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Segregated funds in Canada
Market growth with a written guarantee underneath. Estate bypass. Creditor shielding. The investment a mutual fund cannot replicate.
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Answer all our questions in a timely manner, and the process was much more simple than I was expecting. We had our life insurance sorted and approved within a few days. I really like that they did the comparisons of policies for us.
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What is a segregated fund?
A segregated fund (often shortened to seg fund) is an insurance contract from a Canadian life insurance company. Behind that contract sits a professionally managed pool of stocks and bonds, similar to a mutual fund. The difference is what wraps around it: a written guarantee that you, or your beneficiaries, will get back at least 75 percent or 100 percent of what you originally invested at maturity or on death, even if markets dropped in between.
Some insurers market the same contract under a different label, calling it a guaranteed investment fund or GIF. Legally and structurally it is the same product. Because guaranteed investment funds sit under provincial insurance law instead of securities law, they can do three things a mutual fund cannot: guarantee your principal, pass directly to a named beneficiary outside of probate, and provide potential protection from creditors.
How does segregated funds work?
The investment
Inside every GIF is a diversified pool of investments run by professional managers. You pick the mix that matches your goals: equity-heavy for growth, fixed-income for stability, or a balanced blend in between. Day to day, the portfolio rises and falls with markets exactly the way a mutual fund does. If you have held mutual funds before, this side of a guaranteed investment fund will look familiar.
The insurance contract
Around that portfolio sits an insurance contract issued by a licensed life insurer. The contract names your beneficiaries, sets a maturity date (usually ten years out), and locks in your guarantee level at 75 or 100 percent. When the contract matures or you pass away, the insurer is legally bound to pay your beneficiaries whichever is higher: current market value, or the guaranteed percentage of your original deposit. If markets came up short, the insurer covers the gap.
Two contract features that shape your returns
The reset feature
Most guaranteed investment fund contracts include a reset feature. If your portfolio has grown, you can lock that higher value in as your new guaranteed floor. The trade-off is that each reset restarts your ten-year maturity clock from that point forward. So a reset in year three of a contract means you are now committed for another full ten years from year three.
A balanced approach is to evaluate resets once or twice a year rather than triggering them on every uptick. Resetting too aggressively keeps pushing your maturity date out further than you actually want.
Maturity vs. death benefit guarantees
A seg fund contract carries two separate guarantees, and they do not have to be set at the same level. The maturity guarantee kicks in when the contract reaches its end date. The death benefit guarantee applies whenever you pass away during the term, regardless of where the markets are. If you put in $100,000, markets fell to $65,000, and you died at that point, a 100 percent death benefit guarantee means your beneficiary still receives the full $100,000.
Many Canadians choose 75 percent at maturity and 100 percent at death. That structure favours estate protection while keeping fees in check. The right pairing depends on what you actually need the contract to do.
Why Choose PolicyAdvisor for segregated funds?
Get expert, personalized support for insurance-based investing with licensed advisors, a fully digital journey, and guidance that helps you choose with confidence.
Talk to licensed advisors who explain GIF options in plain language and help you figure out which contract structure actually matches your goals.
Get tailored advice on guarantees, estate benefits, and risk levels so you can choose a contract that aligns with your priorities.
Apply online with support when you need it.
From choosing a fund to finalizing your investment, PolicyAdvisor is there to answer questions and keep the process moving.
Our platform is designed to make insurance-based investing easier to understand and complete with less friction.
Compare contracts from Canada's major insurers with someone who can explain guarantees, fees, and structure in plain language.
The five reasons Canadians choose segregated funds
Seg funds offer five protections you simply cannot get from a mutual fund or a GIC. All of them flow from one fact: the contract behind your investment is regulated as insurance, not as a security.
A floor under your principal
When the contract matures or you pass away, the insurer pays the higher of two numbers: the current market value, or the guaranteed percentage of your original deposit. In 2008, the TSX fell about 35 percent. In March 2020, it dropped close to 37 percent in six weeks. A GIF holder with a 100 percent guarantee would have walked away with their full principal regardless of the timing.
