Does naming a beneficiary on a segregated fund protect it from the deceased's creditors in Ontario?

It can, but it isn't automatic for every beneficiary. Because a segregated fund is an insurance contract, naming a beneficiary who falls into a protected category — typically a spouse, child, grandchild, or parent of the person insured — can shield the fund's proceeds from the deceased's creditors, similar to how life insurance proceeds work. Naming someone outside those protected relationships, or naming your own estate as beneficiary, generally removes that protection, since the proceeds are then treated as part of the estate and available to satisfy debts.

This protection is separate from the general rule that segregated funds pass outside probate to a named beneficiary. Creditor protection and probate avoidance are related but distinct features of the same contract, and one doesn't guarantee the other applies in every circumstance. The specific wording of the contract, the relationship of the named beneficiary, and the timing of any transfers can all affect the outcome.

If protecting assets from creditors is a goal, whether for your own estate or a beneficiary's, it's worth reviewing your segregated fund beneficiary designations with a financial advisor or lawyer rather than assuming the protection applies by default.