SunFlex Retirement Income

Target profile
Clients 55+
Retired or near retirement
Ready to draw income from their registered savings
Interested in security with opportunity for income growth

Selling features
Guaranteed lifetime income
Bonus income linked to market performance
Flexibility to meet changing needs

Product overview

Features and benefits

Feature

Benefit

Part of the Money for Life approach to retirement planning

Lifetime minimum income will help cover basic needs.

Lifetime minimum income

  • An income stream that will never be affected by changes in market returns or interest rates.
  • Predictable income clients can use to cover essential expenses.

Bonus income

  • Bonus income is linked to the performance of the selected funds.
  • Clients receive it in addition to the lifetime minimum income.
  • It can provide clients with income growth and some protection against inflation.

Choice of annuity type

Clients can guarantee lifetime income for themselves or for themselves and their spouse.

Choice of income strategy

Clients choose an income strategy that produces the income pattern that matches their needs. The two choices of income strategy available are:

  • Future Income Max
  • Starting Income Max

Guaranteed period

Clients choose a guaranteed period. During this period:

  • clients may take income advances (providing no locked-in funds are used to purchase the SunFlex Retirement Income).
  • we will pay a death benefit.

Income advance

During their guaranteed period, clients may take a lump-sum advance from future guaranteed payments (providing no locked-in funds are used to purchase the SunFlex Retirement Income Policy).

Death benefit

If a client dies during the guaranteed period (or both the client and their spouse, in the case of a joint contract), we pay a death benefit.

Range of performance-linked investments (PLIs)

Clients can match their choice of funds to suit their needs and adjust their choices as their needs change. A fund listing is available in the Performance-linked investment options
booklet.

Transfer to a payout annuity

Clients can choose to lock in income gains and trade fluctuating income for a steady stream by transferring income to a traditional payout annuity from Sun Life Financial. We allow three transfers over the life of the policy.

Frequently asked questions
General tax information

Clients can purchase a SunFlex Retirement Income only with registered money. All income will be fully taxable.

Clients will receive annual tax slips as determined by the source funds:

  • A T4A (and Relevé 2, if you live in Quebec) for funds from a RPP, DPSP or LIF.
  • A T4RSP slip (and Relevé 2, if you live in Quebec) for funds from an RRSP (locked or nonlocked), RRIF, LRIF or LIRA.

The total income that appears in illustrations and the client's policy pages is the gross income before taxes. The amount of income clients actually receive may be lower if we're required to withhold mandatory taxes or if clients ask to have additional amounts withheld.

Qualifying for eligible pension income

Income from a SunFlex policy can qualify as eligible pension income, for the purpose of pension income splitting or the pension income tax credit.

If the source of premium was a Registered Pension Plan (RPP):

Age of annuitant

Eligibility

Any age

Income from SunFlex may qualify if the source of premium used to purchase the SunFlex policy is an RPP (subject to rules RPP of contract that may restrict the age at which the plan can be converted to an annuity. In many contracts the minimum age is 55).

For all other sources of premium:

Age of annuitant

Eligibility

65 and older

Income from SunFlex may qualify.

Under 65

Income from SunFlex may qualify only if the premium used to purchase the SunFlex policy is from the proceeds as a result of the death of a spouse or common-law partner.

Pension income splitting

Income from SunFlex Retirement Income may qualify for income splitting for tax purposes. This would allow policyholders to transfer to their spouse up to 50 per cent of the taxable income from the SunFlex Retirement Income.

The income splitting is done by the policyholder on their annual tax return. Sun Life will issue a tax slip to the policyholder for the full taxable amount.

Note: In order for the income to qualify for splitting, clients and spouses must be Canadian residents at December 31 of the year for which they are filing their return.

Pension income tax credit

Income that qualifies for pension income splitting also qualifies for the pension income tax credit. This non-refundable tax credit is available to all Canadians on the first $2,000 of eligible pension income. Complete Canada Revenue Agency form T1032 - Joint Election to Split Pension Income to determine the amount of the tax credit.

Glossary

Bonus income is the income that is payable, in addition to the lifetime minimum income amount, during an income period.

Guaranteed period multiplier is a factor we use to calculate the:

  • death benefit we'll pay to a beneficiary, and
  • amount the client can take as an income advance.

Income advance is the process of taking a lump-sum advance from future guaranteed payments. It can also be the amount clients may take from their policy using this process. It's not available if the client chose the option of no guaranteed period or if they used locked-in funds to purchase the policy.

Income advance available is the maximum amount the client can take as an income advance.

Income changing event is an event that will reduce the lifetime minimum income amount and performance income. These events include:

  • taking an income advance
  • making a transfer to a Sun Life payout annuity, and
  • the death of an annuitant for a joint life annuity in which the client chose to have income decrease when an annuitant dies.

Income period is the 12-month period during which the client's income amount will remain the same. If an income-changing event occurs, the income amount will change and remain at the new amount until:

  • the income period ends, or
  • another income-changing event occurs.

Income strategy is the income pattern the clients choose. There are two income strategies, and each has its own rate:

  • 3.5 per cent for Future Income Max
  • 5.0 per cent for Starting Income Max

We use the income strategy rate to calculate income. Clients can't change the income strategy after we have issued the policy.

Lifetime minimum income is the amount clients are guaranteed to receive each payment.

Performance income is an amount we calculate based on the returns of the performance-linked investments clients selects. We use it to calculate bonus income.

Performance income reset is the process we use to calculate the change in the performance income amount.

Performance income reset date is the date on which we do the scheduled performance income reset. This date is always one month before the anniversary of the payment start date. If the performance income reset date isn't a business day, the performance income reset will occur on the next business day.

Performance-linked investments are the funds the client chooses. They affect the amount of income the client receives. Clients don't own any units of the performance-linked investments they have chosen. We use these funds to determine the client's income payments.

Performance period is each period during which we track the returns of the performance-linked investments. We use the performance period when we calculate the performance income reset. If it is not a business day on the day the performance period starts or ends, we will use the next business day.

Performance period rate of return is the percentage change in the unit values of the chosen performance-linked investments, during the performance period. If a client's income is linked to more than one performance-linked investment, we use the weighted average to calculate the performance period rate of return.

