What is meant by a death benefit guarantee in segregated funds?

A death benefit guarantee in segregated funds refers specifically to a guaranteed amount that beneficiaries will receive upon the policyholder's death. This feature is one of the key advantages of segregated funds, as it provides a level of financial security for the policyholder's beneficiaries. The death benefit is often set to the higher of the current market value of the investment at the time of death or a predetermined minimum value, which could be linked to the total premiums paid.

This guarantee ensures that the beneficiaries are protected from market fluctuations that could diminish the value of the segregated funds at the time of the policyholder's death. It offers peace of mind, knowing that their loved ones will receive a specific amount, regardless of the market conditions. In contrast, other choices such as assurance of income for life, promises of investment growth, or reimbursements of all premiums do not directly address the protective guarantee aspect specific to death benefits. These aspects concern different financial solutions rather than the primary function of a death benefit guarantee in segregated funds.