Segregated Funds

When Clyde became an agent for Great Eastern Assurance Company, he wanted to learn more about the difference between a segregated fund and a mutual fund.

Which of the following statements is/are true?

• In both mutual funds and segregated funds the investor receives capital gains and losses

• In a mutual fund the assets are owned by the fund; in a segregated fund the insurance company owns the assets

• Prior to being offered to the public, a segregated fund must be approved by federal regulators

• All of the above

Yolanda has begun to set up an investment strategy for her retirement. She talks to her insurance agent about investing in a RRSP. The insurance agent tells her about an Individual Variable Insurance Contract that has had consistent performance in the past. He gives her some reading material and sets a follow up appointment. That evening, Yolanda reads the material that he left her.

What will she not require to help her make her decision?

• A summary fact statement

• A prospectus and financial statement

• An information folder and financial statements

• A&C

Jeremy is interested in purchasing an IVIC. He contacts an insurance agent and receives an information folder, financial statements and a summary fact statement to review prior to completing a segregated fund contract.

What would be included in the information folder Jeremy has received?

• A Statement of Understanding

• A statement of changes in net assets of the segregated fund

• A description of benefits that are guaranteed and those that are not guaranteed and that value is subject to market fluctuations

• B & C

When Brian died, his wife Roberta began to review all their financial material. She had never been involved in any of the financial decisions. Much of the information she read caused her to feel confused and frustrated. She finds paper work showing that Brian purchased a 10-year deferred straight life annuity 22 years ago and that the payment was $2,100 a month. She also sees that he has four 5-year GICs each worth $10,000 that he invested in each year over the last 5 years. She calls you, the insurance agent, and asks you to explain the GIC and the deferred annuity that Brian has.

Which of the following statements would be most accurate?

• The GIC can be cashed even if they are non-redeemable or left to mature at the estate's discretion

• The annuity payments will continue to be paid until Roberta's death

• The annuity payment will continue to be paid to the estate until the funds have been depleted

• The full value of the GIC will be taxed if redeemed prior to maturity

Tommy Takimoto has a $10,000 deferred annuity that he bought when he was

25. He also has purchased an $8,000 5-year GIC every year, for the last 3 years. Tommy has decided to be his own boss and open a sports and sushi bar. Tommy quits his job as an electrician and uses his emergency cash to start his sports and sushi bar. He is very excited about the future. Unfortunately his business does not do as well as he hopes it would. He decides to use his retirement fund to help pay the bills until the business is more profitable instead of using his credit cards even though he has more room available.

Which of the following statements about Tommy's deferred annuity and GIC is correct?

• He cannot redeem funds out of either with no fees and charges

• He can redeem funds out of his GIC

• He can redeem funds out of his annuity

• B &C

Every year for the last 5 years Douglas has invested $6,500 in a GIC. This year he speaks with a life insurance agent who tells him about deferred straight life annuities. Douglas asks many questions because this money is for his retirement.

What does the agent tell him?

• Upon death the GIC and annuity form part of the estate

• The deferred annuity is creditor protected, but the GIC is not

• Both have consumer protection from CompCorp of up to $60,000

• A& C

Wesley purchases an Individual Variable Insurance Contract with $15,000. He was 55 at the time of the purchase. When he turns 60 he has a heart attack and decides after the surgery to retire and enjoy life. The value of the IVIC is now $18,400. He wants to withdraw as much as possible so he can visit family in Scotland.

What will apply with his withdrawal?

• He can withdraw only 75% of the present prior to the maturity

• He can withdraw only 75% of the original amount invested prior to the maturity

• The policy has not reached the 10-year maturity so he cannot withdraw his money

• He can withdraw the full amount less any fees associated with the sales charges

Daphne is a paramedic. She has a great group plan covering life insurance, medical and a pension plan. She decides to invest a $15,000 inheritance she received from her grandmother in a registered Individual Variable Insurance Contract. The contract has a 75% guarantee. Seven years later the value of.the account increased to $18,400. The next 2 years the fund experienced a dramatic decrease in value. When Daphne died from a car accident her account was worth only $10,000.

What amount did her husband Simon receive?

• The highest account value recorded or 75% of her original deposit which ever is greater

• Nothing because it was registered it must be transferred to her estate

• The full amount of the original deposit

• The present value or 75% of the original deposit whichever is greater

Rachael Seager loved to research and analyze investment opportunities. She had just learned about segregated funds and was reviewing the features and benefits of a number of segregated funds provided by different insurance companies. One of the things she wanted to analyze was the maturity, redemption, and surrender options.

What document will contain the information she seeks?

• Information folder

• Prospectus

• Financial Statements

• Summary of facts

Kaylyn Aikens loved to research and analyze investment opportunities. She had just learned about segregated funds and was reviewing the features and benefits of a number of segregated funds provided by different insurance companies. One of the things she wanted to analyze was how the price of units is determined on purchase, transfer, or withdrawal including charges.

Where can she find this information?

• Summary of facts

• Prospectus

• Financial Statements

• Information folder