Product at a glance

Issue age*

Minimum:

  • Age 55
  • Age-plus-impaired rating of 55 (Impaired annuity)

Maximum: Age 100

Premium / Deposit

Minimum: $25,000
Maximum: $1,000,000
Sun Life must review and approve premiums over $1,000,000.

Currency

Canadian

Premium sources 

Clients can purchase SunFlex Retirement Income with these types of registered funds only:

  • Registered retirement savings plan (RRSP)
  • Registered retirement income fund (RRIF)
  • Locked-in retirement account (LIRA)
  • Deferred profit-sharing plan (DPSP)
  • Life income fund (LIF)
  • Locked-in retirement income fund (LRIF)
  • Locked-in registered retirement savings plan (LRRSP)
  • Registered pension plan (RPP)
  • Clients cannot purchase SunFlex Retirement Income with:
    • Funds locked in under Quebec, New Brunswick or Federal (PBSA) pension legislation
    • Non-registered funds
    • Funds from a Tax-Free Savings Account (TFSA)

Residency requirements

Clients must be Canadian residents for tax purposes.

Annuity types

  • Single life annuity
  • Joint life annuity

Impaired annuities

SunFlex Retirement Income will offer impaired annuities to clients who qualify. To find out if they do, we must first underwrite the annuitants.

Income deferral

Clients can choose to defer the initial income payment up to one year from the purchase date.

Income frequency

Clients can choose to receive their income payments:

  • Monthly
  • Quarterly
  • Semi-annually
  • Annually

Payment methods and timing

  • Clients can select the day of the month on which they want to receive their payment (must be between the 1st and the 28th)
  • Monthly, quarterly or semi-annually by direct deposit.
  • Annually by direct deposit or cheque.

Guaranteed period

Clients can select a;

  • 15-year guaranteed period,
  • 10-year guaranteed period,
  • 5-year guaranteed period, or
  • No guaranteed period

Income advance

Clients can take a lump-sum advance on their future guaranteed payments. This feature is available only:

  • during the guaranteed period
  • if none of the funds used to purchase the policy was Locked-in
  • if at least three months are left before the end of the guaranteed period, and
  • if income has started

Death benefit

We'll pay a death benefit if all annuitants die during a client's chosen guaranteed period:

  • for a life annuity: If the annuitant dies.
  • for a joint life annuity: If both annuitants die.

Taxes

  • All income is fully taxable when the client receives it.
  • Clients will receive an annual tax slip.
  • Some income sources may be subject to withholding tax rates as set out by the Canada Revenue Agency.

Your compensation

  • Sales commissions - 3.5% of premium
  • Trailer - 0.35% of implied account value**
    • On a transfer to a payout annuity, an upfront 1% commission will be paid on the amount transferred. If a SunFlex policy remains, the trailer will be proportionately reduced.
Product overview
What is SunFlex Retirement Income?

SunFlex Retirement Income (SunFlex) is a new type of retirement income product. It provides lifetime guaranteed income and the potential for bonus income.

Target market

SunFlex Retirement Income is designed for clients who are retirement-ready or already in retirement. It will appeal to clients who:

  • are ready to transfer their registered savings into income.
  • want lifetime guaranteed income.
  • have an appetite for some market exposure.
  • have enough other assets to put aside the portion they desire for their estate/beneficiaries and meet their need for emergency cash.
How does it work?

SunFlex Retirement Income combines a lifetime guaranteed income with the potential for bonus income that is based on the performance of funds that you help the client choose.

When clients buy SunFlex Retirement Income:

  • they select the following:
    • annuity type,
    • guaranteed period length,
    • income start date,
    • income strategy,
    • payment frequency,
    • income reduction percentage (for joint life policies), and
    • performance-linked investments (funds).
  • the amount of their lifetime guaranteed income is based on their age and the total premium.
  • the amount of their first bonus income is based on their age and gender, the total premium, and the product features they choose. Initial bonus income is not affected by their choice of performance-linked investments.

After payments have started, bonus income is based on the return of performance-linked investments, and clients can:

  • change funds or the percentage of income allocated to a fund,
  • transfer income to a payout annuity, or
  • receive a lump sum payment now from payments they would receive in the future*.
Types of annuities
Single life annuity
  • Provides income for one lifetime.
  • When the annuitant dies the annuity payments stop.
  • If the annuitant dies during the guaranteed period we may pay a death benefit.
Joint life annuity
  • Provides income for two lifetimes.
  • When one of the annuitants dies, the annuity payments continue to the surviving spouse. When the surviving spouse dies (i.e., both annuitants have died) the annuity payments stop.
  • If both annuitants die during the guaranteed period, we may pay a death benefit.
Option to have income reduce on death of one of the annuitants

Clients purchasing a joint life annuity can set up the policy so that payments decrease by a certain percentage if:

  • the annuitant dies first,
  • the joint annuitant dies first, or
  • either annuitant dies, regardless of which one it is.

Clients must choose the reduction percentage at the time of purchase. Choosing an income reduction will increase the initial income.

If clients use any locked-in money to purchase the policy, and the reduction requested is greater than the reduction allowed under the pension legislation that applies to the locked-in money, spouses must waive their rights before we can issue the policy.

When the death that triggers an income decrease occurs, the lifetime minimum income and performance income will decrease by the percentage clients chose. If we are paying any bonus income, it'll also decrease by the requested percentage.

If the death that triggers an income decrease occurs during the guaranteed period, the total income and the lifetime minimum income won't decrease until the end of the guaranteed period.

Product details

Death benefit

We may pay a death benefit when the last surviving annuitant dies.

Whether we do and how much we pay depends on:

  • whether payments have started,
  • where the premium funds came from (e.g. RRSP, LIF, etc.), and
  • the length of guaranteed period remaining.

The chart below reflects current legislation and Sun Life Financial's practices regarding how we pay death benefits. 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 as a cash lump-sum only.

Before payments start

If the last surviving annuitant dies before income starts, we pay a death benefit whether or not the client has selected a guaranteed period. We determine the benefit amount according to legislation that applies to the premium used to purchase the SunFlex Retirement Income policy.

