Reset Features

Segregated funds allow the contract holder to “reset” their benefit guarantees, in some cases, as many as two times per year.  What this means is that the maturity guarantee and death benefit guarantee can be reset to a higher amount if investment gains of the market value of a segregated fund contract increases. This resets the contract’s deposit value to equal the greater of the deposit value or current market value, as well as restarts the contract term and extends the maturity date.

For example, if you started with $10,000, you would be guaranteed to receive at least $10,000 at the end of 10 years, (you chose an issuer providing a 100% maturity benefit guarantee). But let’s say that because of a spectacular return within the segregated fund, the investment grows to $20,000 after only two years. With a reset feature, you can reset the account so that the guarantees will now be based on 100% of $20,000.

The downside of the reset feature is that the 10-year investment period is also advanced by an additional10 years from the date of reset. In our example, therefore, the contract will actually mature 12 years after it was taken out – that is, two years from when the contract commenced, plus the new 10 years to maturity from the reset date.

Investors should read the Information Folder for important information on the segregated funds of interest.  The Information Folder will contain information and details on factors affecting maturity values, death benefits, reset features, fees and commissions and much more.  Segregated funds unit values fluctuate in value and redemptions or sales can be made at a loss. 

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