Payout annuities

Target client profiles
Those seeking guaranteed income for life or a specified period of time, with protection from market risk.

Selling features
Guaranteed income that can be higher than many other income generating products; Assuris protection; tax efficient income; income may qualify for tax credits and pension income splitting; many options to customize, such as a guaranteed period that can provide a death benefit and income indexing that can offset the effect of inflation.

Product overview

Product overview

A payout annuity is an income-generating insurance product. In exchange for a lump-sum premium, the client receives guaranteed income payments for one lifetime, two lifetimes (for joint products) or a specified period of time.

  • Designed for Canadians ages 60 and over, looking for a source of guaranteed lifetime income, usually for retirement.
  • Income from a payout annuity can supplement other sources of guaranteed lifetime income such as Canada Pension Plan (CPP), Old Age Security (OAS) or a defined benefit pension.
  • This "income floor" helps to ensure there's enough guaranteed income to pay essential living expenses. Once the basics are covered, clients can look at creative ways to generate lifestyle income in retirement.

Who else might benefit from a payout annuity?

  • Canadians approaching retirement who are looking for an income bridge until other sources of income begin.
  • Canadians of any age looking for income for a certain period of time.
  • Companies developing a payout plan for employees or executives.
Features and benefits

Feature

Benefit

Income for life option

  • Life annuity - Clients can never outlive their retirement income
  • Joint life annuity - A client can provide lifetime income for a spouse even after the client dies

Market risk protection

  • Income is not affected by market or interest rate fluctuation
  • Clients are protected from making poor investment decisions

Inflation protection

Clients can choose to have income increase each year by a fixed percentage to help offset the impact of inflation.

Low maintenance income

Income doesn't require ongoing management for clients who aren't interested in managing their investments.

Death benefit

Clients can choose a period of time during which, if they die, we'll pay a death benefit.

Tax and Estate planning

  • Tax efficient income (non-registered annuities)
  • Income may qualify for tax credits and pension income splitting

Assuris protection

If a life insurance company fails, Assuris guarantees a policyholder will retain up to $2,000 per month or 85% of the monthly income amount, whichever is higher. For more details please see www.assuris.ca.

Attractive income

Guaranteed income that can be higher than many other income-generating products

Customizable

Many options to "customize" annuity to client needs

Glossary

Annuitant

For life annuities, the person whose life expectancy we use to calculate income. This is also the person who must be alive at the end of the guaranteed period for payments to continue.

The annuitant is usually the policy owner. The annuitant must be the policy owner for annuities purchased with registered funds.

Beneficiary

The person(s) or entity (ies) named to receive the death benefit.

Compensation

Payout annuities pay up-front (sales) commission. To reflect the additional effort needed to sell an impaired annuity, impaired annuities receive a commission enhancement.

Final payment date

The date we make the last annuity income payment. We don't make any payments after this date. This applies to term certain and temporary life annuities.

Guaranteed period

The time, chosen by the client at issue, during which we'll pay a death benefit if the last surviving annuitant dies. The guaranteed period starts on the payment start date.

Impaired annuity (Essential Care Annuity)

Also known as an enhanced, age-rated or accelerated annuity. It's available for those with a life-shortening condition. An Essential Care Annuity provides higher income payments (or requires a lower premium) than an annuity for someone of the same age and sex with no health impairment.

Joint annuitant

For life annuities, we use this person's life expectancy, along with the expectancy of the annuitant, to calculate income. The joint annuitant is also one of the two people who must be alive at the end of the guaranteed period for payments to continue.

Payment start date

The date we make the first annuity income payment. The policyholder selects the payment start date and cannot change it once we issue the policy.

Policyholder

The owner of the contract.

Present value

The value today of a future payment or series of future payments.

Purchase date

The date we receive the completed application and the entire premium amount. The contract takes effect on this date.

Product at a glance

Residency requirements

We'll issue a policy only if the policyholder and annuitant(s) are Canadian residents.

Exception: If the policyholder has an existing Sun Life Financial policy with a contractual right to purchase a payout annuity.

Issue ages

  • Registered (including locked-in funds) - Ages 18 to 100*
  • Non-registered - Ages 0 to 100*

*Subject to legislative restrictions.