After payments start

During the guaranteed period, we'll pay a death benefit:

  • if the annuitant on a single life annuity dies, or
  • if the last surviving annuitant on a joint life annuity dies.
Death benefit on death of the annuitant (single life) or the last surviving annuitant (joint life)
Source of premium

Before income start date

After income start date (while a guaranteed period exists)

RPP, LIF, LRIF

A death benefit is available regardless of a guaranteed period.

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

Note: Return of premium plus interest is available for Alberta, British Columbia, Manitoba, Newfoundland, Nova Scotia, Ontario and Saskatchewan but must be requested at time of purchase.
Return of full premium plus interest1- PEI.

The beneficiary can choose to do one of the following:

  • receive a cash lump-sum calculated according to the contract provisions, or
  • if the contract allows, continue to receive payments for the time remaining in the guaranteed period.

The income will no longer be tied to the performance-linked investments. It will be a fixed payment based on current pricing rates for payout annuities.

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 - Alberta, British Columbia, Manitoba, Newfoundland, Nova Scotia, Ontario, and Saskatchewan

Note: Return of premium plus interest is available for Alberta, British Columbia, Manitoba, Newfoundland, Nova Scotia, Ontario and Saskatchewan but must be requested at time of purchase.
Return of full premium plus interest1-  PEI.

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. The income will no longer be tied to the performance-linked investments. It will be a fixed payment based on current pricing rates for payout annuities.

If the beneficiary is not the spouse, or the spouse chooses to take the death benefit as a lump sum:

We'll pay the death benefit as a cash lump sum. We'll calculate the lump sum according to the provisions of the contract. 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 SunFlex Retirement Income 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 available regardless of a guaranteed period.

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

Note: Return of premium plus interest is available for Alberta, British Columbia, Manitoba, Newfoundland, Nova Scotia, Ontario and Saskatchewan but must be requested at time of purchase.
Return of full premium plus interest1-  PEI.

RRSP:

If the beneficiary is the spouse:

Spouses 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:

Spouses 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. The income will no longer be tied to the performance-linked investments. It'll be a fixed payment based on current pricing rates for payout annuities. 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. We'll calculate the lump sum according to the provisions of the contract. 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.

The death benefit will be the return of premium without interest, unless return of premium with interest was requested at time of purchase.

The beneficiary can choose to do one of the following:

  • Receive a cash lump sum calculated according to the provisions of the contract.
  • If the contract allows, continue to receive payments for the time remaining in the guaranteed period. The income will no longer be tied to the performance-linked investments. It'll be a fixed payment based on current pricing rates for payout annuities.

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

1 Return of full premium plus interest option is calculated as the return of premium at the legislated interest rate.

Calculating Death benefit on or after income payments start - summary

If we are paying a death benefit, we'll reset the performance income when we receive the death notice, and calculate the death benefit as follows:

  • The performance income before the reset, times the discount factor that applies to the number of payments remaining in the current income period, plus
  • The annual performance income after the reset, times a multiplier based on the number of years remaining in the guaranteed period, minus
  • Any payments we made between the date we receive notice of the death and the date we calculate the death benefit amount.
Calculating death benefit on or after income payments start - details

Step 1

  • We determine the number of payments left until the end of the income period.
  • We multiply the current performance income amount by the discount factor applicable to the number of payments left in the current income period. See the discount schedule below.

Step 2

  • We complete a performance income reset using the values in effect at the end of the day we receive the death notice.
  • We determine the number of full years remaining in the guaranteed period, excluding any payments from Step 1.
  • We multiply the reset performance income amount by the guaranteed period multiplier applicable to the number of full years left in the guaranteed period. See the death benefit and income advance schedule below.

Step 3

  • We add the total of Step 1 to the total of Step 2.

Step 4

  • We subtract any payments we made between the date we received the death notice and the date we calculated the death benefit amount.
Death benefit and income advance schedule
Discount factor schedule:

Payments remaining in income period

Frequency of payments

Monthly

Quarterly

Semi-annual

Annual

12

11.8

 

 

 

11

10.8

 

 

 

10

9.8

 

 

 

9

8.9

 

 

 

8

7.9

 

 

 

7

6.9

 

 

 

6

5.9

 

 

 

5

4.9

 

 

 

4

4.0

3.9

 

 

3

3.0

3.0

 

 

2

2.0

2.0

2.0

 

1

1.0

1.0

1.0

1.0

Guaranteed period multiplier schedule

Each income strategy has its own schedule of factors for each income frequency. We apply these to the remaining guaranteed payments.

Number of full years remaining in guaranteed period

Guaranteed period multiplier
Future Income Max

Guaranteed period multiplier
Starting Income Max

15

11.75

10.75

14

11.00

10.25

13

10.50

9.75

12

9.75

9.00

11

9.25

8.50

10

8.50

8.00

9

7.75

7.25

8

7.00

6.50

7

6.25

6.00

6

5.50

5.25

5

4.50

4.50

4

3.75

3.75

3

2.75

2.75

2

1.90

1.90

1

0.95

0.95

Example of a death benefit calculation
Income strategy

Future Income Max

Current performance income

$500/month

Payments remaining before next performance income reset

5

Discount factor for income strategy and remaining payments

4.90

Performance income after reset

$495/month / $5,940/year

Remaining guaranteed period

6 years, 5 months

Full years remaining in guaranteed period

6 years

Multiplier for income strategy and years remaining in guaranteed period

5.5

Step 1
Current performance income (per month)

  $500

Discount factor

x 4.90

Total Step 1

$2,450

Step 2
Performance income (per year) after reset

$5,940

Multiplier from death benefit schedule

x5.5

Total Step 2

$32,670

Factors that affect the amount of the death benefit

Generally, the benefit becomes smaller with each income payment. Factors include:

  • daily change in the returns of the client's chosen performance-linked investments,
  • number of payments left in the income period,
  • time left in the guaranteed period, and
  • income strategy chosen.
No death benefit

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

  • the income start date and there is no guaranteed period, or
  • the end of the guaranteed period.

If an overpayment has occurred after the date of death, we will recover the overpayment amount from the estate.

