Segregated fund contracts

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If you want your money to have the potential to grow with built-in guarantees, a segregated fund contract (also known as a seg fund contract) might be worth exploring. Only Canadian life insurance companies offer them. When you invest into a segregated fund contract, you allocate your investment among one or more segregated funds managed by the insurer.

What do segregated fund contracts offer? 

Here’s what every segregated fund contract includes for you:

Get maturity and death benefit guarantees

All segregated fund contracts include maturity and death benefit guarantees. The guaranteed level – 75% or 100% - depends on which segregated fund product you choose. At maturity or upon your death, you’ll receive at least the guaranteed amount, or the current market value if it’s higher.  

Note: any withdrawals you make will reduce your guarantee amount.

Provide guaranteed money to your loved ones

When you die, your named beneficiary receives a death benefit paid directly to them. They receive the guaranteed amount on your contract or its current market value, whichever is higher.

Estate planning made simpler

Because segregated fund contracts are insurance contracts, you can name a beneficiary. When you die, your savings pass directly to them, outside your estate. In most cases, this means no probate, faster settlement and greater privacy for you and your loved ones. Rules vary by province and territory.

Choose how your loved ones receive the benefit

You can choose how your loved ones receive your death benefit 

  • Lump-sum cash: your beneficiary receives the full benefit payment in a lump sum, giving them flexibility to use the money however they need. 
  • Legacy settlement option: The benefit is used to set up a payout annuity which will provide guaranteed income payments for life or for a certain period. This can be a helpful option if you’re concerned about your beneficiary managing a large lump sum. 
  • Contract continuation1: With a special designation set up, your loved one could take over your contract. This can help avoid delays and fees and keep all your investments and guarantees as they are.

Get potential creditor protection:

Segregated fund contracts may offer creditor protection in certain situations, such as bankruptcy or legal proceedings. This can be particularly valuable for business owners, professionals, and freelancers.  

However, creditor protection eligibility rules are complex. Whether you’re eligible depends on many factors including: 

  • Your province or territory 
  • Who you name as beneficiary 
  • Your specific circumstances 
  • Applicable legislation and court decisions 
  • And more 

An advisor and your lawyer can help you understand more about how creditor protection may apply to you.

Here are some additional features worth asking your advisor about:  

  1. Income guarantee: Some contracts guarantee a minimum payment amount every year. This option is often considered by Canadians who want a lifelong stream of income in retirement. 
  2. Reset feature: Some contracts offer the ability to reset your guarantee periodically if the market is higher, allowing your guarantees to potentially increase over time. This is typically done on your contract anniversary date.  

A Sun Life advisor can explain the various options that are available to you to meet your individual needs.

How does a segregated fund contract work? 

  1. You meet with an advisor: You will meet with a licensed life insurance representative to assess your needs and determine if a segregated fund contract is right for you.  
  2. You choose the segregated fund product you want to invest in: The money you invest is called a premium. You can start with a lump sum, make regular contributions or both. 
  3. You complete your application and invest your money. 
  4. Your guarantees are in place: At maturity or death, you or your beneficiary gets either the market value or the guaranteed amount – whichever is more. Any withdrawals you take will reduce that guarantee. 
  5. You and your advisor stay in touch: Your advisor will review your investments with you from time to time to ensure they still match your goals, lifestyle and risk tolerance. As your life circumstances change, they’ll help you make any necessary adjustments. 

Still have questions about how it all works? A Sun Life advisor can walk you through it at your own pace.

Helpful segregated fund contract numbers to know

75% or 100%

Guarantee level.

Age 100+

Typical segregated fund contract maturity age. 

2 types of guarantees

In every segregated fund contract: maturity guarantee and death benefit guarantee.

How do segregated fund contracts compare to mutual funds?

Segregated fund contractsMutual funds
Issuer Life insurance company.Investment fund management company. 
GuaranteesYes. Maturity and death benefit guarantee.No.
Probate bypass Yes (with named beneficiary). Rules vary by province or territory. Rules vary by province or territory. 

No.

Exceptions: unless held in a registered account with a named beneficiary where permitted.

