Segregated Funds Flashcards
7 cards from real IFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Segregated Funds flashcards as text
What is the primary legal structure of a segregated fund in Canada?
Answer: An insurance contract issued by a life insurance company
Segregated funds are structured as insurance contracts issued by life insurance companies, which distinguishes them legally from mutual funds and other securities.
Which regulatory body primarily oversees segregated funds in Canada?
Answer: Provincial insurance regulators
Segregated funds are regulated by provincial insurance legislation rather than securities law, because they are classified as insurance products.
What minimum maturity guarantee must Canadian segregated funds offer under industry guidelines?
Answer: 75% of net premiums paid
Canadian insurance industry guidelines require segregated funds to guarantee a minimum of 75% of net premiums paid at maturity, though many funds offer a 100% guarantee.
What is the typical minimum holding period required before a segregated fund's maturity guarantee applies?
Answer: 10 years
Segregated fund maturity guarantees generally require the contract to be held for at least 10 years before the guarantee can be triggered.
In a segregated fund contract, who is referred to as the 'annuitant'?
Answer: The person whose life the insurance coverage is based on
The annuitant is the individual whose life the insurance contract is based on; the maturity and death benefit guarantees are linked to this person's age and lifespan.
Which feature of a segregated fund can potentially protect the investor's assets from creditors?
Answer: The named beneficiary designation
When a beneficiary other than the estate is named on a segregated fund, the assets may be shielded from creditors in bankruptcy proceedings, provided the designation was not made to defraud creditors.
How are segregated fund assets protected if the issuing life insurance company becomes insolvent?
Answer: Through Assuris, the life insurance industry protection plan
Assuris is the Canadian life insurance industry's not-for-profit protection plan that covers policyholders' benefits up to specified limits if a member insurer fails.