Step 3
Add Steps 1 and 2

$35,120

Step 4
Payments made between the date we received the death notice and the date we calculated the death benefit amount

       2

Current performance income

x $500

Total payments we made between receiving the death notice and calculating the death benefit

$1,000

Step 5
Total Steps 1 and 2

$35,120

Less total payments we made between receiving the death notice and calculating the death benefit

- 1, 000

Total death benefit

$34,120

Guaranteed period

The period during which:

  • we'll pay a death benefit, and
  • the client may take income advances (if available).

Clients can choose one of the following guaranteed periods*:

  • 15-year guaranteed period,
  • 10-year guaranteed period,
  • 5-year guaranteed period, or
  • No guaranteed period.

Clients must select the guaranteed period when they purchase the policy and can't change it after we have issued the policy. The guaranteed period starts when the payments start.

Trade off
  • A longer guaranteed period means a lower income and a longer period during which we'll pay a death benefit.
  • A shorter guaranteed period means higher income and a shorter period during which we'll pay a death benefit.
Implied account value and trailer commissions

When a client purchases a SunFlex Retirement Income (SunFlex) policy, they are not purchasing shares in a company or units of a fund. Instead, they are exchanging their premium for an income stream that is guaranteed to last for life.

SunFlex Retirement Income policyholders will not have an account value and will not own units of any funds in relation to their SRI policy. In order to determine the basis from which to pay trailer commissions, Sun Life will calculate an implied account value (IAV). This value is approximately equivalent to the fair market value of the policy, held by Sun Life to support the Performance Income associated with that particular policy liability, as defined by the policyholder's contract.

The IAV behaves similarly to a mutual fund account or segregated fund contract account value in that it increases with positive market performance and decreases with negative market performance or redemptions. It differs in that the value is calculated prospectively, rather than retrospectively. More specifically, the IAV is determined by the income level, age of the annuitant(s) and income strategy selected.

While the account value for the mutual fund or segregated fund can run to zero if the client exhausts their balance, the IAV for SunFlex will never run to zero during the life for the policy owner. This means a trailer will be payable as long as the policy owner is alive.

The chart below illustrates a sample IAV for two SunFlex policies (Starting Income Max and Future Income Max, respectively), as well as sample account values for a mutual fund portfolio and a segregated fund contract.

We have assumed that the mutual fund is paying the higher of the prescribed RRIF minimum and the income from the Future Income Max policy. The other products are paying income according to the provisions of their contracts.

Account value comparison - Historical returns

Note: The above chart is based on a 65 year old male, with a 10 year guaranteed period and $100,000 premium/initial deposit. For the specific annual returns used in this example, see the returns table at the end of this document.

Trailer comparison

Note: This scenario is a single example, and the projections will vary dependent on the returns realized by the policyholder. For the specific annual returns used in this example, see the returns table at the end of this document. The trailer commission paid on SunFlex is 0.35% of the IAV. DSC funds were used in this comparison. The maximum (gross) trailer commission paid on a mutual fund or segregated fund in a DSC schedule is 0.5% of the account value. We are comparing net trailer amounts and have assumed that trailer commissions from the mutual fund and seg fund go through a dealer grid, after which the advisor nets 66% of the gross trailer amount.

* The returns used in this example are:

Year

Return

Year

Return

0

7.2%

17

8.5%

1

13.9%

18

10.8%

2

-1.3%

19

-1.1%

3

12.7%

20

-13.0%

4

7.7%

21

12.8%

5

21.2%

22

6.5%

6

1.5%

23

-3.5%

7

12.0%

24

7.2%

8

15.6%

25

13.9%

9

12.7%

26

-1.3%

10

8.9%

27

12.7%

11

12.6%

28

7.7%

12

6.0%

29

21.2%

13

-1.5%

30

1.5%

14

-8.0%

31

12.0%

15

7.5%

32

15.6%

16

5.3%

33

12.7%

Note: these returns are for used for illustrative purposes only and are not guaranteed.

Income
Income advance
SunFlex Retirement Income - Income advance

Clients can request a lump-sum advance from their future guaranteed payments. This option is available only if:

  • funds used to purchase SunFlex Retirement Income are not locked-in*,
  • income payments have started,
  • at least three months are left in the guaranteed period, and
  • haven't already taken one within the same income periode

Because we base the amount available for an income advance on the performance income, the amount available for an income advance will change daily based on the performance of the performance linked investments clients chose.

To request an income advance:
  1. A client must first contact you with the request.
  2. To get an estimate of the income advance available (the amount available for an income advance changes daily), contact Sun Life Financial.
  3. You must request an illustration from Sun Life Financial that will show how the request will affect the client's income.
  4. We'll send you the illustration to discuss with the client.
  5. Clients that wish to proceed can complete form SunFlex Retirement Income - Request for an income advance (810-3662)
    .
  6. You must send the completed form to Sun Life Financial within two weeks of the day the illustration was produced.

Once we receive the completed form, we'll complete the income advance and send the client a payment and an amendment to their SunFlex Retirement Income policy.

Example: A client with 14 years left in the guaranteed period and access to $55,000 of capital decides to take an income advance of $10,000. The client's lifetime minimum income is $4,750, bonus income is $250 and performance income is $5,000.

After we receive the client's confirmation for an income advance, we perform an unscheduled reset:

  • lifetime minimum income drops to $4,001,
  • bonus income drops to $444,
  • performance income drops to $4,445, and
  • the guaranteed period shortens to 13 years (the shortened guaranteed period combined with the reduced performance income means any death benefit payable has also been reduced).
Calculation of income advance available

This calculation mirrors the one for the death benefit. When we receive a request for an income advance, we'll reset the
performance income and calculate the income advance available as follows:

  • the performance income before the reset, times the discount factor that applies to the number of payments left in the current income period, plus
  • the performance income after the reset, times a multiplier based on the number of years left in the client's guaranteed period.
Step 1
  • We determine the number of payments left until the next scheduled performance income reset.
  • We multiply the current performance income amount by the discount factor that applies to the payments left in the current income period. See the discount factor schedule below.
Step 2
  • We complete a performance income reset using the values in effect at the end of the day on which we receive the request for an income advance.
  • We determine the number of full years remaining in the guaranteed period, excluding any payments from Step 1.
  • We multiply the reset annual performance income amount by the guaranteed period multiplier that applies to the number of full years left in the guaranteed period. See the death benefit and income advance schedule below.
Step 3
  • Add the total of Step 1 to Step 2.
Death benefit and income advance schedule
Discount factor schedule
Payments remaining in income period

