Continuing Education for Advisors - CE Corner

Participating life insurance

Continuing Education for Advisors

Life’s brighter under the sun

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Continuing education for advisors

Life’s brighter under the sunwith Sun Life Financial

2

Learning objectives

By the end of this course you will be able to:

Explain what participating life insurance is

Explain how participating life insurance works

Know when to recommend participating life insurance



Now more than ever, participating permanent whole life plans offer tremendous value to participating policyholders. Canadians have increasingly demonstrated renewed interest in par products. Sales have been on the rise since a low in 2001, while sales of universal life (UL) have declined or held steady over the same period.

As the Canadian boomer market moves from the accumulation of assets to protection and

as they transfer those assets to the next generation, they are looking for products that offer

both growth and stability.

3

The benefit of participating life insurance in today’s market

What is participating whole life?

Participating life insurance plans offer clients the opportunity for

long-term growth without the volatility traditionally associated

with equity markets.

?



4

How does participating life insurance work?

Life insurance involves the transfer of risk from an individual to a life insurance company. With participating life insurance, a portion of the risk is shared among the policyholders and the company.

As part of the risk-sharing relationship, participating policyholders may also share in certain

rewards when policies perform better than originally expected. This reward may come in

the form of a policyholder dividend, which is a portion of the earnings from the insurance

company’s participating account. This account is where the investments, expenses and other

items related to the company’s participating policies are tracked. The company determines

at least annually, through the sole discretion of its Board of Directors, if there will be a

dividend and the amount of any dividend.

What are the differences between participating policyholder dividends and shareholder dividends? Policyholder dividends are based on the experience of the company’s participating account.

Shareholder dividends are based on the company’s overall performance, including earnings

from all of its lines of business.

There is no direct relationship between these two types of dividends. That is why it’s possible

for policyholder dividends to decrease in the same year the company’s shareholder dividends

have increased. Consequently, it is also possible for policyholder dividends to increase in the

same year that shareholder dividends have decreased.



5

What determines the dividend credited to a participating policy?

It is important to note that policyholder dividends are not guaranteed and they will vary from year to year.

Participating policies are grouped based on certain factors such as the type of policy and

when it was purchased. The experience of each group determines the dividends available

to be allocated within the group. This approach in determining dividend allocation is

known as the contribution principle and is used by life insurance companies in Canada

to help ensure a fair distribution of the participating account earnings among the

participating policyholder groups.

The amount of dividends allotted each year can vary upward or downward as a result of a

change to the dividend scale. The dividend scale is the outcome of a series of calculations.

It will determine how the available earnings for the group will be allocated to each

individual policy in the form of policyholder dividends.



6

What is meant by experience?

Insurance companies will design their products based on a set of risk assumptions to be shared with the policyholder. These risks include investment returns, mortality, expenses, taxes, inflation and the number of policyholders they assume will cancel their coverage.

Each year, the company compares these assumptions to the actual results and the anticipated

future results for their participating life insurance product. This assessment defines the

experience for the group. Experience that is better than the assumptions made creates

earnings that are available to be distributed as policyholder dividends. When experience

worsens, earnings available to be distributed as dividends will decrease. If the experience is

equal to or worse than the assumptions made, dividends may be zero.



7

There are three key risks that can be used to further explain how experience impacts the dividend scale and the earnings available to be allocated as policyholder dividends.

Expense risk Mortality risk Investment risk

- Like any business, an insurance company has expenses such as the cost to develop, market, distribute and administer insurance products

- Expense risk reflects the company’s ability to control and reduce expenses, relative to the assumptions made in the dividend scale

- The impact of the expense experience on participating account earnings is relatively small, but changes can have a significant impact on participating policies with smaller face amounts

- During periods of high inflation, expenses will increase

- Mortality is the number of deaths expected to normally occur in a given group at a given age

- Mortality risk reflects the death benefits actually paid, in relation to the assumptions made in the dividend scale for the group

- The impact of mortality experience on participating account earnings is gradual over time because mortality trends and changes to mortality trends develop slowly

- Premiums from all participating policies in the group are pooled; funds not required to pay benefits, expenses and taxes are invested to provide for future benefits

- The investment risk reflects the company’s actual returns on the invested funds, net of losses due to defaults, in relation to the assumptions made in the dividend scale for the group

- Investment experience is usually the most important factor in determining annual participating account earnings

- The participating account has investments in a variety of asset classes and has a long-term investment strategy



8

How do participating account portfolio investments respond to market conditions?

