which is a long-term investment.
Guarantees of the segregated fund generally have three series, the capital preservation level is 75/75, 75/100 and 100/100, the number in front of the slash is Maturity Guarantee, and the number behind is Death Benefit Guarantee. For many people, the maturity guarantee is of little significance, because it usually expires after 10 years; but the death guarantee is valued by most investors, because no one can predict the risks of life and their own lifespan. If you choose the 100% death guarantee fund type, you can pass on 100% capital preservation to your loved ones in case of unfortunate accidental death, no matter whether the investment is lost or not!