Frequency of payments

Monthly

Quarterly

Semi-annual

Annual

12

11.8

 

 

 

11

10.8

 

 

 

10

9.8

 

 

 

9

8.9

 

 

 

8

7.9

 

 

 

7

6.9

 

 

 

6

5.9

 

 

 

5

4.9

 

 

 

4

4.0

3.9

 

 

3

3.0

3.0

 

 

2

2.0

2.0

2.0

 

1

1.0

1.0

1.0

1.0

Guaranteed period multiplier schedule

Number of full years remaining in guaranteed period

Guaranteed 
period multiplier
Future Income Max

Guaranteed 
period multiplier
Starting Income Max

15

11.75

10.75

14

11.00

10.25

13

10.50

9.75

12

9.75

9.00

11

9.25

8.50

10

8.50

8.00

9

7.75

7.25

8

7.00

6.50

7

6.25

6.00

6

5.50

5.25

5

4.50

4.50

4

3.75

3.75

3

2.75

2.75

2

1.90

1.90

1

0.95

0.95

After the income advance

Annual scheduled resets continue to occur as they did before the advance. We'll send client a confirmation of the transfer, including details on the revised values and guaranteed period.

What clients should consider before taking an income advance

While this option offers clients some flexibility to cover unexpected expenses, they must understand these implications:

  • If they take a portion of the income advance available, the following amounts will decrease:
    • performance income,
    • lifetime minimum income,
    • bonus income,
    • death benefit,
    • the remaining guaranteed period will become shorter, and
    • the income will be fully taxable in the year clients receive it and they will have to pay any applicable withholding taxes.
  • If they take all of the income advance available, the following amounts will decrease:
    • performance income,
    • lifetime minimum income,
    • bonus income,
    • the guaranteed period will drop to zero, so there won't be a death benefit, and
    • the income will be fully taxable in the year clients receive it and they'll have to pay any applicable withholding taxes.
Restrictions
  • The lifetime minimum income in the SunFlex Retirement Income policy must be at least $50 per payment frequency.
  • Clients are allowed one income advance per income period.

Note: Clients can purchase SunFlex with premiums from different sources, e.g., a client could use $50,000 from an RRSP, $10,000 from a RRIF. We'll combine the premiums and issue one contract. However, if any portion of the total premium comes from a locked-in source, the entire SunFlex policy will not qualify for the income advance feature.

Your commission and income advances

For clients that take an income advance from a SunFlex Retirement Income policy, the implied account value that we use to calculate the trailer commission will decrease. We won't correct any trailer commission you receive while the income advance is being processed.

Income strategy

The income strategy clients choose at the time of purchase determines the pattern of income they will receive. It also determines the target rate we'll use to calculate bonus income.

There are two income strategies:

  1. Future Income Max
  2. Starting Income Max
Clients' choice of income strategy affects:
  • The amount of their starting bonus income - Future Income Max provides lower starting income than Starting Income Max.
  • How clients' performance income and bonus income respond to the performance of their funds.
Starting bonus income

A 65-year-old male uses $100,000 to purchase a SunFlex Retirement Income policy with a guaranteed period of 15 years. His initial income would break down like this:

Income strategy

Lifetime minimum income

Bonus income

Total initial income

Future Income Max

$4,750

$411.87

$5,161.87

Starting Income Max

$4,750

$1,274.42

$6,024.42

For illustration purposes only.

How bonus income responds to returns

Income strategy rates
Each income strategy has a percentage rate associated with it. It's:

  • 3.5% for Future Income Max, and
  • 5.0% for Starting Income Max.

Clients' choice of income strategy affects how their bonus income responds to the performance of the funds (called "performance-linked investments") they chose. That's because we compare the income strategy rate to the returns of their performance-linked investments to calculate any changes to performance income.

If the return of the investments is?

then performance income?

higher than the income strategy rate,

increases.

lower than the income strategy rate,

decreases.

Examples of income strategies at work

The following table shows how the choice of income strategy affects the income pattern.

If return of the
performance-linked
investments is

and income
strategy rate is

performance
income would

6.0%

3.5%

increase 2.5%

1.0%

3.5%

decrease by 2.5%

3.5%

3.5%

not change.

To calculate bonus income, we first reset clients' performance income and then compare the performance income to their lifetime minimum income.

To reset performance income, we compare the return of the funds clients chose to their income strategy rate and adjust the client's performance income by the result.

After we have reset the performance income, we subtract the lifetime miniumum income from it. The result is the new bonus income.

For example: If the performance income was $5,000 and the lifetime minimum income was $4,750, the bonus income would be $250.

Income strategy bonus income $250

If the performance income is less than the lifetime minimum income, clients' bonus income will be $0 and clients will receive only their lifetime minimum income.

For example: If the performance income was $4,100 and the lifetime minimum income was $4,750, the bonus income would be $0.

Income strategy bonus income $0

Income strategy comparison

Future Income Max

Starting Income Max

Lower starting income

Higher starting income

Increases to bonus income more likely

Increases to bonus income less likely

Decreases to bonus income less likely

Decreases to bonus income more likely

Income strategy doesn't affect lifetime minimum income

The income strategy rate helps to determine clients' initial bonus income and whether there are changes to bonus income when income is reset. It doesn't affect the amount of lifetime minimum income they receive.

Income projections for three scenarios

The following are examples of how each income strategy would respond to three different market conditions.

These examples are based on:

  • Male annuitant
  • Age 65
  • $100,000 premium
  • 15-year guaranteed period

Historical returns

Income strategy legend for graph

This scenario is based on historical returns and volatility.

Income strategy graph based on historical returns from 1988-2011

For illustrative purposes only. This comparison is based on historical returns from 1988-2011. For the purpose of showing a longer period, the historical returns are repeated after year 24, beginning with 1988 returns again. Morningstar category averages were used to create this return scenario. These average the net return of all mutual funds in a given CIFSC category.

Strong early returns

This scenario assumes strong performance in the early policy years and weaker performance later.