The investment return experience is normally the

most important factor influencing the earnings

available to be credited as policyholder dividends.

A long-term investment strategy, together with

a large, well established participating account,

contributes to more stable investment returns.

As a result, these investment returns tend to

fall more slowly than actual interest rates and

equity markets. They also recover more slowly

when actual interest rates increase or equity

markets enter periods of growth. The following

chart illustrates the performance of the Sun Life

Participating Account over the past 25 years.

Historical returns35%

30%

25%

20%

15%

10%

5%

0%

-5%

-10%

-15%

-20%

-25%

-35%

-30%

Dividend Interest CPIS&P/TSX 5-year GIC10-year GOC bond

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Calendar year

? Why Sun Life Financial for par?We sold our first participating life

insurance policy in 1871. We’ve

paid policyholder dividends every

year since 1877 and have a large,

prudently managed par account.

We have over $16 billion in par

account assets, and support

1.6 million par policyholders

who have over $87.6 billion of

participating life insurance with us.



9

What safeguards are in place to protect the interests of participating policyholders?

The participating account is kept separate

As required by law, the insurance company maintains an account for its participating

policies that is separate from the accounts for its non-participating policies and other

businesses. The participating account records the assets, liabilities, premiums and any

earnings for the participating policies only.

With participating life insurance, only the base insurance amount and any additional

coverage provided under either a dividend option or any optional plus premium benefit

are considered participating. All other optional benefits are considered to be

non-participating and do not contribute to the participating account, nor are they

eligible for policyholder dividends.

The Board of Directors (the Board)

The Board decides if policyholder dividends will be paid and the dividend scale that

will be used to allocate them. Participating policyholder dividends are reviewed at least

annually. The Board considers the participating policyholder dividend recommendation

of the company’s Appointed Actuary who applies sound actuarial principles and

practices in formulating the recommendation. Before declaring the annual participating

policyholder dividend, the members of the Board review a written report that includes a

signed opinion from the Appointed Actuary stating that the policyholder dividends being

considered are in accordance with the company’s dividend policies.



10

Dividend options

Paid-up additional insurance

Base insurance amount

* The total death benefit is not guaranteed.

Total death benefit*

Time


Paid-up additionalinsurance

Policyholder dividends credited to the policy are used to purchase paid-up additional

insurance. The paid-up additional insurance is added to the base insurance amount creating

another layer of permanent protection. This layer as well as the base insurance amount is the

basis for earning dividends, resulting in a compounding effect of dividend earning potential.

The paid-up additional insurance also has a cash value which accumulates over time on a

tax-preferred basis.


Enhanced insurance

Annual premium reduction

Dividends on deposit

Cash payments



11

Enhanced insurance

Enhanced insurance is a dividend option that enables clients to establish a permanent life

insurance policy in a cost-effective manner. With enhanced insurance as the dividend option,

on each policy anniversary any dividend credited to the policy is used to purchase a

combination of yearly term insurance and paid-up additional insurance (PUA). This combined

amount is equal to the enhanced insurance amount set out in the client’s policy.

In the graph to the right,

you can see the various

layers of coverage in a

policy with the enhanced

insurance dividend option.

The first layer is the base

insurance amount which is

the permanent insurance

that is guaranteed for the

entire lifetime of the insured

person, regardless of future

dividend scales, provided all of the required premiums are paid.

The next layer is the enhanced insurance amount – at issue this is made up entirely of yearly term

insurance. On every policy anniversary, any dividends credited are used to purchase a combination

of yearly term and paid-up additional insurance equal to the initial enhanced insurance amount.