Premiums

Minimum - $5,000 (combined total from all sources)
Maximum - $5 million

  • Premiums $2 million or over - Special pricing may apply. Illustrations must be run by Payout Annuity Customer Service Team.
  • Premiums over $5 million will be considered. Special pricing may apply. Life annuities over $5 million require underwriting.

Annuity types

  • Life annuity
  • Joint life annuity
  • Term certain annuity
  • Temporary life annuity
  • Temporary joint life annuity

Currency

Canadian

Premium sources

  • Registered retirement savings plan (RRSP or RRIF)
  • Locked-in retirement account (LIRA)
  • Deferred profit sharing plan (DPSP)
  • Life income fund (LIF)
  • Locked-in retirement income fund (LRIF)
  • Registered pension plan (RPP) funds
  • Non-registered funds

Note: While a client can purchase a payout annuity with funds from a TFSA, the annuity must be a non-registered prescribed annuity or an accrual annuity.

Source of premium and annuity types allowed

Source of premium

Life

Term certain

Term certain to age 90

RRSP, RRIF

Yes

No

Yes

Locked-in RRSP/LIRA, LRIF/LIF, RPP/Locked-in RPP

Yes

No

No

DPSP, Non-registered

Yes

Yes

No

Deferral periods

Maximum 10 years, subject to restrictions based on the source of premium. For annuities with non-registered accrual taxation, deferral periods of greater than 10 years and less than 15 years can be requested.

Guaranteed periods

0 - 40 years. Subject to restriction based on the source of premium.

Payment frequency

  • Monthly, quarterly or semi-annually by direct deposit to a Canadian financial institution only.
  • Annually by direct deposit to a Canadian financial institution or by cheque.

Payment options

  • Level payments - Payment amount remains the same throughout the payment period.
  • Indexed payments
    • Income increases yearly by a fixed percentage. The client selects an increase between 1 per cent and 4 per cent at purchase.
    • Not available for prescribed annuities
  • Reducing payment (joint life annuities) - Income reduces by a certain percentage selected at issue when one of the annuitants dies.
  • Integrated payment - Annuity income decreases when CPP, QPP or OAS payments begin.
    • Not available for prescribed annuities.
    • Registered funds are subject to legislative restrictions.

Taxation

  • Registered - Income from an annuity purchased with registered funds is fully taxable to the policyholder in the year it's received.
  • Non-registered - Income from an annuity purchased with non-registered funds can have prescribed, non-prescribed (accrual) or level tax treatment.
  • Withholding tax - Canadian withholding tax is mandatory for annuities purchased with RPP (locked-in and non locked-in), LIF or DPSP premiums. If a client is a non-resident the applicable rate of withholding tax will be deducted for any annuity that has been purchased.

Death benefit

Death benefits depend on whether income has started, the source of premium and the guaranteed period chosen.

Surrender

A payout annuity cannot be partially or fully surrendered and has no cash surrender value.

Exception: A term certain annuity that is other than prescribed, may be surrendered on request. A request will require our review and approval.

Essential Care Annuity

For an annuitant with a life-shortening condition, we'll consider issuing an impaired annuity. This can result in lower premium or higher income than for someone of the same age and gender without a health impairment. Only life annuities can be impaired annuities. Term certain annuities don't qualify.

Limits /minimums/maximums

Maximum issue age  (before age rating)

Age 75

Minimum premium

$10,000

Maximum premium

$5 million

Minimum guaranteed period

5 years

Maximum guaranteed period

The source of premium may restrict the maximum guaranteed period available.

Number of impaired annuitants (Joint life annuities)

One or both annuitants can be impaired

Minimum age rating

4 years

Maximum age rating

20 years

Illustrations for Essential Care Annuities must be requested from the Payout Annuity Customer Service Team.

How to produce an illustration

  • Create an illustration using the online illustration tool (available on the Sun Life website you usually use).
  • Illustrations that cannot be run on the online illustration tool can be requested from Payout Annuity Customer Service Team.

Purchase date

The date:

  • we have received all premiums and the application form, and
  • the contract takes effect
Product options
Types of annuities

Life annuity

A life annuity provides payments for as long as the annuitant lives.

Joint life annuity

A joint life annuity provides payments for as long as either the annuitant or joint annuitant lives.

