20 - Segregated & Insurance Flashcards
Who can sell segregated funds?
Licensed life insurance salespeople
Who regulates segregated funds?
Provincial insurance regulators
What are investors of a segregated fund provided instead of shares?
Notional units
What are the three parties of a segregated fund contract?
- Contract holder
- The annuitant
- The beneficiary
Who can be the annuitant if the contract is held outside of a registered plan?
Anyone who the contract holder has an “insurable interest” in the life/health of, or someone who provides written consent.
What is a revocable vs irrevocable designation?
Revocable allows the contract holder to change the beneficiaries at will; irrevocable must obtain the beneficiary’s consent for a change.
What are 4 benefits of segregated funds?
- Maturity guarantees
- Death benefits
- Creditor protection
- Bypassing probate
What is the minimum maturity guarantee (and the typical)? (What is the minimum holding period?)
10 year holding period;
75% minimum, 100% typical (higher MER) guarantee
What do reset dates allow for?
Allow contract holders to lock in the current market value for another 10 years.
What are death benefits?
Ensures the beneficiary receives at least the guaranteed amount in the case of death even if the market value is below that.
Why aren’t segregated funds included in bankruptcy and family law? (E.g. Creditor protection)
Because they are insurance contracts and not property
What org provides protection against segregated fund issuer insolvency and up to how much $?
Assuris up to $60k or 85% of guaranteed amts per policyholder per institution. (Covering shortfalls in death benefits and maturity guarantees)
What insurance option allows policyholders to withdraw a certain % each year regardless of how the fund performs?
Guaranteed Minimum Withdrawal Benefit (GMWB)
What are portfolio funds?
Segregated funds that invest in other funds (higher MER)
What are Protected Funds?
Mutual funds that are similar to segregated funds although do not offer creditor protection (and don’t always provide a death benefit).