Over time, paid-up additional insurance replaces the yearly term insurance.

Yearly term

Dividend crossover point


Time






12

The dividend crossover point

occurs when all of the yearly term insurance is

replaced by paid-up additional insurance. Then

any future dividends are used to purchase more

paid-up additional insurance. The paid-up

additions earn dividends and accumulate cash

value. The result is a higher total cash value

and a higher total death benefit. An important

element of the enhanced insurance dividend

option is which of two guarantees the client

chooses at purchase.

Lifetime guarantee

With the lifetime guarantee, the enhanced insurance amount is guaranteed for the life of the

policy regardless of the policyholder dividend performance. If the policyholder dividends

credited to the policy are insufficient to pay for the yearly term insurance required, we will

surrender any previously purchased paid-up additional insurance for its cash value to make

up the amount owing. This ensures that the total death benefit remains intact.

Even if the combination of the dividend credited and cash value from surrendered paid-up

additional insurance is insufficient to pay for the cost of the yearly term insurance, the

lifetime guarantee will ensure the total death benefit remains intact.

Sun Par Protector offers

clients the choice of two

guarantees under the

enhanced insurance dividend

option. They can choose

either the lifetime guarantee,

or the 10-year guarantee.

!



13

10-year guarantee

If a client selects the 10-year guarantee, the enhanced insurance amount is guaranteed for

the first 10 years of the policy regardless of policyholder dividend performance.

If the policyholder dividends credited to the policy are insufficient to pay for the yearly term

insurance required, we will surrender any previously purchased paid-up additional insurance

for its cash value to make up the amount owing. At any time during the first 10 years, if the

combination of surrendered paid-up additional insurance and policyholder dividends can’t

cover the cost of the yearly term insurance, we guarantee the total death benefit will remain

intact during that time.

Starting on the 11th policy anniversary, if the

combination of policyholder dividends and

surrendered paid-up additional insurance

(PUA) is not sufficient to cover the cost of

yearly term insurance, we will reduce the

remaining yearly term insurance to the

amount that may be purchased at that time.

To maintain the original coverage, the policy

owner may make additional payments in

the form of plus premium benefit payments

which we determine are enough to prevent

a reduction to the enhanced insurance

amount from occurring. Under these

circumstances, these additional payments

will not be subject to additional evidence

of insurability. However, the policy owner

will be limited to paying what is needed to

maintain the yearly term insurance.

Note about surrendering PUAs When PUAs are surrendered

for their cash value, the death

benefit will decrease by more

than the cash value. This is a

result of the multiplier effect of

PUAs where one dollar of cash

value equals more than one

dollar of death benefit.



14

Annual premium reduction Dividends credited to the policy are used to reduce the annual premium for the next policy

year. If in the future the dividends exceed the annual premium, then the excess amount is held

in the withdrawable premium fund.

Dividends on deposit Dividends credited to the policy are automatically deposited into an account that is similar

to a savings account and earns taxable interest. Clients have access to these dividends at any

time. The death benefit is equal to the base insurance amount plus any remaining dividends

on deposit. Dividends paid will become taxable once cumulative dividends paid exceed the

adjusted cost basis of the policy.

Cash paymentDividends are paid in cash directly to the client each year. Dividends paid will become taxable

once cumulative dividends paid exceed the adjusted cost basis of the policy.

Summary of dividend options available

Annual cash flow

Cash accumulation

Increase in death benefit

Annual tax reporting

Paid-up additonal insurance No Yes Yes No

Enhanced insurance No Yes No1 No

Dividends on deposit No Yes Yes2 Yes

Annual premium reduction Yes No No Yes

Cash payment Yes No No Yes

1 May occur if and when the dividend crossover point is reached.2 The value of dividends on deposit is added to the death benefit.



15

While premium offset provides clients with future flexibility for premium payments, it is

important to remember that other values, such as the increase in death benefit and cash

value, will not accumulate to the same extent as they would if the client continued to pay the

premium with out-of-pocket payments.