Term certain annuity (single annuitant and joint annuitants)

A term certain annuity provides payments for a selected period of time. We pay a death benefit if the last surviving annuitant dies before we've made all the payments. We don't make any further payments after the payment period ends.

Term certain annuity to age 18

When a financially dependent child or grandchild receives a lump-sum payment from a registered retirement savings plan (RRSP) or registered pension plan (RPP) because a parent or grandparent has died, an annuity may be purchased on behalf of the child. The child is responsible for any tax payable on income from the annuity and the tax can be spread evenly over the time between the annuity's purchase date and the day before the child's 19th birthday.

Temporary annuity (life and joint life)

A temporary life annuity provides payments for a selected period of time, as long as the annuitant – or, in the case of joint annuity, one of the annuitants – is alive. We don't make any further payments after the payment period ends.

Integrated annuity

An integrated annuity may appeal to clients who want to bridge the income gap between early retirement and the start of CPP or QPP benefits, OAS or payments from an employer pension plan.

Annuity income is integrated with the government benefits so when the government benefit payments start, the annuity income decreases by the amount of those payments.

We calculate the income from an integrated annuity using the amount of government benefits applicable when the client purchases the annuity. If the amount of CPP/QPP or OAS increases or decreases before the government benefits begins, the annuity income won't increase or reduce as a result of the change in the benefit amount.

  • RRSP, locked-in RRSP, RRIF or LIRA
    • Integrated annuity income amount can be up to the value of OAS income
    • Cannot be integrated with CPP or QPP
  • RPP, LIF, LRIF
    • Integrated annuity income amount can be up to the combined value of OAS and CPP or QPP income

Essential Care Annuity (impaired, age-rated or accelerated annuity)

Product details

Proof of survival / customer confirmation form

We periodically send out a customer confirmation form (CCF) - also known as a certificate of existence - to clients who are receiving payments. The CCF helps to ensure we make payments according to terms of the contract, and maintain current client information such as addresses, Power of Attorney and authorization documents.

We mail a CCF every two years on the annuitant's birthday. We send a covering letter and the form to all clients who have life or temporary payout annuities. For clients with more than one policy, we target a "consolidated" mailing so they receive only one form.

If we don't receive a response within four weeks, we'll send a second letter and form. If we still don't receive a response after a total of 8 weeks, we'll suspend payments.

Death benefit

Any death benefit we pay depends on the guaranteed period, the source of premium or whether income has started.

The chart below reflects current legislation and Sun Life Financial practices. You should review the policy pages for a specific policy as they could contain legislative requirements or options not outlined below. For example, some legislative changes are date-specific.

Note: If the beneficiary is the estate, we will pay the death benefit only as a cash lump sum.

Death benefit upon death of the annuitant (single life) or the last surviving annuitant (joint life)

Source of premium

Before income start date

After income start date

RPP, LIF, LRIF

A death benefit is available regardless of a guaranteed period.

Return of premium without interest - Nova Scotia, Ontario, Alberta, British Columbia, Manitoba, Newfoundland, Saskatchewan.

Note: Return of premium plus interest is available upon request for Alberta, British Columbia, Manitoba, Newfoundland and Saskatchewan.

Return of full premium plus interest*- Quebec, New Brunswick.

Commuted value**- PEI, Indian Band and PBSA*** (which includes Nunavut, North West Territories and Yukon). Payment will be taxable to the beneficiary, however, if the spouse is the beneficiary, the spouse has the option to transfer to a registered product.

The beneficiary can choose to do one of the following:

  • Receive a cash lump sum equal to the present value of the payments remaining in the guaranteed period at the date of the death.
  • If allowed by the contract, continue to receive payments for the time remaining in the guaranteed period.

Note: Payments from both options will be fully taxable to the beneficiary and will be subject to any applicable withholding tax.

LIRA, locked-in RRSP

A death benefit is available regardless of a guaranteed period.

Return of premium without interest - Nova Scotia, Ontario, Alberta, British Columbia, Manitoba, Newfoundland, Saskatchewan.

Note: Return of premium plus interest is available upon request for Alberta, British Columbia, Manitoba, Newfoundland and Saskatchewan.

Return of full premium plus interest* - Quebec, New Brunswick.

