SEGREGATED FUNDS offer the growth potential of mutual funds, but they provide a distinct advantage: wealth protection features are only available in a segregated fund contract from an insurance company. One of the most valuable is a death benefit guarantee.

Segregated fund contracts provide exposure to a broad selection of investment options such as equities, bonds and money market funds. They also feature a selection of guarantees that can help to protect your investment during volatile markets.

Segregated fund contracts generally assure that either 75 per cent or 100 per cent of the value of your principal investment will be guaranteed at death or after a specific period of time. Some segregated funds allow you to “reset” the value of your contract to a higher amount and capture any growth experienced by the underlying investment. For example, if your segregated fund portfolio grew by 10 per cent over a certain time period, a reset could occur to lock in that higher value, which becomes the new value upon which the guarantees are based.

Since segregated fund contracts are insurance products they can also provide additional benefits such as potential protection from creditors and the ability to bypass probate (assuming that there is a named beneficiary). Other benefits of segregated funds may include access to your capital should the need arise. However, withdrawals will affect the guarantee features associated with segregated fund contracts.

Beginning in 2008, the government has enhanced the flexibility of RESPs by extending the contribution period from 21 to 31 years and raising the maximum time that an RESP may remain open from 25 to 35 years. Corresponding changes to individual RESPs for beneficiaries who are eligible for the Disability Tax Credit extend the contribution period from 25 to 35 years and the maximum time that an RESP may remain open from 30 to 40 years.

There is also more flexibility for beneficiaries to access their RESP savings. Beneficiaries who cease to be enrolled in a qualifying post-secondary program after 2007 are eligible to receive education assistance payments (EAPs) for up to six months after they leave the program.