Which of the following is a significant legal advantage of naming a specific beneficiary (other than the estate) in a segregated fund contract?

Question: Which of the following is a significant legal advantage of naming a specific beneficiary (other than the estate) in a segregated fund contract?

Answer options:

• The policy is exempt from capital gains tax.
• The insurer guarantees 100% of the market value at all times.
• The funds are protected from all creditors while the policyholder is alive. ✅ The death benefit proceeds bypass the probate process if a beneficiary is named.

Correct answer: The death benefit proceeds bypass the probate process if a beneficiary is named.

Explanation: The 'probate bypass' is a key advantage of segregated funds. When a beneficiary other than the 'estate' is named, the death benefit proceeds flow directly to that person, avoiding the delays and costs associated with the probate process.