Commuted value** - PEI, Indian Band and PBSA*** (which includes Nunavut, North West Territories and Yukon).

If the beneficiary is not the spouse, the payment will be taxable to the deceased.

If there is a spouse, and the spouse chooses to take the payment as cash, the payment will be taxable to the deceased.

If the spouse chooses to transfer the payment to a registered product, the spouse is taxed.

If the beneficiary is the spouse, he or she can continue to receive payments for the time remaining in the guaranteed period. These payments will be fully taxable to the spouse.

If the beneficiary is not the spouse, or the spouse chooses to take the death benefit as a lump sum, we will pay the death benefit equal to the present value of the payments remaining in the guaranteed period at the date of death. The value of the death benefit on the date of death is taxable to the deceased.

Note: Canada Revenue Agency (CRA) rules state that if a payout annuity is purchased with LIRA or locked-in RSP funds, the annuity is treated like a matured RRSP and RRSP tax treatment applies.

RRSP, RRIF

A death benefit is payable regardless of a guaranteed period.

Return of premium without interest.

Return of premium with interest is available upon request.

RRSP: If the beneficiary is the spouse, the spouse can transfer the death benefit to their own RRSP or RRIF. We would issue a T4RSP tax slip (Relevé 2 for Quebec residents) reporting the death benefit as a refund of premiums.

If the beneficiary is not the spouse, we'll issue a T4RSP tax slip (Relevé 2 for Quebec residents) to the deceased for the value at the date of death.

RRIF: If the beneficiary is the spouse, the spouse can transfer the full value of the death benefit to their own RRSP (if they are under age 71) or RRIF. The death benefit payable would be tax reported to the beneficiary.

If the beneficiary is not the spouse, the death benefit will be tax reported to the deceased in the year of death.

If the beneficiary is the spouse, he or she can continue to receive payments for the time remaining in the guaranteed period. These payments will be fully taxable to the spouse.

If the beneficiary is not the spouse, or the spouse chooses to take the death benefit as a lump sum, we will pay the death benefit as a cash lump sum, equal to the present value of the payments remaining in the guaranteed period at the date of death. The value of the death benefit on the date of death is taxable to the deceased.

DPSP

A death benefit is payable regardless of a guaranteed period.

Return of premium without interest.

Return of premium with interest is available upon request.

Payment will be taxable to the beneficiary however, if the spouse is the beneficiary, the spouse has the option to transfer to a registered product.

The beneficiary can choose to do one of the following:

  • Receive a cash lump sum equal to the present value of the payments remaining in the guaranteed period at the date of the death.
  • If allowed by the contract, continue to receive payments for the time remaining in the guaranteed period.

Note: Payments from both options will be fully taxable to the beneficiary and will be subject to any applicable withholding tax.

Non-registered funds

Return of premium without interest.

Return of premium with interest is available upon request.

Note: We'll pay the return of premium death benefit whether or not there is a guaranteed period.

We'll provide the present value of guaranteed payments on request if the guaranteed period is greater than 0 years.

For annuities with:

  • prescribed or accrual taxation - the payment will be taxable to the deceased.
  • level taxation - the payment will be taxable to the beneficiary.

The beneficiary can choose to do one of the following:

  • Receive a cash lump sum equal to the present value of the payments remaining in the guaranteed period. For annuities with:
    • prescribed tax treatment, any taxable policy gain will be tax reported to the deceased in the year of death.
    • level tax treatment, any taxable policy gain will be tax reported to the beneficiary in the year in which the payment is made.
    • accrual tax treatment, any taxable policy gain will be tax reported to the policy owner in the year of death.
  • Continue to receive payments for the remainder of the guaranteed period. For annuities with:
    • prescribed and level tax treatment, the taxable portion of these payments will be taxable to the beneficiary.
    • accrual tax treatment, Note: Taxable gain is tax reported to the policy owner in the year in which a death occurred. This includes the death of the policy owner, joint policy owner, annuitant or joint annuitant. We'll calculate a new accrual schedule based on the lump sum value.

There is no death benefit if the annuitant(s) dies after:

  • the income start date and there is no guaranteed period
  • the end of the guaranteed period
Taxation

The information in this section reflects our understanding of current federal and provincial income tax laws. Taxation laws are subject to change; rules and restrictions may differ in the future. It's important to encourage clients to seek advice from a tax consultant regarding the tax implications for their individual situation.

