Guaranteed Investment Funds

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Guaranteed Investment Funds or "Segregated Funds", can give you the growth potential of investment funds with the security of insurance guarantees.

If you want to participate in the growth potential of the markets, but want downside protection; you’re looking for estate planning benefits; or you’re a small business owner or a professional and want potential protection from creditors, then Guaranteed Investment Funds or GIFs may be for you.

GIFs are investment products sold by life insurance companies. They invest in one or more underlying assets, such as a mutual fund.


There are several differences between Mutual Funds and Guaranteed Investment Funds.  "GIFs" are offered through Insurance Companies and offer many features and benefits that Mutual Funds do not, including:

A Maturity Guarantee
The maturity guarantee gives an investor the option to choose a guarantee of 75% or 100% of his or her net investment.  When he or she cashes in the GIF at a specified future date (usually ten or fifteen years), he or she will receive the greater of the guaranteed amount or the current market value.  This feature provides long term protection from poor market performance while providing the opportunity to participate in the upside of good market performance.  

A Death benefit Guarantee
Death guarantees are similar to maturity guarantees but do not have a time requirement as the net investment is guaranteed on death. This is a very useful estate planning tool to protect funds to be passed on to loved ones if the investor were to pass away in a down market.  The guarantee can be set at either 75% or 100% of the net amount invested.
Protection of Market Gains - Resets
Either twice a year or on the investment anniversary date, there is an option to lock in all the gains to date, which resets the guaranteed amount at a higher level. So if the market is down, the investor is still protected by his or her original guarantee.  If it is up, the gains can be locked in.   

Avoiding Probate
Upon the death of the investor, Guaranteed Investment Funds flow to the beneficiaries without going through probate.  By avoiding the probate process, the funds are not tied up for months or longer.  Rather, they pass to the beneficiaries in days or weeks.  In addition, the Ontario estate administration tax is avoided.  On a $1 million estate, estate administration tax would be just under $15,000 in Ontario. 

Creditor Protection
Provided that the investment is made before any creditor issues are apparent and the decision is a sound investment decision, then the creditor protection applies.  This is a particularly useful feature for business owners. 

Competitive Fees
For investors with $100,000 or more, there are offerings that carry lower fees than the average mutual fund. 

Other features and benefits of Guaranteed Investment Funds

• Low Minimum Investment – Start with as little as $50 with pre-authorized deposits or $1,000 lump sum deposit

• Tax-efficient – More tax-efficient than mutual funds with no built in capital gains when you purchase a GIF

• Privacy – no one has the right to find out or challenge the amount that has been passed on to the beneficiary

• Settlement Options –Option of electing to leave an annuity or structured payments instead of a lump sum to your named beneficiaries. Ideal for leaving to heirs when you don’t want to leave them a lump sum. May avoid the need for a testamentary trust

• Your investment is insured by Assuris – Assuris is the not for profit organization that protects Canadian policyholders if their life insurance company should fail. Every life insurance company authorized to sell insurance policies in Canada is required, by the federal, provincial and territorial regulators, to become a member of Assuris. Mutual funds do not have this protection – only GIF do.

If you want to participate in the growth potential of the markets, but want downside protection; you’re looking for estate planning benefits; or you’re a small business owner or a professional and want potential protection from creditors, call me.

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