Investments with a safety net, explained simply.

What they are

These are investment funds held inside a contract with an insurance company. Professional managers invest the money in a mix of stocks and bonds, the same as many other funds. The difference is the insurance contract wrapped around it, which adds features ordinary investments don’t have. Their formal name is segregated funds.

Feature 1: a guarantee on what you put in

The contract guarantees a percentage of what you invested, usually 75% to 100% of your deposits (less any withdrawals), depending on the contract series you choose and its terms, on two occasions:

• At maturity: a set date in the contract, often 10 or 15 years after you invest.
• At death: the people you name receive at least the guaranteed amount.

In between, the value still goes up and down with the markets. The guarantee is a floor on specific dates, not a promise of growth.

Feature 2: straight to the people you name

Because they’re insurance contracts, you can name a beneficiary. When you die, the money can generally go directly to them, outside your estate. That typically means no wait for probate, no Ontario Estate Administration Tax on that amount, and more privacy for your family, but ownership, the designation and the contract terms all matter, and a lawyer can confirm for your situation.

Feature 3: potential protection from creditors

In certain circumstances, with the right beneficiary named, these investments can be protected from creditors. That can matter a great deal to business owners and professionals. It isn’t absolute, and the details depend on your situation.

What they cost

The guarantees aren’t free. Fees are usually higher than for a comparable fund without them, and the more guarantee you choose, the higher the fee tends to be. That trade-off is worth looking at openly, not glossing over.

Who they may not suit: money you’ll need in the next few years, or anyone whose priority is the lowest possible fee and who is comfortable without a guarantee.

The fine print that matters

Any amount allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Guarantees apply only as described in the contract, including the maturity date and any conditions on withdrawals.

General information, not a recommendation. The right investment depends on your goals, timeline and comfort with ups and downs. If you need something outside what I’m licensed to offer, I’ll tell you and point you to someone who is.