Registered annuity

Income from an annuity purchased with registered funds is fully taxable to the policyholder in the year it is received.

Non-registered annuity

Income from an annuity purchased with non-registered funds can have one of three different tax treatments - accrual, prescribed or level.

Accrual (non-prescribed) taxation

Note: If a policyholder is under 65 and purchases an annuity with an amount received as a result of the death of a spouse or common-law partner, the annuity income may qualify as eligible pension income.

Annuities receiving accrual taxation treatment report a varying amount of tax annually. Generally, non-prescribed annuities have larger taxable amounts in the early years of the policy and the taxable portion decreases each year.

Prescribed taxation

All annuities are taxed on an annual basis and receive accrual tax treatment. All annuities are taxed on an annual basis and receive accrual tax treatment unless they qualify for prescribed tax treatment. During the payout period, the payments from an annuity receiving prescribed tax treatment are considered to be a level blend of interest and capital so a fixed portion of each payment will be taxable.

Qualifying for prescribed taxation

To qualify as a prescribed annuity, the contract must satisfy the following conditions:

  • The policyholder(s) must also be the annuitant(s). The policyholder can be a testamentary or spousal trust.
  • A joint life annuity is permitted if the second annuitant is either:
    • a brother or sister of the first annuitant (policyholder), or
    • a spouse of the first annuitant.
  • The annuity must be non-commutable.
  • Annuity payments must start by December 31 of the year following the year of purchase.
  • Annuity payments must be equal, not indexed, and made regularly and at least annually. Payments may reduce on the first death under a joint life annuity.
  • Annuity payments can be for:
    • a fixed term (term certain annuity), or
    • the life of the annuitant(s) (life or joint life annuity).
  • For an annuity with a guaranteed or fixed term, the term cannot extend beyond the annuitant's 90th birthday. For joint life annuities, the age of the youngest annuitant can be used.

Prescribed taxation applies automatically if the above conditions are met.

A policy could change tax treatment during a year if one or more of the qualifying conditions changes. For example, an annuity could meet all the criteria for prescribed taxation except the income start date is five years after purchase. Tax treatment would start as accrual but when payments begin, the tax treatment would change to prescribed.

Level taxation

Any unreported taxable gain (interest earned) from a life insurance policy issued prior to December 2, 1982, isn't taxable until the policy is surrendered or annuitized. Upon annuitization, any unreported taxable gain will be spread over the expected number of annuity payments.

Taxation during the deferral period

Annuities purchased with registered money: Registered annuities are non-taxable during the deferral period.

Annuities purchased with non-registered money: Any income accrued (aka earned) during the deferral period is taxed on an annual basis.

Withholding tax

Sun Life is required to deduct tax from certain types of payments. Sun Life pays that tax directly to the Canada Revenue Agency (CRA). The withholding tax percentage is determined by the CRA. The client claims the income and any tax withheld on their yearly tax return.

The payment the client receives is net of withholding tax. Note: Illustrations and policy pages show gross income not net income. The following information applies to Canadian residents:

Source of premium

Tax withheld

RPP

Yes

RRSP

No

LIRA

No

RRIF

No

LIF

Yes

LRIF

Yes

DPSP

Yes

Non Reg

No

Note: For non-registered funds, tax can be withheld but it must be a flat amount. For all other sources of funds, tax or additional tax can be withheld and can be a percentage or a flat amount.

Taxation of non-residents

When the policyholder of a payout annuity becomes a non-resident, we base their non-resident withholding tax on the source of funds used to purchase the annuity and the policyholder's country of residence, provided that the client supplies us with an NR301 form Declaration of Eligibility for Benefits Under a Tax Treaty for a Non-Resident Taxpayer. If we do not have this form, the government requires us to withhold 25 per cent.

For a deferred annuity, no tax form is issued during the deferred period. Once payments begin, Canada imposes a withholding tax.

Pension income: Eligible income, tax credits and income splitting

Income that qualifies as "eligible pension income" can receive preferential tax treatment.

Annuity income that qualifies as pension income:

The source of the premium used to purchase the annuity determines if/when the income qualifies as eligible pension income.