Potential creditor protectionYes (conditions apply). Limited.
Income guarantee optionOnly available on specific segregated fund products. Not all.No income guarantees.
Management feesCan be higher due to the cost of insurance protections.Generally lower.

For a more in-depth comparison, compare segregated fund contracts vs mutual funds

Why open a segregated fund contract with Sun Life 

A Sun Life advisor helps you understand what segregated fund contracts mean for your life. With Sun Life Guaranteed Investment Funds (Sun Life GIFs), you get access to a broad range of investment options and insurance protections built into every contract - plus an advisor who stays with you as your needs change.

A broad range of investment options, built in

Sun GIF Solutions and Sun Lifetime Advantage GIF give you access to a wide selection of funds across equity, fixed income, and balanced categories to match your goals or risk tolerance.

Funds recognized for performance

Some funds available within Sun Life GIFs have earned FundGrade A+ ®2 Awards for consistent, outstanding performance. Each year, Fundata Canada awards this recognition to the funds that perform best in Canada.

Guidance beyond the investment

A licensed Sun Life advisor does more than recommend a fund. They’ll help you understand how a segregated fund contract fits into your plans - from investment options to estate planning - and adjust your plan as your needs change over time. 

Our segregated fund products 

Sun Life’s segregated fund products are called Sun Life GIFs. Here are the options available under Sun Life GIFs through a Sun Life advisor:

Sun GIF Solutions

Offers 4 series designed to support different financial goals at every stage of life. You have the flexibility to move within the same contract as your needs change over time.

  • Investment Series: growth potential across asset classes, with guarantees built in. 
  • Income Series: guaranteed lifetime income to help fund your lifestyle needs today, in retirement and for life. 
  • Estate Series: designed for efficient wealth transfer, estate planning and potential for growth. 
  • Estate Heritage Series: focused on legacy preservation for clients aged 81-85.
Explore Sun GIF Solutions

Sun Lifetime Advantage GIF

Offers a minimum guaranteed lifetime income that can increase every year before you start taking money out.

Explore Sun Lifetime Advantage GIF

Sun Life segregated fund contracts can be held in different registration types 

Segregated fund contracts can be held in several types of accounts. Here are the most common options.

Registered Retirement Savings Plan (RRSP)

An RRSP helps you save for your retirement. Your contributions into this plan are tax-deductible. And, the income earned within your RRSP is tax-deferred until you make withdrawals.

Explore RRSPs

Registered Retirement Income Fund (RRIF)

A RRIF is an investment account that pays you income during retirement. There’s a minimum amount that you must withdraw from a RRIF each year. Funds in this plan are tax-deferred until you make withdrawals.

Explore RRIFs

Tax-Free Savings Account (TFSA)

A TFSA helps you save money for any purpose. Although contributions aren’t tax-deductible, your investments can grow tax-free and you can make withdrawals at any time without paying any tax.

Explore TFSAs

Non-registered account

A non-registered investment account lets you invest without the contribution limits that apply to registered accounts. While investment income and gains are taxable, you can make withdrawals when needed.

Frequently asked questions

Yes. Segregated fund contracts can be held in registered accounts, including Registered Retirement Savings Plans (RRSPs), and Tax-Free Savings Accounts (TFSAs).

When you die, your beneficiary receives a death benefit. This will be the current guaranteed amount or your contract’s current value – whichever is higher. If you’ve named a beneficiary, the proceeds pass directly to them outside your estate. 

However, with a special designation1 set up, your loved one could take over your contract. This can help avoid delays and fees and keep all your investments and guarantees as they are.  

Ask your advisor for more details

Segregated fund contracts can only be sold by licensed life insurance representatives. At Sun Life, our advisors are licensed to discuss and recommend segregated fund contracts based on your financial goals.

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This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply. 

1Special designations and local laws: To ensure contract continuation, you must make special designations, like a successor annuitant. Designation options can vary by registration type, province or territory. Speak with your advisor and an estate lawyer for your specific situation. 

2FundGrade A+ ® is used with permission from Fundata Canada Inc., all rights reserved.

A Sun Life advisor can help you protect them, grow them and pass them on with confidence.