How are segregated funds classified regarding investment products?

Segregated funds are classified as insurance products because they are essentially investment funds offered by insurance companies that also provide unique insurance features. Unlike mutual funds, which are established primarily for investment purposes, segregated funds combine investment with a life insurance component.

This classification emphasizes the dual role of these products: they not only allow individuals to invest in a variety of underlying assets but also provide a level of protection for investors’ principal amounts upon the policyholder's death, usually up to a specified percentage of the original investment. Additionally, they often offer benefits that are characteristic of life insurance, such as the ability to bypass probate upon death and potential creditor protection, which further solidifies their status as insurance products rather than merely investment vehicles.