Income strategy graph based on Strong early returns

For illustrative purposes only. The Strong early returns series is based on the historical series, as described above. This series is meant to demonstrate the sequence of returns risk only. The Strong early returns series begins with a 5-year historical period to represent strong initial returns (1993-1997). After the initial 5 years, the series uses the historical returns, beginning in 1988 and loops to provide a longer time period.

Weak early returns

This scenario assumes weak performance in the early policy years and stronger performance later.

Income strategy graph based on Weak early returns

For illustrative purposes only. The Weak early returns series is based on the historical series, as described above. This series is meant to demonstrate the sequence of returns risk only. The Weak early returns series begins with a 5-year historical period to represent depressed initial returns (2007-2011). After the initial 5 years, the series uses the historical returns, beginning in 1988 and loops to provide a longer time period.

Do strong returns guarantee bonus income?

It's possible that clients' performance-linked investments (PLIs) can perform well, but clients don't receive bonus income. This can happen because of the relationship between the performance income and the lifetime minimum income.

Clients receive bonus income only if performance income is greater than the lifetime minimum income.
The returns of clients' PLIs change their performance income.
It's possible for performance income to increase, but still be less than the lifetime minimum income.
If the performance income remains below the lifetime minimum income, the client will receive only the lifetime minimum income.

Example: A client's performance rate of return in year six was strong at nine per cent. But because the client's performance income was low, this strong performance didn't bring the reset performance income above the lifetime minimum income amount. For the next income period, the client didn't receive any bonus income, only lifetime minimum income.

Year

Return (previous 12 months)

Income strategy rate

Change in performance income

Reset performance income

Lifetime minimum income

Bonus income

Total income

1

 

 

 

$5,161.87

$4,750.00

$411.87

$5,161.87

2

6.0%

3.5%

2.5%

$5,290.92

$4,750.00

$540.92

$5,290.92

3

3.0%

3.5%

-0.5%

$5,264.46

$4,750.00

$514.46

$5,264.46

4

2.0%

3.5%

-1.5%

$5,185.50

$4,750.00

$435.50

$5,185.50

5

-12.0%

3.5%

-15.5%

$4,381.75

$4,750.00

$0

$4,750.00

6

9.0%

3.5%

5.5%

$4,622.74

$4,750.00

$0

$4,750.00

7

7.0%

3.5%

3.5%

$4,784.54

$4,750.00

$34.54

$4,784.54

8

8.0%

3.5%

4.5%

$4,999.84

$4,750.00

$249.84

$4,999.84

9

12.0%

3.5%

8.5%

$5,424.83

$4,750.00

$674.83

$5,424.83

10

8.0%

3.5%

4.5%

$5,668.95

$4,750.00

$918.95

$5,668.95

For illustrative purposes only.

Graph illustrating Bonus income with respect to Lifetime minimum income

For illustrative purposes only.
 

Clients might be interested in Future Income Max if they:

Clients might be interested in Starting Income Max if they:

want to maximize their future income to offset the effect of inflation or are concerned about meeting future expenses.

want to maximize their income at the beginning of retirement.

are comfortable with:

  • lower initial income,
  • larger potential increases in bonus income, and
  • smaller potential decreases in bonus income.

are comfortable with:

  • higher initial income,
  • smaller potential increases in bonus income, and
  • larger potential decreases in bonus income.

When choosing an income strategy, clients should make the selection that best matches:

  • their retirement concerns,
  • their income needs, and
  • their tolerance for fluctuating income.

    They should also consider what future returns they expect from their chosen PLIs in the future.

Calculating income overview

When clients purchases a SunFlex Retirement Income policy, they select the

  • annuity type,
  • guaranteed period,
  • income strategy,
  • payment start date,
  • income frequency, and
  • performance-linked investments.

We then:

  • calculate clients' total initial income, which is the lifetime minimum income plus the initial bonus income,
  • begin to track the performance of the chosen performance-linked investments, and
  • start income payments on the date clients have chosen.

One month before the anniversary of the first payment

Eleven months after the first income payment, we calculate the bonus income for the next 12 months. To do this we:

  • Calculate the net return of the performance-linked investments since the purchase date.
  • Determine the amount clients' performance-linked returns surpassed or fell short of the income strategy rate.
  • Change the performance income by the percentage calculated above to determine the new performance income.
  • Calculate the bonus income, if any, by comparing the lifetime minimum income to the performance income.

If the performance income is:

  • Greater than the lifetime minimum income, the client will receive the lifetime minimum income plus the bonus income.
  • Less than or equal to the lifetime minimum income, clients will receive only the lifetime minimum income.
  • Send clients a reset confirmation (and a copy to you).

On the anniversary of the first payment

Twelve months after the first income payment, we begin to pay the new income amount.

After that, every 12 months, on the anniversary of the performance income reset

We recalculate the bonus income. To do this we:

  • Determine the return of the performance-linked investments during the previous 12 months.
  • Determine the amount by which the performance-linked returns were above or below the income strategy rate.
  • Change the performance income by this percentage.
  • Compare the lifetime minimum income to the performance income to calculate bonus income.

Every 12 months, on the anniversary of the income start date

We begin paying the new income amount. When we reset clients' income, we'll send them a reset notice. It'll confirm the performance income reset and the income payment amount for the next income period.

You'll receive advance notice before we send the reset notice to clients.

Calculating income details

Calculating income in the first year

When a client buys a SunFlex Retirement Income policy:

  • We calculate the total income clients will receive made up of the lifetime minimum income and bonus income.
  • Clients chooses the date they want their income to start.
  • The payment start date must be within 12 months of the purchase date.
  • The initial income amount will remain the same for the 12 months after payments begin.

Payment period timeline illustrated from initial income period to next income period

For example:

Policy purchased on:  January 3, 2012
Payment start date:  March 5, 2012
Initial income period:  March 5, 2012 to March 4, 2013
Second income period begins:  March 5, 2013
Second income period:  March 5, 2013 to March 4, 2014

Payment period timeline illustrated from initial purchase date to initial income period to second income period

Calculating income in the second year

One month before the start of the second income period, we calculate income for the upcoming income period. The date we recalculate income is called the performance income reset date.

For example, if the client purchases the policy on January 3, 2012 and income starts on March 5, 2012, we'll calculate the income for the second income period on February 5, 2013.

