IFC Segregated Funds

Question 1

What is the primary legal structure of a segregated fund in Canada?

Accepted Answer

An insurance contract issued by a life insurance company

Answer

Segregated funds are structured as insurance contracts issued by life insurance companies, which distinguishes them legally from mutual funds and other securities.

Question 2

Which regulatory body primarily oversees segregated funds in Canada?

Accepted Answer

Provincial insurance regulators

Answer

Segregated funds are regulated by provincial insurance legislation rather than securities law, because they are classified as insurance products.

Question 3

What minimum maturity guarantee must Canadian segregated funds offer under industry guidelines?

Accepted Answer

75% of net premiums paid

Answer

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.

Question 4

What is the typical minimum holding period required before a segregated fund's maturity guarantee applies?

Accepted Answer

10 years

Answer

Segregated fund maturity guarantees generally require the contract to be held for at least 10 years before the guarantee can be triggered.

Question 5

In a segregated fund contract, who is referred to as the 'annuitant'?

Accepted Answer

The person whose life the insurance coverage is based on

Answer

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.

IFC - Investment Funds in Canada Practice Test

IFC - Investment Funds in Canada Practice Test

IFC Segregated Funds