Just like mutual funds, segregated funds are invested in equities, bond, and other investments. However, while mutual funds sold by financial institutions generally have no guarantees, segregated funds guarantee most or all of you principal investment upon maturity or death.

Segregated funds are only available from life insurance companies and get their name from the fact that their assets are held separate or ‘segregated’ from the general assets of the company. This financial insulation adds to their financial strength and stability.