Guaranteed Lifetime Withdrawal Benefit Segregated Funds

Segregated funds, also known as seg funds, are specific insurance products in which your funds are invested in underlying assets such as mutual funds for example. Segregated funds differ from mutual funds, however, in that they have a built-in guarantee for either all or part of your investment, potentially offering a more secure option. Guaranteed Lifetime Withdrawal Benefit (GLWB) funds provide you with a minimum income from your savings every year starting at a specific year or age. GLWB also provides the potential for investment gains to help increase the minimum income over time.

How does it work?

  • Deposit a lump sum of money into a registered or non-registered GLWB savings plan. You can also make additional deposits into the plan.

  • Choose from the investment options that are available through the GLWB plan.

  • Once your money is deposited and invested in the GLWB, based on your GLWB contract, you are guaranteed an income beginning at a specific age or year for the rest of your life.

  • Depending on your GLWB contract there are different ways to increase your income such as receiving an annual bonus on years that you don’t take a withdrawal or locking in your market gains (also known as a reset). This will vary depending on your contract.

  • When you start making income withdrawals, the withdrawal will decrease your market value however it will not change your guaranteed income amount.

  • On death, your beneficiaries will receive the market value of your investment.

Please note that there are penalties for excess withdrawals above the guaranteed income amount and there are restrictions on investment options.

If you would like to find out if a GLWB fund makes smart financial sense for you, please don’t hesitate to reach out.