Purchase date:  January 3, 2012
Payment start date:  March 5, 2012
First performance income reset date:  February 5, 2013

Initial start date to initial performance income reset date (11 months)

To calculate income for the second income period:

  1. We complete the first performance income reset.
  2. We use the result of the performance income reset to calculate the bonus income.

Completing the first performance income reset:

To calculate the first performance income reset, we:

  1. Calculate the performance period rate of return using the returns of the chosen performance-linked investments in the initial performance period.
  2. Determine the amount by which the performance period rate of return surpasses or falls short of the income strategy rate.
  3. Multiply this percentage by the performance income to calculate a change in the performance income.
  4. Add the change in initial performance income to the initial performance income to calculate the new performance income.

Initial income period and initial performance period

Adjusting the income strategy rate to "match" the performance period

A performance period can be greater than or less than one year. This can occur during the first performance period or for subsequent performance periods, if the performance period starts or ends on a non-business day.*

The income strategy rate is an annual rate. If the performance period is greater than or less than a year, we increase or decrease the income strategy rate proportionately to reflect the same number of days as the performance period.

For example, if the performance period is 398 days and the income strategy is Future Income Max, we would increase the income strategy rate to 3.82% to reflect the 33 extra days i.e., (398/365) x 3.5% = 3.82%.

* If the performance period starts or ends on a non-business day, we'll use the next business day to calculate income.

Calculating bonus income

To find out if there will be any bonus income in the next income period, we determine the difference between the lifetime minimum income and the new performance income calculated above.

If the new performance income amount is...

Then income for the next income period will be...

greater than the lifetime minimum income amount

the total of the bonus income and the lifetime minimum income amount.

less than or equal to the lifetime minimum income amount

the lifetime minimum income amount (bonus income will be $0).

Example:

Performance income amount: $5,000/year
Lifetime minimum income: $4,750/year
Income strategy rate: 3.5%
Performance period rate of return: 6.0%

Calculation

Performance period rate of return

6.0%

Income strategy rate

- 3.5%

Difference

2.5%

 

 

Performance income amount

$5,000

Change in performance income

x 2.5%

Change in performance income

$125

 

 

Performance income

$5,000

Change in performance income

+$125

New performance income

$5,125

 

 

New performance income

$5,125

Compared to lifetime minimum income

- $4,750

Bonus income

$375

The client will receive $4,750 + $375 for a total of $5,125/year. The client begins to receive the new income at the
beginning of their new income period (the anniversary of the start of the client's income).

Calculating income in the third and following years

The calculation is the same as that used for the second year:

Examples of scheduled income resets

Here's an example of a series of scheduled income resets. Note: returns from the previous 12 months are used to calculate income for the next year.

Note: Some rounding was used in the example below for the purpose of simplifying the numbers.
Year 1

Initial income

$5,000

Calculating bonus income for year 2

 

 

 

 

Performance period rate of return

  6.0%

Performance income

$5,125

Less Income strategy rate

- 3.5%

Lifetime minimum income (LMI)

- $4,750

Change in initial income

  2.5 %

Bonus income

   $375

 

 

 

 

Initial income

$5,000

 

 

Change in initial income

x 2.5%

 

 

Change in initial income

    $125

 

 

 

 

 

 

Initial income

$5,000

 

 

Change in initial income

 + $125

 

 

Performance income

$5,125

 

 

Year 2

Performance income

$5,125

Calculating bonus income for year 3

 

 

 

 

Performance period rate of return

  3.0%

New performance income

$5,100

Less Income strategy rate

- 3.5%

Lifetime minimum income (LMI)

- $4,750

Change in performance income

  -0.5%

Bonus income

   $350

 

 

 

 

Performance income

$5,125

 

 

Change in performance income

x -0.5%

 

 

Change in performance income

 - $25.63

 

 

 

 

 

 

Performance income

$5,125

 

 

Change in performance income

+ -$26

 

 

New performance income

$5,100

 

 

Year 3

Performance income

$5,100

Calculating bonus income for year 4

 

 

 

 

Performance period rate of return

  -1.0%

New performance income

   $4,870

Less Income strategy rate

- 3.5%

Lifetime minimum income

-  $4,750

Change in performance income

 -4.5 %

Bonus income

   $120

 

 

 

 

Performance income

$5,100

 

 

Change in performance income

x -4.5%

 

 

Change in performance income

    -$230

 

 

 

 

 

 

Performance income

 $5,100

 

 

Change in performance income

 + -$230

 

 

New performance income per month

   $4,870

 

 

Income deferral and the length of the first performance period

Clients choose the date their income starts. They can choose to have their income start immediately or defer the start date of their income for up to one year.

How long clients choose to defer income will determine how long the first performance period is. The first performance period runs from the purchase date until the first income reset date. Depending on the date clients choose to have income start, the first performance period can be as short as 11 months or as long as 23 months. After the first income reset, the performance period is 12 months.

Example

If income starts on the purchase date, the first performance period will be 11 months.

Purchase date:  January 3, 2012
Payment start date:  January 3, 2012
Initial income period:  January 3, 2012 to January 2, 2013
First performance income reset date:  December 3, 2012
Initial performance period:  January 3, 2012 to December 3, 2012

Initial income period and initial performance period, scenario 2

If the client defers income for one year, the first performance period will be 23 months.

Purchase date:  January 3, 2012
Payment start date:  January 3, 2013 (one year after purchase date)
Initial income period:  January 3, 2013 to January 2, 2014
First performance income reset date:  December 3, 2013
Initial performance period:  January 3, 2012 to December 3, 2013

Initial income period and initial performance period, scenario 3

Note that the income strategy rate will be adjusted to reflect the deferral period.

Unscheduled income resets

The above describes the annual scheduled income reset. Clients can trigger an unscheduled income reset if they choose to:

  • transfer income to a payout annuity, or
  • take an income advance.

In these cases, we must reset their income before we can complete the request. To reset their income, we'll follow the same steps as we did above for the scheduled reset. However, we'll use the returns from the last scheduled reset (or unscheduled reset, if applicable) date to the date of the request. We'll then use the reset performance income in calculations to complete the transfer or income advance transaction.

