What is the difference between seg funds and mutual funds

Protection from market volatility: Most mutual funds are affected by changes in the stock market. If the markets perform poorly, you could end up with a lot less than you started with.

Creditor protection: Mutual funds have no protection from creditors except in limited circumstances. Probate or estate administration fees can be as much as 1. During probate, assets are frozen to bypass probate not only saves up to 1. Any thoughts on how we could make the experience even better?

All Resources. Carefully consider your need for these features before you buy. Always know the latest news on investor initiatives and research, educational resources and fraud warnings by signing up for our newsletter. View past issues. Warning If you cash out before the maturity date Maturity date The date when an investment becomes due. Guaranteed death benefit Death benefit Money that your life insurance or savings and pension plan s pays to your estate or beneficiary after your death.

Example: If you contributed to the Canada Pension Plan, money may go to your estate, spouse or common-law partner and children. The money goes to finance government programs and other costs. This amount is not subject to probate fees if your beneficiaries are named in the contract. Potential creditor Creditor A person or institution that lends money. You may also be charged a penalty.

Higher fees — Segregated funds usually have higher management expense ratios MERs than mutual funds. This is to cover the cost of the insurance features.

All articles. Mutual funds vs. Share on. What are mutual funds and segregated funds? Advantages of segregated funds Maturity and death benefit guarantees One benefit of a segregated fund policy is that they include guarantees to your original investment. Footnote 1 1 That said, should you choose a registered mutual fund or segregated fund policy, as opposed to a non-registered one, you can pass funds on to your named beneficiaries without having them go through your estate. Speak with a financial security advisor to learn more.

Footnote 3 3 Creditor protection depends on court decisions and applicable legislation, which can be subject to change and can vary from each province; as such, it can never be guaranteed. Having a segregated fund contract can help lower the overall cost of administering an estate. With a segregated fund contract, the money within the contract could be exempt from the claims of creditors if certain beneficiary designations have been made.

The ability to have creditor protection can be important to small business owners. A segregated fund contract may protect personal assets held in that contract from any professional liability. Creditor protection is possible when there are certain family member beneficiary designations. You and your heirs also benefit from bypassing the estate and possible probate, as well as potential creditor protection. This article does not provide tax, legal, or estate planning advice.

Please consult with professional advisors before acting on any information contained in this article. Any amount that is allocated to a segregated fund is invested at the risk of the contract owner and may increase or decrease in value. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Does it pay to stay invested when markets fall? Our investment solutions are built to solve the real needs of investors.

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