All investorsMoney flows straight to your beneficiaries
Naming a beneficiary on a seg fund contract lets those assets skip the estate entirely. They land with the named person, usually inside two weeks of a claim, without going through probate or a courtroom. On a $500,000 contract in Ontario, your family avoids roughly $7,500 in probate fees that would otherwise be paid to the provincial government.
Estate planningA shield from most creditor claims
When a guaranteed investment fund is held with a preferred class beneficiary (a spouse, child, grandchild, or parent), most provincial insurance legislation treats those assets as shielded from creditors. The protection is not absolute and provincial rules vary, but for business owners, incorporated professionals, and anyone carrying personal liability, it is meaningful coverage no mutual fund or GIC offers.
Business ownersThe transfer never becomes public
Probate filings are public record. A GIF transfer is not. Because the assets move outside of probate, no one outside your family sees the amount, the recipient, or the timing. For blended families, second marriages, and anyone who wants their distribution choices to stay private, that matters more than people realize until they are dealing with it.
Blended familiesA death benefit that applies at any time
The death benefit guarantee is in force the entire time you hold the contract, not just at maturity. If markets are sitting below your guaranteed amount on the day you die, the insurer makes up the gap before any money goes to your beneficiary. Your family knows the worst-case payout from day one. That is a kind of certainty no purely market-based investment can match.
Estate protectionSeg funds vs. mutual funds vs. GICs
These three products show up in almost every retirement conversation in Canada. They look similar from a distance and they each solve a different problem. The table below makes the differences concrete.
| Feature | Segregated fund | Mutual fund | GIC |
|---|---|---|---|
| Capital guarantee | 75 to 100% at maturity or death | None | 100% (principal) |
| Market exposure | Yes | Yes | No |
| Growth potential | Market-linked | Market-linked | Fixed rate |
| Probate bypass | Yes, with named beneficiary | No | No |
| Creditor protection | Possible with preferred beneficiary | No | No |
| Death benefit | Guaranteed, paid to beneficiary | Goes through estate | Goes through estate |
| Resets | Yes | No | N/A |
| Fees | Higher (typically 1% to 3% MER) | Lower (typically below 1% MER) | No MER (returns are fixed) |
| Held in RRSP/TFSA/RRIF | Yes | Yes | Yes |
| Assuris / CDIC | Assuris | Neither | CDIC |
Which insurers offer segregated funds in Canada?
Every major Canadian life insurer issues guaranteed investment fund (GIF) contracts under one name or another. We are appointed with all of the carriers below, so you get an unbiased look at every option.
Who should consider a segregated fund?
Segregated funds are not the right product for every Canadian. They are a precise tool for a specific kind of investor: someone who wants market exposure with a real safety net underneath. If you fit one of these profiles, the maths usually works.
Retirees and near-retirees
Stay invested in markets without the risk of a sharp drop wiping out your retirement income.
Self-employed and business owners
Assets held with a preferred beneficiary sit outside most creditor claims under provincial insurance law.
Estate-focused investors
A named beneficiary receives the proceeds in about two weeks. No probate, no court, no public record.
Blended families
Beneficiary designations override the will, so money lands exactly where you intended.
Anyone who wants downside protection
The guarantee is contractual and legally binding, with Assuris backing it if the insurer fails.
How to buy segregated funds through PolicyAdvisor ?
Seg funds are insurance contracts, which means you cannot buy them through a bank, a discount brokerage, or a robo-advisor. They are sold through licensed insurance advisors. Here is how the process works when you go through us.
Start with a real conversation
An advisor asks about your goals, timeline, risk tolerance, and estate plan. No script. The recommendation only happens once we actually understand the picture.
Compare contracts side by side
Your advisor lays out segregated fund options from Canada's major insurers, including guarantee levels, fees, fund lineups, and reset provisions.
Get the contract in place
Your advisor handles the paperwork. Beneficiary designations, guarantee level, fund selection, and contributions, all done inside a week.
Need insurance answers now?
Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them.
Frequently asked questions
