What type of insurance contract combines an investment that produces returns and provides death benefits?

The correct answer is a segregated fund. A segregated fund is an insurance product that combines features of an investment fund and an insurance policy. It allows investors to invest in a variety of underlying assets while also providing death benefit protection, which means that in the event of the policyholder's death, a specified amount will be paid out to their beneficiaries.

This dual function—allowing for potential growth through investment returns alongside a safety net for loved ones—is a key distinction of segregated funds. They are often offered by insurance companies and come with additional features such as maturity guarantees, which ensure that the investment does not lose value over a specific period, further distinguishing them from standard mutual funds.

In contrast, other options do not provide this combination of investment growth and death benefits. Mutual funds focus primarily on pooling investments to generate returns without the death benefit aspect. Savings bonds are fixed-income securities with no associated life insurance component, and whole life insurance primarily serves the purpose of providing a death benefit with a cash value accumulation feature, but it does not combine investment returns in the same structured manner as a segregated fund.