And while the performance of policy owner dividends plays an important part in determining

the future premium offset point, there are a number of other factors that should be taken

into consideration. These factors include cash withdrawals, policy loans, a change in dividend

option and the addition of optional benefits to the policy.

Premium offsetPremium offset is a non-contractual feature that may be available at some point in the future.

If your clients select paid-up additional insurance or enhanced insurance with the 10-year

guarantee as their dividend option, they may be able to select premium offset in the future.

After paying the required premiums for a number of years, annual dividends combined with

the surrendering of existing paid-up additional insurance for its cash value are projected to be

sufficient to pay the required premium in future years.

Premium offset may occur when the base insurance

amount and any paid-up additional insurance have

created a base large enough to earn enough policy owner

dividends, which in combination with the surrendering of

paid-up additional insurance, are projected to be sufficient

to cover the cost of future premiums.



16

If your clients elect paid-up additional insurance as their dividend option, the potential

premium offset point may occur earlier than if they elected enhanced insurance as their

dividend option.

This is because the policyholder dividends credited under the paid-up additional insurance

dividend option are used entirely to purchase additional insurance. Whereas, with enhanced

insurance, the policyholder dividends are being used to purchase a combination of

paid-up additional insurance and yearly term insurance.

So while changes in the dividend scale will have an impact on the premium offset point,

regardless of the dividend option elected, clients electing enhanced insurance as their dividend

option will likely see a greater impact than those electing paid-up additional insurance.

Even if the policy has gone on premium offset, if the dividend scale is reduced in the future,

clients may have to either resume paying premiums to maintain their coverage, or elect a

decrease in the death benefit.


Currentdividend scale

Premium offsetat year 15


Time

Alternatedividend scale





17

Plus premium benefitParticipating whole life insurance products typically offer clients the opportunity to make additional

payments beyond the required premiums. This option would generally be available to be made

either as lump-sum payments or combined with the scheduled required premiums.

The availability of this option will depend on the terms set by the insurer, but is typically available

when the client has chosen either the paid-up additional insurance or enhanced insurance dividend

options. The additional premiums paid under this option allow the policyholder to increase the

amount of paid-up additional insurance purchased. The result will be a more rapid accumulation of

paid-up additional insurance and the cash value associated with it. The insurer will set maximums in

order to prevent the growth from exceeding the maximum tax exempt limit.

With enhanced insurance as the dividend option, the total death benefit will not increase

immediately. Instead, the paid-up additional insurance purchased by the additional premiums

would replace the yearly term portion of the enhanced insurance more rapidly. Eventually, the

paid-up additional insurance would entirely equal, then exceed, the enhanced insurance amount,

making the total death benefit grow from that point onward.


Time* The total death benefit is not guaranteed.

Paid-up additional insurancepurchased by

plus premium benefit

The power of plus premium benefitPaid-up additional insurance dividend option

Paid-up additionalinsurance purchased

by dividends




18

How to calculate the total cash value:

Guaranteed cash value +

Any accumulated dividends on deposit +

Cash value of any paid-up additional insurance +

Any value in the withdrawable premium fund –

Any outstanding policy loans or automatic premiums loan =

Total cash value

$

The total cash value of the plan is made up of guaranteed cash value plus any cash values

that are generated by dividends, as well as any plus premium benefit payments if the client

has elected the optional plus premium benefit.

Policy cash values – what they mean and how they are calculated

Guaranteed cash value:

Guaranteed cash values are set out in the

client’s policy. They typically begin at the

end of year five. Guaranteed cash values are

not affected by the dividend option selected.

They are determined on the base permanent

insurance portion of the policy and vary by

issue age, sex, payment period, smoking status

and payment duration.

Non-guaranteed cash value:

Non-guaranteed cash values arise when

dividends are used to purchase paid-up

additional insurance or left on deposit.

