Annuities and segregated funds
What you'll be able to do
Annuities buy guaranteed income; segregated funds add insurance guarantees to investing — both trade cost or flexibility for certainty.
- Annuities turn a lump sum into guaranteed income, addressing longevity risk (less flexibility).
- Segregated funds wrap an investment portfolio in insurance guarantees.
- Seg-fund features: maturity/death guarantees, potential creditor protection, probate bypass.
Two insurance-based products sit on the border with investing. An annuity converts a lump sum into a guaranteed stream of income, often for life — directly addressing the retiree's fear of outliving their money (longevity risk). The trade-off is reduced flexibility and access to the capital. Annuities suit clients who value certainty of income over control of the lump sum.
Segregated funds are insurance-company investment funds (so they're sold by licensed insurance reps) that wrap a mutual-fund-like portfolio in insurance guarantees: typically a maturity and death-benefit guarantee that returns a set percentage of deposits, potential creditor protection, and the ability to bypass probate by naming a beneficiary. Those guarantees come at a higher cost (a higher MER than a comparable mutual fund).
The seller's job is to be clear-eyed about the trade-off: the guarantees and estate features are real and valuable to some clients, but they aren't free. Recommend segregated funds when the protection and estate benefits genuinely matter to the client — not as a reflexively 'safer' version of a mutual fund.
Key points
- Annuities turn a lump sum into guaranteed income, addressing longevity risk (less flexibility).
- Segregated funds wrap an investment portfolio in insurance guarantees.
- Seg-fund features: maturity/death guarantees, potential creditor protection, probate bypass.
- Those guarantees cost more (higher MER) — recommend when the protection genuinely matters.
Examples
A client drawn to a segregated fund 'because it can't lose' should understand the maturity guarantee's terms and that its higher MER is the price of that guarantee — a fair trade for some, not for all.
Pitfalls
- Pitching segregated funds as a free 'safer mutual fund' while ignoring the higher cost.
- Selling an annuity to a client who clearly needs continued access to the capital.
Ask your sales coach
In a real Adept rollout this routes to your firm's compliance-approved Claude project; in the demo it opens a fresh Claude chat. Never share real client details.