Understanding segregated funds
What is a segregated fund and what are the benefits of it?
A segregated fund is an insurance contract between the policy owner and Equitable Life. The policy owner can:
Choose a guarantee class
Choose an investment option
Name a person to receive the death benefit
Pick a registered or non-registered contract
Receive regular payments or a payment on the contract maturity
Be aware that the options the policy owner chooses may affect applicable taxes. The value of the contract can go up or down depending on market fluctuations.
To learn more, see Pivotal Select Contract and Information Folder (Form #1403).
How does a segregated fund compare to a mutual fund?
While mutual funds and segregated funds share many similarities, segregated funds have unique estate planning advantages. Segregated funds allow a beneficiary to be named on a non-registered investment. Unlike mutual funds, the investment proceeds are paid directly to the named beneficiary(ies), bypassing the administrative costs associated with the estate settlement process.
To learn more, see Segregated Funds and Estate Planning (Form #1112).
What classes of segregated funds do you offer on Pivotal Select contracts and what are the main differences between them?
Equitable Life offers three guarantee classes:
Investment Class (75/75 Growth & Flexibility): a broad selection of investment choices with no additional insurance fee; 75% of both deposit and death benefit guarantee with no resets
Estate Class (75/100 Growth & Estate Preservation): broad fund offering for investors wishing to protect their investment; 75% deposit maturity guarantee and 100% death benefit guarantee with one reset a year for both guarantees up to the annuitant's 80th birthday
Protection Class (100/100 Growth & Principal Protection): broad fund offering for investors who want the assurance that their principal investment is protected; 100% maturity guarantee on deposits made prior to the first policy anniversary and 100% death benefit guarantee with one reset a year for both guarantees up to the annuitant's 80th birthday
To learn more, see Pivotal Select Product at a Glance (Form #1385) for a comparison of the three investment classes. Also, see the Pivotal Select Advisor Guide (Form #1405) for more information.
What is the maturity guarantee on Pivotal Select contracts and how does it work?
An investor will receive a maturity benefit guarantee on the maturity date. This protects the value of the investment at specific dates in the future. On the maturity date, the investor is guaranteed the greater of the market value of the funds or 75% or 100% (depending on guarantee class chosen) of the money put in the funds, reduced proportionally if money has been taken out. On the Estate Class and Protection Class, there is a deposit maturity guarantee every 15 years. On the Investment Class the maturity date is at age 105.
For learn more, see Pivotal Select Advisor Guide (Form #1405)
What is the death benefit guarantee on Pivotal Select contracts, and how does it work?
The death benefit guarantee protects the value of the investment if the Annuitant named in the contract dies. Money is paid to the beneficiary. On the date of the death of the Annuitant, it is the greater of the market value of the funds or 75% or 100% (depending on guarantee class chosen) of the money put into the funds, reduced proportionally if money has been taken out. If a policy owner chooses the 100% death benefit guarantee, an extra fee will apply).
To learn more, see Pivotal Select Advisor Guide (Form #1405).
What is a non-reducing death benefit?
Many companies reduce the amount of death benefit guarantees after the client reaches age 80 or older. Equitable’s Pivotal Select Estate and Protection Class maintains 100% non-reducing death benefit guarantee throughout the life of the contract.
What is a reset for Pivotal Select contracts and how do they work and which classes offer resets?
A policy owner can choose to reset the deposit maturity or death benefit guarantee amount. A reset is allowed once per year up to the annuitant's 80th birthday. A reset is done to lock in the maturity, or the death benefit guarantee payable. A policy owner can choose any day of the year to reset either guarantee for maximum flexibility and chance of locking in better gains. Be aware that resetting the maturity guarantee restarts the 15-year maturity guarantee period. Resets are not available on Pivotal Select Investment class contracts.