These cash values are available only if

a client has elected paid-up additional

insurance, enhanced insurance or

dividends on deposit as the dividend

option with the policy.



19

Cash accessibility options

Cash withdrawals are:

• Availablewithpaid-upadditional

insurance or dividends on deposit.

• Notavailablewithenhanced

insurance, annual premium

reduction or cash payments.

Another way clients can access the cash value from their participating policy is through withdrawals.

If a client has elected either paid-up additional

insurance or dividends on deposit as their

dividend option for their policy, they can

access the cash values arising from policy

owner dividends through withdrawals.

Withdrawals are available in amounts equal

to or greater than $1,000.

If the dividend option is paid-up additional insurance, the cash withdrawals are made by

surrendering paid-up additional insurance to access the policy’s cash value. The total death

benefit will be reduced by the amount of the paid-up additional insurance surrendered for

the withdrawal. It is important to note that the death benefit will be reduced by more than

the amount withdrawn. That’s because, with paid-up additional insurance, one dollar of

cash value results in more than one dollar of death benefit.

If a withdrawal of guaranteed cash values is made, the base permanent insurance portion

and all other guaranteed values associated with the plan will be reduced accordingly. Cash

withdrawals are not available with enhanced insurance, annual premium reduction, or

cash payments.



20

Policy loans• Clientscanaccessthecashvalueofthepolicy

through a policy loan, anytime the policy is

in force. A policy loan will accrue interest.

• Theclientcanrepaythepolicyloanatany

time without penalty. Upon the insured

person’s death, the balance of any policy loan

is subtracted from the death benefit payable.

• Iftheclientrequestspolicyloans,they

will be subject to taxation to the extent the

loan exceeds the adjusted cost basis (ACB)

of the policy.

• Upto100%ofthetotalcashvalue,

less one year’s interest, less any existing

indebtedness may be borrowed.

• Policyloansareagoodwayfor

clients to take advantage of the cash

accumulated in their policy. The higher

the total cash value in the policy, the

more funds the client can borrow.

Adjusted cost basis (ACB) The ACB of a life insurance policy is

calculated using a complex formula that takes into account all premium

payments, withdrawals, loans and the net cost of pure insurance.

$



21

Non-forfeiture optionsSun Par Protector and Sun Par Accumulator have non-forfeiture options that can keep

some coverage in force for clients, in case they can’t pay the required premiums.

Automatic premium loan

If a premium is outstanding, the amount will first be taken from the withdrawable

premium fund. If there isn’t enough money in the withdrawable premium fund, then the

amount will be paid through an automatic premium loan. Automatic premium loans are

available only to pay unpaid premiums and cannot be requested by the client.

The client’s policy will lapse when the total loan plus applicable interest exceeds the total

cash value of the policy.

Reduced paid-up life insurance

With reduced paid-up life insurance, Sun Life Financial will decrease the death benefit

to an amount where premiums will be no longer payable. If the dividend option on

the original policy was either enhanced insurance or annual premium reduction, it will

automatically change to paid-up additional insurance. Any benefits attached to the policy

will be terminated once the policy changes to reduced paid-up.

You can customize clients’ policies with these optional non-par benefits

!Term insurance (base insured) – 5-, 10-, 20-year

Term insurance (additional insured) – 5-, 10-, 20-year

Child term insurance

Accidental death benefit

Total disability

Total disability benefit for juveniles

Owner waiver on disability

Owner waiver on death

Guaranteed insurability benefit



22

When to use participating whole life?

Estate protection – Par whole life is an ideal choice for estate protection as it offers

an increasing death benefit.

Investment shelters – On an individual or corporate basis, par whole life is ideal

for its long-term growth potential. The compounding effect of dividends allows clients to

accumulate significant sums within their policy, without necessarily exposing themselves to

volatile equity markets.

Leveraging – Ideal for clients looking to supplement their retirement income, a par

policy allows the client to take advantage of the policy values. Due to the stability of the

guaranteed cash values and previously credited dividends, clients can potentially access

greater amounts through a leveraged lending arrangement.

