What does "lock-in" refer to in the context of segregated funds?

In the context of segregated funds, "lock-in" specifically refers to the option to capture performance gains for benefits. This concept is an essential feature of segregated funds, as it allows policyholders to secure the investment returns or gains achieved by their fund at certain points in time. By locking in these gains, the policyholder ensures that the value of their investment is protected, particularly against market fluctuations that might occur later on.

The "lock-in" feature can play a crucial role in a client's investment strategy, as it provides an opportunity to safeguard profits without the need to withdraw or redeem the investment entirely. Clients can often select when to lock in these gains based on their financial objectives and market conditions, allowing for a more tailored approach to managing their investments and retirement planning.

This functionality is particularly appealing for individuals looking to leverage the benefits of market performance while also ensuring a level of protection against downturns. It distinguishes segregated funds from other investment products that may not offer the same level of security regarding capital gains.