Guaranteed Investment Funds Provide Flexibility, Growth Potential and Valuable Additional Benefits

Solutions Magazine: Winter Edition 2010

WHAT ARE GUARANTEED INVESTMENT FUNDS?

A guaranteed Investment Fund product, otherwise known as a segregated fund contract, is an insurance contract offered through an insurance company. These investment vehicles typically provide several investment options managed by many different fund managers in a wide range of asset classes. In addition, Guaranteed Investment Funds can deliver a number of features unavailable through other types of investment vehicles.

Depending on the type of contract, Guaranteed Investment Funds can offer benefits including income protection from market downturns, maturity guarantees and guaranteed death benefits. Investors typically pay additional fees for these types of protection features.

Some investors – including younger investors – may not need these protection features. Fortunately, some insurance companies now offer a base Guaranteed Investment Fund contract that doesn’t include more expensive guarantees until they are needed. Fees are highly competitive with those charged by mutual funds – but even the base contracts include some additional benefits of interest
to many investors.

GETTING DOWN TO BASICS
The following features are common to all segregated funds offered by insurance companies.

ESTATE PLANNING BENEFITS

Death benefit guarantee: In the event of death, your beneficiaries are guaranteed to receive 75 per cent of all deposits made (reduced proportionally by withdrawals) even after market downturns.

Bypass of estate: In the event of death, unless you have named your estate as beneficiary, the proceeds of an insurance contract can pass privately1 and directly
to your designated beneficiaries, without the expense and delay of settling the estate. That way, the proceeds avoid probate and estate administration fees, meaning more money goes to your beneficiaries quickly and efficiently.

CREDITOR PROTECTION BENEFITS

As insurance contracts, Guaranteed Investment Funds have the potential to protect an investor’s assets from creditors.This feature is ideal for professionals and small business owners looking to help shield their personal assets from professional liability.

MORE FLEXIBILITY, MORE INVESTMENT CHOICE

Another benefit of base Guaranteed Investment Fund contracts is the flexibility and variety of investment choices they provide. Depending on the company you invest with, many different Guaranteed Investment Funds may be available, representing a range of asset classes including Canadian and global equity funds. What’s more, you can move your deposits among a number of highly respected asset management firms generally without triggering switching charges or redemption fees.

Additional advantages provided by some companies that offer Guaranteed Investment Funds include an objective fund manager selection and monitoring process that helps to ensure that each fund remains true to its stated investment objective.These monitoring processes typically use stringent criteria to make sure the investment funds available represent the highest-quality investment    managers. You’ll    never have to second-guess your choice of investments again.

Solutions Magazine: Winter Edition 2010