Young children – A 20-pay plan is an ideal configuration for juveniles.

Par as an asset class – For those clients who may be equity heavy, participating

whole life plans allow policyholders to diversify their assets.



23

Meet Frank

Frank, age 55 has built a sizeable estate and is looking forward

to an early retirement. He is also laying the groundwork for an

efficient transfer of wealth to his three grown children.

The challenge – Frank’s experience in the world of investing has been

bittersweet. His hands-on approach has allowed him to successfully build

a sizeable portfolio. However recent pullbacks in equity markets have left

him scratching his head. He built his fortune over his lifetime and does not

want to see it decreased through excessive exposure to unpredictable equity

markets. As he approaches retirement, Frank’s focus will be to slow down

and take a more passive approach to protecting his assets.

The solution – If Frank purchases a $1M Sun Par Accumulator policy

and selects paid-up additional insurance as the dividend option, his annual

premium would be $46,030. As Frank has substantial non-registered assets,

he also chooses to add the plus premium benefit. This would allow him

to make additional annual payments of $7,520 for a total of $53,550.

He would make these payments for the next 10 years.

Sun Par Accumulator could provide an ideal estate transfer vehicle for Frank.

The policy illustration projects a tax-free death benefit of $1,610,630 at

age 85, assuming the current dividend scale. Dividends are not guaranteed

and will vary based on a number of factors including investment returns,

mortality, inflation, lapses and taxes.



24

Sun Par Protector is funded using base premiums of $42,090

with plus premium benefit of $11,460. Premiums are made for 10 years

and then projected to go on offset. By comparison, the total cash value

of Sun Par Protector at year five is $89,546 versus $246,871 for Sun Par

Accumulator. This is an ideal solution for Frank as he is used to hands-on

management of his investments and likes to see that his premiums are

reflected in his cash values in the early years.

Given Frank’s history of hands-on management, the higher early cash values

available with Sun Par Accumulator give him the comfort he is looking for.

The policy cash value projected at year five is $246,871. As a par policy, Sun Par

Accumulator can provide Frank with access to a stable and well managed par account

to assist him with his estate transfer wishes and the opportunity for growth.

Male, age 55, non-smoker, $1M death benefit, paid-up additional insurance

Sun Par Protector

Sun Par Accumulator

Projected total cash value comparison

0

5

10

15

20

25

30

35

Sun Par Protector Sun Par Accumulator

55 65 75 85 95

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Tota

l dea

th b

enef

it

Age



25

Meet Mary and Dianne

Mary and Dianne are identical twins, age 45. Both earn $500,000 per year as lawyers, have maxed out their

registered retirement savings plans (RRSPs) and are looking for

permanent life insurance protection for estate preservation with an

element of additional tax-preferred savings.

The challenge – While much of their lives have been identical – both

married, two children and a dog – they have truly different investment styles.

Mary invests heavily in the market, and market turmoil does not cause her

sleepless nights. She enjoys the opportunity for potential high returns.

On the other hand, Dianne is willing to give up some potential return for

more steady and stable growth.

Both have a $1M permanent life insurance need.

The solution – Dianne purchases a 20-pay $1M Sun Par Protector

policy with paid-up additional insurance as the dividend option. Premiums

of $33,480 are payable for 20 years. Dianne is comfortable with the steady

and conservative nature of the investments held within the par account.

She likes the fact that the diversified portfolio of bonds, mortgages, real

estate and conservative equities are managed with a long-term view.

As Mary prefers to make her own investment decisions, she chooses a

“no bonus” universal life plan with a $1M face amount, an increasing death

benefit and a level cost of insurance structure. She also contributes annual

premiums of $33,480 for 20 years and selects a diversified mix of equity

based investments. While she realizes that the returns within her policy will

fluctuatefromyeartoyearsheassumesanaveragenetrateofreturnof6.5%

over the life of the plan.



