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An investing/insurance alternative
By Jeff Lakie
Segregated funds are the insurance company's answer to mutual funds. There
are many differences and similarities but if you are putting together a financial
plan that includes insurance and investments, you'll probably want to consider
a segregated fund.
Segregated funds are also called individual variable insurance contracts
(IVIC's) and they'll be offered by a many insurance companies. Like mutual
funds, they are investment vehicles, but like insurance, they have guarantees
and tax advantages.
How are they like mutual funds?
Like mutual funds, you can choose to put your segregated fund money into
any number of different types of segregated fund. For example you can
choose growth oriented funds or bond funds or some combination of both,
which provide you with an investment vehicle that matches your goals.
How are they like insurance products?
But there are four insurance-related aspects of segregated funds that make
them an attractive product for many people.
1. First, is the maturity guarantee. A segregated fund offers a guarantee
of at least 75% after 10 years (although some segregated funds offer maturity
guarantees of 100%!).
2. As well, segregated funds offer attractive death benefits, which work
in a similar way to the maturity guarantee: your survivors will receive the
difference between the guaranteed amount and the market value of the fund
at your death.
3. Because segregated funds are insurance products, they also offer
creditor protection, so that if creditors seize your assets, they cannot touch your
segregated fund.
4. Lastly, segregated funds bypass probate so that you can easily
transfer the money to a beneficiary upon your death without the costly fees
associated with probate.
Like all insurance and investment vehicles, segregated funds are not for
everyone. For example, the guarantees do bring a higher cost in order to
enjoy the segregated fund. However, segregated funds are growing in
popularity, so many people feel that the guarantees are worth the cost.
These are just highlights of segregated funds. There are many more aspects
you should be aware of. But, if you're interested in a segregated fund and what
one can do for your financial portfolio, contact your insurance company and
see if they sell them. If they do not, you can probably find another insurance
company that will be able to help you if you look around.
About the Author
Jeff Lakie is the founder of Insurance Information a website providing information on Insurance
Article Source: http://www.simplysearch4it.com/article/11948.html
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