Overview
A segregated fund is a type of pool investment which guarantees a specific percentage of return upon maturity. These are similar to mutual funds but are offered through insurance companies.
The term “segregated” is used because the funds are kept separate from the issuing companies other investment funds. Your net premiums are invested in the segregated funds of the insurer. These funds are subsequently invested in securities such as stocks, bonds, and money market investments. The primary difference between a segregated fund and a mutual fund is that there is a principal guarantee on maturity or death. Additionally, the funds are protected from creditors.
The primary difference between a segregated fund and a mutual fund is that there is a principal guarantee on maturity or death. Additionally, the funds are protected from creditors. The estate value is protected at death, and the beneficiaries receive either the guaranteed death benefit or the market value depending on whichever is greater. Hence, segregated funds are considered to be one of the best options for investment.