Source

Eligible pension income - Under 65

Eligible pension income - Over 65

RPP

Yes

Yes

RRSP

No

Yes

DPSP

No

Yes

LIRA

No

Yes

LIF

No

Yes

Locked-in RRSP

No

Yes

RRIF

No

Yes

LRIF

No

Yes

Non-registered (Prescribed and Level)

No

Yes

Non-registered (Accrual)

No

Yes

Easy rule: If the annuitant is under 65, annuity income qualifies as eligible pension income only if RPP funds were used to purchase the annuity.

Pension income tax credit

A taxpayer can claim a federal tax credit on up to $2,000 of eligible pension income. As well, most provinces offer a tax credit on eligible pension income.

Pension income splitting

A taxpayer can transfer up to 50% of eligible pension income to their spouse. This transfer is for income tax purposes only and it does not transfer ownership of the income to the spouse. Because the transfer can result in an increased tax liability for the spouse, both the taxpayer and their spouse must file a special election form with their annual tax returns to allow this transfer.

Pension splitting can result in significant tax savings for a taxpayer and their spouse:

  • Transfer income from a higher-income spouse to a lower-income spouse.
  • If the receiving spouse does not have other eligible pension income, it allows the couple to claim an additional pension credit. This is an advantage even if both spouses have the same tax rate.
  • If the transferring spouse has net income above the Old Age Security (OAS) clawback amount, pension income splitting with a lower-income spouse could reduce or eliminate the clawback, keeping more money in their pocket.

An example of the benefits of creating eligible pension income

Jim, age 70, lives in BC. His marginal tax rate is 32%. His wife Karen has a lower marginal tax rate of 20%. Jim currently does not have any eligible pension income. If he buys a life annuity using $500,000 of his non-registered savings his:

  • Annual income is $45,514,
  • Of that income $9,800 is taxable,
  • The $9,800 is eligible pension income so,
    • he can allocate $4,900 to Karen for tax purposes.
    • they both can claim pension income credits of $2,000 of pension income, saving each of them up to $300 in federal tax credits and $51 in provincial tax credits.

Avoiding OAS clawback

If a taxpayer's taxable income is too high, some government benefits may be reduced or not available. Or, the taxpayer may not qualify for some income-tested tax credits.

Investment income is included in taxable income at different rates. For example, interest income is included on a tax return at 100 per cent, and dividend income is "grossed up" before it's included in income. For income from a prescribed annuity (non-registered), only a portion of a payment is taxable and the taxable portion is the same every year.

A client may be able to restructure their investment portfolio to reduce their taxable income by using some of their assets to purchase a prescribed payout annuity. The client can maintain a desired level of income but reduce taxable income, which will allow them to avoid the clawback or disqualification from some benefits or credits.

Potential creditor protection

If the annuity is purchased with locked-in money, the contract and the income may be protected from creditors based on applicable pension legislation.

If the annuity is purchased with non-locked-in money, during the guaranteed period, the contract and income may be protected if there is an appropriate family or irrevocable beneficiary designation.

Sample contracts

Internal money that qualifies for:

Enhanced income

Enhanced income provides a benefit to your clients who use the money from their qualified Sun Life Financial products to purchase a payout annuity. Normally, commission in these cases is paid according to the reduced commission scale, however, at this time we are paying full commission.

Option 5 is a contractual obligation that exists in some of our life, group and wealth products. It entitles the customer to enhanced income from settlements or transfers to annuities that we offer.

Note:  Payout annuities accept both registered and non-registered sources of money.

The following outlines which internal products qualify for enhanced income rates.

Sun Life Financial - Wealth

Source of premium

Option 5
(Qualifies for enhanced income)

Superflex, RRIF (XA/XR)

Life annuity -Yes. Only death claims issued between December 6, 1982 and November 14, 1990 (2.0%)

Term certain - Yes. Only death claims issued between December 6, 1982 and November 14, 1991 (1.0%)

Pre-Superflex

Life annuity - Yes. Only for policies issued within the dates below:

  • 2.5% issued prior to Nov. 1, 1979
  • 2.0% issued on or after Nov. 1, 1979

Term certain - Yes. Only for policies issued within the dates below:

