After your retirement is set-up and organized, now what do you do with the rest of your money? You and your financial advisor should discuss your goals and build a plan customized to your needs and future desires. The next step would be investing and estate planning.
Segregated funds are a great option! I do not want to get too technical here, but many of you may be asking yourself, what is a segregated fund? It is a contract set up between you and the insurance company. The contract allows the insurance company to offer up to 100% guarantees on your investment, often at time of death. It operates identical to a mutual fund*, but can only be offered by an insurance company, not a financial institution. What this means is if your guaranteed value is $100,000, and at time of death your investment is $75,000, the insurance company will give you an additional $25,000, because the contract states you were guaranteed that amount. A financial advisor who can offer life insurance products can offer you a segregated fund. If you have any questions, please request more information or ask your financial advisor.
Since a segregated fund is similar to a mutual fund you have the potential of still growing your assets while you are still alive, allowing you to have more money for retirement or for your heirs.
With segregated funds, you have given your money to the insurance company on a contractual basis. At time of death, the money is not actually with you but with the insurance company. This means you could save $1,000’s of dollars on probate (administration fee at time of death) and the money will get paid directly to the beneficiaries (like a life insurance policy). You will unfortunately have to pay taxes on capital gains.
Segregated funds are a great strategy for estate planning. With a proper plan in place you can pass most (if not all) of your assets to your designated beneficiaries. It will save money for your loved ones and reduce complications. They will thank you!
*A mutual fund is an investment program funded by shareholders that trades in diversified holdings and is professionally managed.