Majdoub: Diversifying your investments

Segregated Funds versus other Investments (mutual funds, stocks, bonds, GIC, etc)

Meiz Majdoub

by Meiz Mjadoub

Summer is finally here and if you have been in Ottawa, this past winter, these are happy days indeed.

In this summer piece, I’ll like to present a little know facts about Life insurance products.  Little known fact is that with exception of checking accounts offered by the Banking Sector, Life Insurance companies offer the similar products like Savings, Guarantee Investment Certificate (GIC) and Mutual Funds. These are referred to as Segregated Funds.  These funds are segregated from the normal activities (Life Insurance) of the insurance companies.

There are however, significant differences between these two institution, Banking and Life Insurance.  The Bank Act’s basic premise is to safeguard Depositors.  While The Insurance Act however, is designed to safeguard beneficiaries.

I present below at this time how the deposits are treated at death.

Unlike other investments, benefits paid from a segregated fund contract can bypass your estate upon death.  Proceeds can be paid directly to your beneficiaries without being subject to the estate administration/probate process and associated taxes or fees.  This allows you to leave a legacy upon death to our heirs quickly, privately and cost-effectively.

Here’s an example:


  Segregated Funds Other Investments
Investment Value $1,000,000

Greater of Death Benefit Guarantee and current market Value


Current Market Value

Estate Administration Tax 1 (ON) $0 -$14,500
Legal fees (3-5%) $0 -$30,000
Executor fees (3-5%) $0 -$30,000
DSC fees (0-5%)    $0 2 -$30,000
Estimated total cost upon death 3 $0 -$104,500
Net proceeds $1,000,000

Paid quickly and directly to beneficiaries, ensuring the details are kept private


Paid to beneficiaries once the will has been “probated” which can be a lengthy process and is publicly available.





1-Known in other provinces as probate fees, for illustrative purposes only. Example uses Ontario estate administration tax but probate fees applicable in other provinces differ by province.  Other cost can vary depending on the complexity of the estate.  Starting January 1, 2020, the Ontario estate administration tax will be $15 per $1,000 for estate over $50,000.

2- DSC withdrawal fees waived upon the death of the annuitant provided no successor annuitant is named.

3- Estimated total cost upon death.  There may be other cost during the life of the contract.

Unique features of segregated fund contracts:

  Segregated Fund Other Investments
Death Benefit Guarantee Yes No
Maturity Benefit Guarantee Yes No
Resets Yes No
Potential Creditor Protection Yes Registered Only
Estate Bypass Yes Registered Only


The Majdoub Group is very experienced in this area and welcome questions, enquiries and comments.  We are here for you.  Below are our coordinates.

Meiz Majdoub, B.Comm, CLU, CH.F.C.

141 Holland Avenue

Ottawa ON  K1Y 0Y2



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