  • 1.5% issued prior to Nov. 1, 1979
  • 1.0% issued on or after Nov. 1, 1979

Sun Fund

Life annuity - Yes. 2.0%

Term certain - Yes. 1.0%

Sun Life Financial - Life products

Deposit source

Option 5
(Qualifies for enhanced income)

All life policies

Life annuity - Yes. Only for policies issued within the dates below:

  • 2.5% issued prior to Nov. 1, 1979
  • 2.0% issued between Nov. 1, 1979 & March 4, 1992
  • 2.0% issued between March 4, 1992 & Feb. 12, 1996 (term only)

Term certain - Yes. Only for policies issued within the dates below:

  • 1.5% issued prior to Nov. 1, 1979
  • 1.0% issued between Nov. 1, 1979 and March 4, 1992
  • 1.0% issued between March 4, 1992 and Feb. 12, 1996 (term only)

Sun Life Financial - Group

Deposit source

Option 5
(Qualifies for enhanced income)

Transfer from GRS pensions

Life annuity - Yes. Only if GRS contract reflects option 5 discount 2%
Term certain - Yes. Only if GRS contract reflects option 5 discount 1%

Minimum income guarantees

Some life insurance contracts and wealth contracts guarantee a minimum income if the settlement/maturity value is used to purchase a Sun Life Financial payout annuity. In some cases the minimum income guaranteed by the originating contract may be higher than the income from a current payout annuity.

Generally the following could have minimum income guarantees that provide higher income than a current payout annuity:

  • older life insurance contracts
  • certain wealth contracts purchased before December 6, 2009.

In addition, if a policy has a minimum income guarantee, the larger the premium the less likely it is the income guarantee will be higher than a current payout annuity.

Note:The minimum income guarantees have no effect on commission.

If you think a policy may qualify for a minimum income guarantee:

1.Confirm if the policy has a minimum guarantee income, by:

  • Reviewing the policy pages (the provision usually appears towards the end of the contract and can appear as text or a table), OR
  • Checking the list of policies that qualify.

2.Confirm if the minimum income guarantee is higher than a current payout annuity* contract by requesting an income comparison from head office using the regular special illustration process.

  • *If the originating policy has an income enhancement provision (e.g. Option 5), the current payout annuity income compared to the minimum income guarantee will include the income enhancement.

Administration rules that apply when electing a minimum income guarantee:

Combining deposits

Life policies, we will combine deposits from other internal policies if the other policy(ies) is:

  • from the same company of origin, and
  • from the same business line, and
  • has the same issue year range.

Wealth policies, we will combine deposits from other internal policies if the other policy(ies) is:

  • from the same plan, and
  • from the same business line, and
  • has the same issue year range.

We will not combine deposits from:

  • external sources (e.g. cash or other external policies.)
  • another internal policy that does not have:
    • a minimum income guarantee, OR
    • does not have the same company of origin or plan, business line or issue year range.
  • The minimum income guarantees in the originating contracts are usually expressed as a certain dollar amount per $1,000 of settlement/maturity value and specify the type of annuity (e.g. Single life), the income start date and a guarantee period (e.g. 10 years). In certain cases some choices may be restricted. For example, a joint life annuity is an option, however a minimum income guarantee will only apply to the joint annuity if the originating life insurance contract specifies it as an option.
  • Most minimum income guarantee provisions specify that the income start date and purchase date must be the same. SLF will allow a client to choose a later income start date; income will not be adjusted in these situations.

Minimum income guarantees do not apply if purchasing:

  • an Essential Care Annuity
  • an annuity with indexing or a joint life annuity with income reduction, unless this option is specified in the originating contract
  • an annuity with a guaranteed period that is longer than 20 years, unless this option is specified in the originating contract

Note:legislative requirements may restrict some options.

Policies that qualify for the minimum income guarantees

The following internal policies qualify for the minimum income guarantees:

Life insurance policies

  • Sun Life - Series 79 and prior

Wealth policies - Guaranteed

  • Income Master
  • Non-Redeemable GIA
  • Retirement Income Fund
  • Single Premium Retirement Annuity
  • Sun Accumulation Deferred Annuity
  • Sun Flexible Premium Annuity
  • Superflex Deferred Annuity

Wealth policies - Segregated funds

  • SunWise Elite*
  • SunWise Essential Series*