26

Thanks to strong equity market performance, Mary’s universal life plan

resulted in larger cash values and death benefits at ages 65 and 75. However,

softer and more volatile markets in the years leading up to age 85, resulted in

a universal life policy with a lower cash value and death benefit than Dianne’s

Sun Par Protector policy. The Sun Par Protector plan has benefitted from stable

and consistent returns of the par account.

While both Mary and Dianne were able to meet their need for a tax-preferred estate

protection solution that provided the opportunity for increasing cash values and death

benefit, they both went about it a different way.

Sun Par Protector may be ideal for those conservative clients who appreciate a solution

that offers the potential for lower volatility in cash value and death benefit growth over

time without the need to make ongoing investment decisions.

Female age 45 non-smoker, $1M SunUniversalLife and $1M Sun Par Protector

Sun Par Protector

SunUniversalLife

Projected death benefit comparison

05

101520253035404550

Sun Par Protector SunUniversalLife

45 55 65 75

$5,000,000

$4,500,000

$4,000,000

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Tota

l dea

th b

enef

it

Age



27

Meet Paul

Paul, 45, is a successful executive with a young family and a

$500,000 permanent life insurance need. Even though he is not planning

to retire for another 20 years, his focus on asset accumulation has

resulted in building a significant portfolio. Part of Paul’s success lies in

his passion for his career and willingness to take risks. As a result, Paul’s

long-term assets are primarily equity based.

The challenge – Paul has been anxiously watching market events over the

past two years and is concerned about what the future holds for his family. In

addition to his $500,000 permanent life insurance need, Paul is looking for ways

to shift a portion of his assets to a tax-preferred environment while diversifying

his holdings away from the volatility of a straight equity based portfolio.

The solution – Paul purchases a $500,000 20-pay Sun Par Protector

policy and selects paid-up additional insurance as the dividend option.

Annual premiums for this plan are $17,270 and are payable for 20 years.

Sun Par Protector is an ideal solution for Paul as it provides the permanent

life insurance protection he requires with premiums that stop at his planned

date of retirement. As a participating policy that is eligible to earn dividends,

it provides the opportunity to accumulate significant cash values in a

tax-preferred environment.

The policy illustration projects a tax-free death benefit of $1,869,071 at age 80,

assuming the current dividend scenario. Dividends are not guaranteed

and will vary based on a number of factors including investment returns,

mortality, expenses, taxes and inflation. The projected total cash value of this

plan is $560,448 at age 65. Cash values can be accessed should Paul need to

supplement his retirement income.



28

This solution also addresses Paul’s diversification concerns. Investment returns

are one of the primary factors influencing the earnings available to be credited

as dividends. Investments within the par account are managed to help meet

the long-term needs of our participating policyholders. Due to the long-term

investment philosophy of this account and the relatively stable cash flows into

this account, Sun Life Financial can invest in longer-term holdings such as real

estate, equities, bonds and mortgages.

Male, age 45, non-smoker, $500,000 Sun Par Protector – 20-pay

Total cash value

Total death benefit

Projected death benefit and total CSV comparison

0

5

10

15

20

25

30

35

40

45 55 65 75 85 95

$4,000,000

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Tota

l dea

th b

enef

it

Total cash value Total death benefit

Age


Why partner with Sun Life Financial?

1. Brand, strength and integrity

2. Competitively designed and priced products

3. Sales strategy tools

4. Expert, accessible underwriting

5. Regional support

6. VIP treatment via Strategic Partner Program

www.sunlife.ca/advisorVisit us around the clock to check out our broad range of tools and support services, including our

proprietary sales concepts, Finanical Advisor bulletins, case studies, needs analysis softward and full

product guides.

Want to know more?If you already work with Sun Life Financial you can contact your regional distribution office to

arrange for face-to face case assistance, or consultation on advanced tax estate planning issues.

Call 1 800 800-4SUN/4786 option 5.

If you don’t currently work with Sun Life Financial call 1 800 800 4SUN/4786 option 3, 1 to

inquire about contracting.

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Continuing Education for Advisors - CE Corner