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Segregated funds in Canada
Combine market growth potential with insurance protection benefits
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What are segregated funds?
A segregated fund is a type of investment option offered by life insurance companies that combines market growth potential with built-in guarantees. Your money is invested in professionally managed portfolios of stocks and bonds, similar to mutual funds. The main difference is a written guarantee that you, or your beneficiaries, will receive at least 75% to 100% of your original investment at maturity or upon death, even if the markets have dropped.
Segregated funds are also known as Guaranteed Investment Funds or GIFs. However, they are different from GICs (Guaranteed Investment Certificates). A GIC is a fixed-rate bank deposit with guaranteed returns, while a GIF is a market-linked investment that includes built-in insurance protection.
How do segregated funds work?
The investment
Your money goes into a diversified portfolio managed by professional fund 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
This is the "contract" side provided by a licensed life insurance company. 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 dropped, the insurer makes up the difference.
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?
Speak with licensed advisors who can break down your options clearly and help you understand 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.
Five reasons Canadians choose segregated funds
Seg funds offer five protections you simply cannot get from a mutual fund or a GIC. Each one comes from the insurance contract structure underneath the investment.
Your original investment is protected
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 goes straight to your beneficiaries
Naming a beneficiary on a seg fund contract lets those assets skip the estate entirely. They transfer directly to the named person, usually within two weeks of a claim, without going through probate. 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 protection that no mutual fund can replicate.
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 in advance exactly what they will receive at minimum, which is certainty no market-only investment can offer.
Estate protectionSegregated funds vs. mutual funds vs. GICs
These three products come up together constantly in retirement planning conversations. They look similar on the surface but solve different problems. Here is how they actually compare.
| 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 insurance company offers Guaranteed Investment Funds (GIFs). We work with all the leading insurers, giving you an unbiased comparison of different options in one place.
Who should consider a segregated fund?
Segregated funds are designed for investors who want the growth potential of the market along with added financial protection. They may be especially suitable for:
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 are generally shielded from creditors under most provincial insurance legislation.
Estate-focused investors
Assets transfer directly to named beneficiaries with no probate fees, no court involvement, and no public disclosure of amounts.
Blended families
Beneficiary designations override the estate process. Assets go exactly where you intend, without interference from a will, a court, or family disputes.
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 ?
Start with a real conversation
Our advisors ask about your goals, timeline, risk tolerance, and estate situation before recommending anything. No pressure, no obligation.
Compare contracts side by side
The advisor walks you through segregated fund options from Canada's leading insurers, including guarantee levels, fees, 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.
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