Segregated Funds

Segregated funds (SEG funds) are often described as "mutual funds with an insurance wrapper." Much like mutual funds, money invested in a SEG fund is pooled to purchase a portfolio of securities, and the value of that portfolio will change in response to the performance of those underlying securities.

This is exactly where mutual funds and SEG funds begin to diverge. SEG funds are distributed by life insurance companies and are available only from financial advisors who are licensed to sell life insurance. The issuing insurance company keeps SEG funds separate from the rest of its assets. Hence, the name "segregated" funds.

An investment in a SEG fund can actually be described as a deferred annuity, which is an investment contract with a specified maturity date. Generally, maturity is a minimum of 10 years from the date of purchase.

In addition to the advantages that come with mutual funds, SEG funds also offer added benefits including:

• Life Insurance - In addition to the principal guarantee, SEG funds offer a guaranteed death benefit.
• Estate Preservation - Like life insurance, SEG funds are excluded from an estate if there is a named beneficiary. Their proceeds are not subject to certain estate fees or time-consuming, potentially costly probate procedures.
• Guaranteed Value - SEG funds provide extra protection against loss due to poor market performance. Depending on the SEG fund, investors are guaranteed to get back at least a minimum percentage of the amount that they originally invested (less withdrawals). When the contract matures, the investor receives either the investment's current market value, or its guaranteed minimum, whichever is greater.
• Maturity Guarantee Resets - Segregated fund families let investors lock in their market gains and reset their maturity guarantee amounts on a regular basis.

With all of the variables and choices available today, WFG recommends that you contact a WFG associate to discuss if an SEG fund strategy is right for you.