Most People Don’t Realize — Segregated Funds Are Not the Same as Mutual Funds!
And there’s a good reason why only insurance companies can sell them.
Today I’m answering a question I get all the time:
Why can only insurance companies sell segregated funds?
And what’s the real difference between segregated funds and mutual funds?
Let’s break it down—simple and fast.
Segregated Funds: Investments with Insurance Protection
Segregated funds are investment products created by insurance companies. On the surface, they look like mutual funds because they also invest in stocks, bonds, and other assets.
But here’s the big difference: segregated funds come with insurance guarantees.
That means your money can be protected—even if the market drops.
Because of this insurance component, only licensed insurance companies—not banks or traditional investment firms—are allowed to sell segregated funds.
Mutual Funds: Pure Investments
Mutual funds are straightforward investment products. They don’t include insurance. If the market crashes, you bear the full loss—there are no guarantees.
These funds are typically sold by banks, advisors, and investment companies. Since they lack insurance protection, they’re regulated under investment, not insurance, rules.
Additional Benefits of Segregated Funds
- You can name a beneficiary directly
- Your money may bypass probate fees when you pass away—saving your family time and money
Choosing Between Segregated Funds and Mutual Funds
The right choice depends on your goals:
- If you value protection, estate-planning benefits, and guarantees, segregated funds may be the better fit.
- If you’re focused purely on growth and comfortable taking more risk, mutual funds might make more sense.
Ask yourself: “Do I want just investment growth—or insurance protection too?”
Final Thought
Next time you hear “seg fund” or “mutual fund,” you’ll know—they’re not the same thing. And remember: only insurance companies can sell segregated funds.
If you found this helpful, hit like and share it with a friend who’s thinking about investing. Smart choices today lead to a safer future tomorrow.
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