Reserves must be kept to protect your guaranteed capital.
A life insurance company holds a reserve in relation to the capital guarantee provided in the policy contract. Because of the need to assess and insure the capital guarantee, the involvement of life insurance is required.
The insurer is required by law to maintain adequate reserves of capital that may be needed to pay any future liability due to a capital loss. Companies now offering seg fund investments also work in conjunction with a life insurance company to facilitate this reserve and insures the capital guarantee. The management fee charged to the segregated fund includes the cost of that insurance.