Investments

Segregated funds are the insurance company's answer to mutual funds. There are many differences and similarities but if you are putting together a financial plan that includes insurance and investments, you'll probably want to consider a segregated fund.

Bank Of America Investment Segregated funds are also called individual variable insurance contracts (IVIC's) and they'll be offered by a many insurance companies. Like mutual funds, they are investment vehicles, but like insurance, they have guarantees and tax advantages.

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Investment Opportunity How are they like mutual funds?

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Banc Of America Investment Like mutual funds, you can choose to put your segregated fund money into any number of different types of segregated fund. For example you can choose growth oriented funds or bond funds or some combination of both, which provide you with an investment vehicle that matches your goals.

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Banking Investment How are they like insurance products?

Termination fee See Disposition fee or disposal fee. payment rule See end lease. Time value of money The value derived from the use of money over time as a result of investment and reinvestment. This term may refer to either present value or future value calculations. The present value is the value today of an amount that would exist in the future with a stated investment rate called the discount rate. For example, with a 10% annual discount rate, the present value today of $110 one year from now is $100. Future value is the value in the future of a known amount today with a stated investment rate. For example, with a 10% annual investment rate, the future value in one year of $100 today is $110. In either case, the interest rate used reflects the lost opportunities for return from alternative investments.

Investment Solution Strategic But there are four insurance-related aspects of segregated funds that make them an attractive product for many people.
1. First, is the maturity guarantee. A segregated fund offers a guarantee of at least 75% after 10 years (although some segregated funds offer maturity guarantees of 100%!).
2. As well, segregated funds offer attractive death benefits, which work in a similar way to the maturity guarantee: your survivors will receive the difference between the guaranteed amount and the market value of the fund at your death.
3. Because segregated funds are insurance products, they also offer creditor protection, so that if creditors seize your assets, they cannot touch your segregated fund.
4. Lastly, segregated funds bypass probate so that you can easily transfer the money to a beneficiary upon your death without the costly fees associated with probate.

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Investment Banking Services Like all insurance and investment vehicles, segregated funds are not for everyone. For example, the guarantees do bring a higher cost in order to enjoy the segregated fund. However, segregated funds are growing in popularity, so many people feel that the guarantees are worth the cost.

Bank Investment These are just highlights of segregated funds. There are many more aspects you should be aware of. But, if you're interested in a segregated fund and what one can do for your financial portfolio, contact your insurance company and see if they sell them. If they do not, you can probably find another insurance company that will be able to help you if you look around.

Alternative Investment About The Author:

Online Investment Services Jeff Lakie is the founder of Insurance Information a website providing information on Insurance

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