Guarantees that are common to every segregated fund contract include a death benefit guarantee and a maturity guarantee.
The death benefit guarantee protects a specific percentage of the value of an investment upon the death of the contract annuitant.
The maturity guarantee protects a percentage of the value of an investment at the end of a specified term (typically 10 or 15 years).
The Ability To Bypass Probate
In the event of death of the annuitant, the proceeds of an insurance contract pass directly to a named beneficiary without going through probate. The benefit is that the asset avoids probate and estate administration fees. Furthermore, the beneficiary will also generally receive the proceeds without extended delays -- a considerable benefit during a time of need.
The Potential For Creditor Protection
In general, when the beneficiary is a parent, child, grandchild or spouse of the annuitant (for Quebec, ascendants and descendants of the owner), and the contract wasn't set up for the purpose of avoiding creditors, segregated fund assets may be protected from creditors.
This is a benefit to all small business owners, professionals and entrepreneur who want a cost-effective means of ensuring their personal financial assets are not subject to professional liability.
