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What are Segregated Funds, and How Can they Complement an RRSP Portfolio?

By RBC Insurance • Published November 22, 2021 • 3 Min Read

With the RRSP deadline coming up fast, it's a good time to review your investments, and make any last-minute contributions.

But when thinking about the type of funds to choose, keep in mind that as you approach retirement, your financial needs, goals, and how you invest will start to change.

While retirement may still be in the distant future, eventually you’ll need to protect the money you’ve worked hard to save, while still making it grow in order to carry you through retirement. In fact, according to an RBC Insurance survey, 87 per cent of Canadians aged 55 and over agree that they’d like an investment product that guarantees the money they invest, but that also offers opportunities for growth. Yet 60 per cent are not aware that this option is available with segregated (seg) funds.1

Growth and Guarantees for Your Investments

Segregated funds are an investment solution only available through insurance companies. They help to grow and protect your hard earned savings with the added security of principal guarantees. Think of it as a combination of a mutual fund and an insurance policy. In other words, money is invested in professionally managed and diversified assets with the growth potential similar to mutual funds. But segregated funds have additional insurance components that protect the original amount invested.

Segregated funds offer several other unique benefits that other investment products don’t have, including:

  • Protection through guarantees.2 A maturity guarantee helps to protect your initial investment (at contract maturity), while a death benefit guarantee ensures that your named beneficiaries will receive 75% or 100% of the amount that was invested (depending on the guarantee option chosen by you) on your death.
  • Reduce estate-planning costs. After a person dies, there is a legal approval process required to validate their Will. This process is called probate, and can be a lengthy administrative hassle that incurs fees. As an insurance product, segregated funds death benefits paid to specific beneficiaries are not subject to the probate process, meaning that funds go directly to the beneficiary, without any estate or probate fees3.
  • Potential protection from creditors. Segregated funds are considered an insurance contract so they may be exempt from seizure by creditors if the named beneficiaries are in the protected class under provincial law. This may be an important benefit for professionals, entrepreneurs and business owners who might be involved in an unexpected lawsuit or bankruptcy.
  • Increase your protected amount. If your investment has earned money, you may have the option to “reset” the guaranteed value of your investment, which locks in the gains you’ve earned.

These guarantees and benefits, combined with the growth potential, are what make segregated funds so appealing to those who are planning or approaching retirement.

Interested in Learning More About Segregated Funds?

Segregated funds can only be purchased through a life insurance advisor. Have an RBC Insurance advisor contact you to learn more.

2) Guarantees are proportionally reduced by withdrawals.
3) Probate fees and requirements vary by province.


RBC Retirement Investment Solutions

Whether you’re building up your nest egg or ready to turn your hard-earned savings into retirement income, our solutions can help you make the most of your money. Have an RBC Insurance Advisor call you to learn more.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. RBC Guaranteed Investment Funds are individual variable annuity contracts and are referred to as segregated funds. RBC Life Insurance Company is the sole issuer and guarantor of the guarantee provisions contained in these contracts. The underlying mutual funds and portfolios available in these contracts are managed by RBC Global Asset Management Inc. When clients deposit money in an RBC Guaranteed Investment Funds contract, they are not buying units of the mutual fund or portfolio managed by RBC Global Asset Management Inc. and therefore do not possess any of the rights and privileges of the unitholders of such funds. Details of the applicable Contract are contained in the RBC GIF Information Folder and Contract at

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