Seg Funds Segregated Fund Guarantees & Features question: death benefit guarantee

Seg FundsSegregated Fund Guarantees & Features

Kim, 66, a retired transit dispatcher in Winnipeg, Manitoba, deposited $100,000 in a segregated fund contract with a 100% death benefit guarantee. The contract reduces guarantees proportionally for withdrawals. After a market decline, when the contract was worth $80,000, she withdrew $20,000 to help her daughter with a wedding. Under proportional reduction, what is her new death benefit guarantee?

A $60,000
B $75,000
C $80,000
D $100,000

Show the answer and explanation

Answer: B. $75,000

A $20,000 withdrawal from $80,000 is 25% of the value, so the guarantee falls by 25%: $100,000 x 0.75 = $75,000. A dollar-for-dollar reduction would give $80,000. Source: standard Canadian segregated fund and annuity contract terms (industry practice) (as at 12 Oct 2026).

Common mistake

Reducing the guarantee dollar-for-dollar instead of proportionally.

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Leon, 70, a retired air traffic controller in Lethbridge, Alberta, holds a segregated fund contract with a $120,000 guarantee that is reduced dollar-for-dollar by withdrawals. The contract's market value is $150,000. He withdraws $15,000 to buy a used camper van for a trip across the country. What is his new guarantee?Rosalind, 71, a retired music teacher in Oakville, Ontario, deposited $200,000 in a non-registered segregated fund contract with a 100% death benefit guarantee and a 75% maturity guarantee. She named her two nephews as beneficiaries. She dies four years later, having made no withdrawals, when the contract is worth $170,000. What do her beneficiaries receive in total?Ana, 47, lives in Winnipeg, Manitoba, with her husband and two teenagers. Three years ago she bought a non-registered segregated fund contract with a 10-year maturity guarantee and a deferred sales charge schedule. She now calls her agent to say she has lost her job as a warehouse supervisor and will need cash for household bills within 6 months. Her husband's wages cover about half of the family's expenses. Apart from the contract, she has $15,000 in a savings account and no other investments. What should the agent do?

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Original study material mapped to the public CISRO curriculum; not a real test question.Not affiliated with CISRO, CCIR or any provincial insurance regulator. Verify figures and rules against current guidance before relying on them.