There are few guarantees in life, but, if you are age 79 or under and invest in certain segregated funds, you are guaranteed that your beneficiaries will receive 100 per cent death benefit on initial and future deposits until you are age 100.
You may say that an investment in Guaranteed Investment Certificates (following CDIC and CUDIC limits) will do the same. Well, yes and no, you have the 100 per cent guarantee, but there are some additional benefits that a segregated fund investment will offer you and, ultimately, your beneficiaries. Firstly, your investment would bypass probate and transfer directly to your beneficiaries without the cost or delay of estate proceedings. Another benefit is that your investment options are broader and you have the opportunity to invest in growth, value and income funds.
If you are unsure that your beneficiaries will spend your wealth wisely, you have the option of using the Gradual Inheritance Concept; this plan ensures that your beneficiaries get monthly payments instead of a lump sum without the expense of setting up a trust.
Resets may be available as often as twice a year on the maturity benefit of your funds. Although resetting the value extends the contract maturity date, this allows you to lock in higher values when markets are up.
A non-registered segregated fund contract can be set up for as little as $1,000 and as long as you do this before you are age 80, you can safe guard future monies. Whether you receive an inheritance or downsize, just deposit the funds into your existing account for the 100 per cent death benefit guarantee. Some segregated funds allow you to withdraw 10 per cent without penalty per year. This could be received annually or monthly to assist your cash flow. GIC rates typically pay a lower interest rate if you request monthly payments. It is important to fully understand your investment so that there are no surprises if have to withdraw the funds before you intended.
There are still some financial myths surrounding segregated funds. In reality, they may not be more expensive than regular mutual funds and you are not necessarily locked in for an extended number of years.
Complicated? They don’t have to be; talk to your advisor, they should give you advice and information in language you can understand. Segregated funds are not for everyone, but they may give you the peace of mind that you are looking for.
This article was prepared by Carol Plaisier, CFPÆ, FMA, AMP (Accredited Mortgage Professional) who is an Investment Advisor with DWM Securities Inc. She can be reached at can be reached at the DundeeWealth office in Parksville (250) 248-2399, or by email: firstname.lastname@example.org, or at www.carolplaisier.com.
This is not an official publication of DWM Securities Inc. and the views (including any recommendations) expressed in this article are those of the author alone, and they have not been approved by, and are not necessarily those of DWM Securities Inc. *Insurance products provided by Dundee Insurance Agency Ltd.
DWM Securities Inc.,†Member-Canadian Investor Protection Fund, is a DundeeWealth Inc. Company.