What typically determines the death benefit in a segregated fund?

The determination of the death benefit in a segregated fund is primarily based on the guaranteed amount compared to the market value at the time of the insured's death. Segregated funds often come with a maturity guarantee and/or a death benefit guarantee, which ensures that the death benefit paid to the beneficiaries will be at least equal to a specified amount, often a percentage of the premiums paid or the market value, whichever is higher.

This feature provides a layer of security for investors by protecting their investments, particularly in volatile markets, as it ensures their beneficiaries will receive either the current market value of the fund or the guaranteed amount, whichever is greater. This characteristic is a key selling point of segregated funds compared to traditional mutual funds, where no such guarantees exist.

The other options do not accurately represent how the death benefit is calculated in segregated funds. For example, while health status and age can play a role in life insurance policies in general, they are not variables that directly affect the death benefit calculation for segregated funds. Moreover, the average investment of all fund holders does not influence an individual policyholder's death benefit, as it is assessed on a case-by-case basis relating to the individual's own investment and the guarantees in place.