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FEATURES OF SEGREGATED
FUND CONTRACTS
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A guaranteed maturity benefit, equal to at least 75 per cent (and up to 100 per
cent, depending on the contract) of contributions less previous withdrawals. This
guarantee takes effect on a specified maturity date, typically not less than 10 years
from the date the segregated fund contract is issued. In many cases, each
additional contribution has its own maturity date.
A guaranteed death benefit, equal to at least 75 per cent (and up to 100 per
cent, depending on the contract) of contributions less previous withdrawals. The
benefit is payable to the beneficiary of the contract upon the death of the insured
person. If a beneficiary is named and the death benefit paid directly to him or her,
that benefit is not subject to probate, executor or lawyer's fees.
Potential creditor protection. When the contract's named beneficiary is a spouse,
child, grandchild or parent of the insured person (or, in Quebec, the contract
owner), when the beneficiary is designated irrevocably or where the contract is
registered (for example, as a Registered Retirement Savings Plan), creditors
cannot seize a segregated fund contract if the contract owner declares bankruptcy
or fails to pay his or her debts, as long as he or she has not entered into the
contract for the primary purpose of shielding assets from creditors. Courts of law
have deemed the purchase of segregated fund contracts while the contract owner
was insolvent to be an attempt to shield assets, and have disallowed the creditor
protection in those cases.