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SIP Investing - How to Start, Manage & Optimise Your SIP
In summary
Segregated funds are investment-linked insurance contracts offered in Canada. They combine exposure to underlying investments with contractual benefits that may protect part of the investment at maturity or death.
- Guarantees commonly cover 75% or 100% of the original investment, depending on the contract and guarantee selected.
- Fees can be higher than those of comparable mutual funds.
- Withdrawals before maturity may reduce guarantees or trigger charges.
- Creditor protection and tax treatment depend on the applicable laws and individual circumstances.
- In India, a segregated portfolio within a mutual fund has a different meaning.
Before investing, read the contract and understand the conditions attached to its guarantees. The Bajaj Broking website provides access to mutual fund information, but that does not mean Canadian segregated insurance contracts are available through the platform.
What are segregated funds?
Canadian segregated funds are investment products offered by insurance companies, generally through individual insurance contracts linked to investment funds. They provide exposure to assets such as shares and bonds while including specified insurance benefits.
Unlike a conventional mutual fund, the investor holds an insurance contract rather than simply owning mutual fund units. The insurer manages the underlying investments, and the contract defines the maturity guarantee, death benefit, fees, and withdrawal conditions.
Important distinction for Indian investors: A segregated portfolio in an Indian mutual fund is also known as side-pocketing. Under SEBI's framework, a mutual fund may separate affected debt or money market securities following a qualifying credit event. This is not the same as a Canadian insurance contract and does not provide a general guarantee of capital.
How do segregated funds work?
The insurer invests the money according to the selected fund's investment strategy. The contract then determines what benefits apply and when they can be claimed.
Maturity and death benefits
A contract may guarantee a specified percentage of the eligible investment at maturity or on the policyholder's death. The percentage, eligibility conditions, and calculation method depend on the contract. Withdrawals can reduce the amount covered by the guarantee.
For example, if a contract guarantees 75% of an eligible Rs. 1,00,000 equivalent investment, the basic guaranteed amount would be Rs. 75,000 before applying relevant contract conditions and adjustments. This is an illustration of the percentage, not a claim about an Indian product or an actual offer.
Beneficiaries and creditor protection
The policyholder may be able to name a beneficiary to receive the applicable death benefit. Depending on local law and the contract, this arrangement may simplify the transfer of proceeds. Creditor protection is not universal: it can depend on the jurisdiction, beneficiary designation, timing, and circumstances of insolvency.
Investors should review the investment objective and the legal terms of any product before relying on a particular benefit.
Advantages and disadvantages of segregated funds
The insurance component may be useful to investors who value contractual benefits, but those benefits have costs and conditions. Compare the main trade-offs before deciding whether this type of product fits your financial needs.
| Feature | Potential advantage | Limitation |
|---|---|---|
| Capital guarantee | May protect a specified portion of the eligible investment at maturity | Conditions apply, and withdrawals can reduce the guarantee |
| Death benefit | Provides a contract-defined benefit to an eligible beneficiary | The payout depends on the contract and applicable rules |
| Investment exposure | Offers participation in underlying markets | Investment value can fluctuate |
| Creditor protection | May apply in certain circumstances | Depends on jurisdiction and individual facts |
| Costs | Combines investment and insurance features | Fees may reduce overall returns |
| Access to money | Some contracts allow withdrawals | Early withdrawal charges or adjustments may apply |
A guarantee should not be confused with a guaranteed investment return. The investment may perform poorly, and the contract's protection applies only under its stated terms.
Segregated funds vs mutual funds
Both products can provide exposure to underlying investments, but their legal structure and benefits differ. Use this comparison to understand which features require closer investigation.
| Factor | Canadian segregated funds | Conventional mutual funds |
|---|---|---|
| Structure | Insurance contract linked to investments | Units in a pooled investment scheme |
| Capital protection | May include a contractual maturity or death guarantee | No general capital guarantee |
| Costs | May include investment management and insurance-related costs | Scheme expenses and other applicable charges |
| Withdrawals | Contract restrictions and possible charges apply | Redemption is governed by scheme terms |
| Beneficiaries | Contract may provide a named-beneficiary benefit | Transmission follows applicable rules and documentation |
| Regulation | Subject to relevant Canadian insurance rules | Indian mutual funds are regulated under SEBI's framework |
For an Indian investor comparing mutual fund options, the mutual funds comparison and mutual funds listing pages may help with scheme research. Check the product's jurisdiction and legal structure before comparing guarantees or tax benefits.
Costs, withdrawals, and tax considerations
Read the full contract to understand management fees, insurance charges, administration expenses, sales charges, and early-withdrawal costs. A higher guarantee may come with higher costs, so compare the value of the protection with its impact on potential returns.
