1. Mutual Funds with an Insurance Policy wrapper Basant Ramachandran

2. Definition  A.k.a Individual Variable Annuity Contract or Guaranteed Investment Funds  Insurance Contracts offered by Insurance Companies, structured as an investment producing return and an Insurance policy to mitigate risk.

3. Features  Principal guaranteed at maturity and at death  70% - 100%  Guarantee void if redeemed earlier  Guarantee period >= 10 yrs  Protecting Market Gains using Resets  Creditor protection  Consumer Protection  Avoids Probate  Fees  Insurance protection  Management / Operating expense

4. 24 Jun 2014 24 Jun 2024 $1000 $ 2000 $1700 $600 $400 Annuitant receives $2000 Guarantee: 0 Annuitant receives $750 Guarantee: $350 Maturity Guarantee : 75% Death Benefit Guarantee: 75% Beneficiary Depiction of Seg Fund Lifecycle

5. Similarities with Mutual Funds  Pooling of Funds  Professional Money Management  Diversification of portfolio  Capital Growth potential  Investment options similar to MF  RRSP Eligible  The risk / return is similar to Mutual Funds

6. Mutual Funds VS Segregated Funds BenefitSegregated Funds Mutual Funds Maturity GuaranteeYesNo Death benefit GuaranteeYesNo Creditor ProtectionYesNo Probate ProtectionYesNo Insurance ProtectionYesNo

7. Mutual Funds VS Segregated Funds Mutual FundsSegregated Funds Regulated by Provincial Securities Legislation Regulated by Provincial Life Insurance Acts Offered through a prospectus Offered through an information folder Issues Units / SharesIssues Contract

8. Cons  Lock-in >= 10 yrs  Penalties for early Redemption  Higher fees (0.5% > MF)

9. Regulation  OSFI / CCIR / Provincial Regulators  Life and health insurance companies are regulated for solvency: they must meet Minimum Continuing Capital and Surplus Requirements (MCCSR) set by the Office of the Superintendent of Financial Institutions (OSFI) and maintain reserves to meet future guarantees  Products sold by regulated licensed advisors.  Disclosure provided to investors

10. Market crash  Great-West Life co Inc.,  Manulife Financial Corp.  Sun Life Financial Inc.  Setting aside large reserve amounts  Bottom lines hit - Quarterly several hundred million dollars  Share prices down by 50%

11. Facts  35% - Insurance market space  $224.2 Billion  3.4 Million Canadians

12. Q & A