Segregated funds are similar to mutual funds but are issued through an insurance company. Segregated funds are governed by the Insurance Act and are known also as individual variable annuities. Advantages to segregated funds generally relate to protection, as follows: death benefit, maturity guarantees, ability to bypass probate and the potential for creditor protection. These added benefits generally come with a slightly higher annual cost often reflected in the management expense ratio (MER). Depending on an individual’s personal circumstances, segregated funds may play a critical part in minimizing overall risk.
