SEGREGATED FUNDS

Segregated funds are a unique substitute for mutual funds.  They are very similar in how the look and feel as an investment.  The primary difference is that all segregated funds come with either a seventy five or one hundred percent guarantee of your original principal at maturity, which ever you choose.   They offer a death benefit guarantee with the same percentage or market value, whichever is higher.  Segregated funds also offer creditor protection* in most cases.  Creditor protection is a great benefit if you are self employed.  The most commonly used benefit of segregated funds is the fact that you can have a "named beneficiary" on non-registered plans to avoid probate and the funds pass directly and privately to the named beneficiary/beneficiaries.

*  Creditor protection cannot be claimed if know in advance that there may be a judgement or claim placed on your assets in advance.

INSURANCE

People often think of Life Insurance as a financial instrument purchased to replace income.

While true for most Term Insurance, the majority of in-force Permanent Life Insurance is now held for investment purposes by large corporations such as banks, financial institutions, and Fortune 100 companies.

Wealthy Canadians buy Permanent Life Insurance as an alternative investment to low risk, low yield, highly-taxed investments like bonds, GICs , etc.

They use Permanent Life Insurance as a worry-free investment that can grow at an equivalent rate in excess of 10%, can be accessed tax-free, and passed along to families and favourite charities tax-free.   See this example.

The unique tax treatment of Life Insurance policies under Canada’s Income Tax Act makes it a key component in Succession Planning.

Investments

Permanent Insurance as an investment

Tax minimization/elimination

Succession Planning