Withdrawals may reduce the guaranteed amount or trigger market value adjustments and other charges. Do not assume you can access the entire investment without consequences before maturity.
Tax treatment also depends on the country, account type, contract terms, and the investor's circumstances. Do not assume that investment growth is tax-free or that Canadian tax treatment applies in India. Obtain jurisdiction-specific tax guidance before investing.
To compare potential mutual fund outcomes, you can use the mutual fund calculator from Bajaj Finance. It is a planning tool, not a guarantee of returns.
How to assess an investment before committing
Use these checks before signing an insurance-linked investment contract or selecting a mutual fund.
- Check the guarantee: Confirm whether it applies at maturity, on death, or both, and how withdrawals affect it.
- Calculate total costs: Review every fee and charge, not only the headline management fee.
- Check liquidity: Confirm when you can withdraw and what deductions may apply.
- Understand the underlying assets: Review the investment strategy, diversification, and risk exposure.
- Review your risk tolerance: Use the risk tolerance guide to consider how much fluctuation you can manage.
- Align the investment with your goals: Review your financial objectives and whether you need insurance benefits.
- Compare alternatives: A balanced fund or a diversified approach may be relevant to your research, but neither is equivalent to an insurance guarantee. Learn about portfolio diversification before choosing an investment mix.
For Indian mutual funds, also review the scheme's documents and the SEBI Riskometer. Its six levels are Low, Low to Moderate, Moderate, Moderately High, High, and Very High. The Riskometer indicates risk, not the return you will receive.
Conclusion
Canadian segregated funds combine market-linked investments with insurance benefits, but guarantees are conditional and may come with higher fees and limited access to money. Check the contract, applicable laws, and your financial goals before making a decision. Indian mutual fund segregated portfolios serve a different purpose and should not be confused with these insurance products.
Last reviewed: 13 October 2026
Mutual funds are subject to market risk. Please read the scheme-related documents carefully before investing.
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Frequently Asked Questions
Understanding contract terms
Comparing products and tax treatment
Can a segregated fund guarantee be changed after investing?
The answer depends on the contract. Some products may offer options to reset a guarantee under specified conditions, while others may not. A reset can affect fees, maturity dates, or other benefits. Before relying on this feature, ask the insurer how it works, whether it is available, and what happens after a withdrawal.
What happens if the insurance company offering a segregated fund fails?
The outcome depends on the country, insurer, applicable policyholder-protection arrangements, and contract terms. Do not assume that all invested money will automatically be protected if an insurer becomes insolvent. Verify which protection arrangements apply, whether eligibility limits exist, and how claims are handled before relying on insurer-backed benefits.
Can I transfer a segregated fund to another person?
Transfer options depend on the contract and applicable law. Naming a beneficiary is not necessarily the same as transferring ownership while alive. Before making plans to gift, assign, or transfer a contract, check whether the insurer permits it and whether the change could affect guarantees, charges, creditor protection, or tax treatment.
Are Canadian segregated funds available to Indian residents through Indian mutual fund platforms?
Do not assume that a Canadian insurance product is available through an Indian mutual fund platform. The products have different legal structures and regulatory frameworks. Confirm the issuer's country, eligibility conditions, and distribution arrangements before proceeding. The Bajaj Broking website's mutual fund information relates to mutual fund investing and should not be treated as an offer of Canadian insurance contracts.
Do segregated funds receive the same tax treatment as mutual funds?
No single tax rule applies across all segregated funds and mutual funds. Treatment can depend on the country of residence, contract structure, account type, withdrawals, and beneficiary payments. Canadian rules may differ from Indian rules, and individual circumstances matter. Check the relevant tax authority's guidance or consult a qualified tax professional before investing.
Disclaimer
Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319
BFL does NOT:
(i) provide investment advisory services in any manner or form.
(ii) carry customized/personalized suitability assessment.
(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.
In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.
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Disclaimer on Risk-O-Meter:
Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.
Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.
Disclaimer
Bajaj Finance Limited ("BFL") is an NBFC offering loans, deposits and third-party wealth management products.
The information BFL contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.
This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.
Disclaimer
Mutual Fund SIP calculator may provide potential investors an approximate estimate on the maturity amount of the monthly SIP, purely based on mathematical calculation of the projected annual return rate selected by investor. However, such calculation does not factor the actual performance by the Asset Management Company (AMC) and should not be treated as any advice or assurance about the actual return of investment. Mutual Funds do not have a fixed rate of return and it is not possible to predict the rate of return. Please note that the SIP calculator are for illustrations only and do not represent actual returns which may vary depending on various factors including but not limited to actual performance, expense ratio, taxation, exit load (if any), etc.