After we process their request, we'll reduce accordingly certain values such as lifetime minimum income, performance income, current income and bonus income.

On the next scheduled reset date, we'll use the returns from the unscheduled reset date to the scheduled reset date to reset the performance income based on the income changes made after their request.

Income periods with scheduled and unscheduled resets

An unscheduled income reset will not affect any of these:

  • income period
  • income payment date
  • date of the next scheduled income reset

Calculating performance-linked investment returns

The performance period rate of return is the change in the value of clients' performance-linked investments (PLIs) over a performance period.

For clients that select more than one PLI, we calculate the performance period rate of return using a weighted average. We then add the weighted averages of all PLI returns to determine the performance period rate of return for that period.

For example:

Performance-linked investments

Portion of income linked to each PLI

PLI rate of return from Feb 5, 2013 to Feb 4, 2014

Investment A

50%

2.0%

Investment B

50%

6.0%

Performance period rate of return for this period

100%

4.0%


Weighted average calculation:

50% x 2.0% =   1.0%

 

50% x 6.0% =   3.0%

 

                          4.0%

Performance-linked investments

Portion of income linked to each PLI

PLI rate of return from Feb 5, 2013 to Feb 4, 2014

Investment A

20%

2.0%

Investment B

80%

6.0%

Performance period rate of return for this period

100%

5.2%


Weighted average calculation:

20% x 2.0% =   0.40%

 

80% x 6.0% =   4.80%

 

                          5.20%

For clients that change any of their chosen PLIs or the percentage of their income linked to each PLI, we:

  1. Split the performance period into partial periods.
  2. Calculate the return for each period.
  3. Use the returns from each partial performance period to calculate the return for the whole performance period.

Example: On August 4, the client re-allocated their performance-linked investment from Investment B to Investment C.

Performance-linked investments

Portion of income linked to each PLI

PLI rate of return from Feb 5, 2013 to Aug 3, 2013

Investment A

50%

2.0%

Investment B

50%

6.0%

Performance period rate of return for this period

100%

4.0%


Weighted average for the period February 5 to August 3:

50% x 2.0% =   1.0%

 

50% x 6.0% =   3.0%

 

4.0%


Performance-linked investments

Portion of income linked to each PLI

PLI rate of return from Aug 4, 2013 to Feb 4, 2014

Investment A

20%

3.0%

Investment C

80%

7.0%

Performance period rate of return for this period

100%

6.2%

Weighted average for the period August 4 to February 4:

20% x 3.0% = 0.60%

 

80% x 7.0% = 5.6%

 

6.20%

Total performance period rate of return = 10.45%

We calculate total performance period rate of return using the formula: (1 + rate of return) (1 + rate of return) - 1
So the calculation of the rate of return for this example would be:
(1 + 4.0%) (1 + 6.2%) - 1
(104.0%) (106.2%) - 1
110.45% - 1
10.45%

Performance-linked investments

Clients choose how much of their income is linked to each available fund (called "performance-linked investments"). The allocation to each fund cannot be lower than 1 per cent and all allocations must be a whole number (e.g., 33 or 34 per cent, not 33.3 per cent).

Clients can:

  • select up to 10 different performance-linked investments (PLI).
  • change the PLIs they've chosen or the percentage of income allocated to any PLI once a month.

If the client changes their PLI, we'll send them confirmation of the change and take these changes into account when we calculate the returns of the PLIs.

To change a PLI, the client should contact you so they can complete the proper form:

Clients do not own units in any funds. We track the unit value of the fund(s). Then we use the change in their value to calculate the performance period rate of return.

We use Series A unit values to calculate returns. The published Series A unit values have already taken into account all management fees and other fund expenses. If there is no Series A unit available, we will reduce the return by an amount which, based on industry standards, we would expect to be charged if a Series A or retail class of units had been available. Any distributions paid while the client's income was linked to a fund(s) are included in our performance calculation.

Sun Life Financial does not currently deduct any additional fees from the unit values before calculating returns. If we decide to charge or increase a management fee in the future (fee up to a maximum of 0.75% per year), we will provide advance notice to you and the client.

Investment options

Clients can choose from a range of performance-linked investments. SunFlex Retirement Income offers a selection of mutual funds with industry-leading managers - so clients can select the fund or funds that best meet their income goals.

  • Asset Allocation Funds: Sun Life Granite Managed Solutions* can support a wide range of investment objectives, from capital preservation to capital growth to income.
  • Balanced funds: These funds provide a balance of equities, bonds and cash equivalents within one fund. The equity and fixed income weightings vary with each fund.
  • SunFlex bundles: Each SunFlex bundle represents one or more equity funds with a Canadian bond fund. The funds provide a 70% equity and a 30% fixed income exposure. The target asset allocation is rebalanced monthly to maintain the target fund weighting.
Fund changes

In the future, we may change the funds we offer to clients. We will give you and the client notice of any changes.

Fund change history:

 

Previous fund name

Type of change

Current fund name

Date of change

Mackenzie Ivy Growth and Income Fund

Name change

Mackenzie Ivy Canadian Balanced Fund

July 15, 2013

SunFlex Sun Life MFS McLean Budden Canadian Equity Bundle

Name change

SunFlex Sun Life MFS Canadian Equity Bundle

November 1, 2013

SunFlex Sun Life MFS McLean Budden Global Equity Bundle

Name change

SunFlex Sun Life MFS Global Equity Bundle

August 29, 2013

SunFlex Sun Life MFS McLean Budden US Equity Bundle

Name change

SunFlex Sun Life MFS US Equity Bundle

August 29, 2013

Sun Life MFS McLean Budden Canadian Equity Growth Fund*

Name change

Sun Life MFS Canadian Equity Growth Fund*

November 1, 2013

Sun Life MFS McLean Budden Canadian Equity Value Fund*

Name change

Sun Life MFS Canadian Equity Value Fund*

November 1, 2013

Sun Life MFS McLean Budden Global Growth Fund*

Name change

Sun Life MFS Global Growth Fund*

August 29, 2013

Sun Life MFS McLean Budden Global Value Fund*

Name change

Sun Life MFS Global Value Fund*

August 29, 2013

Sun Life MFS McLean Budden U.S. Growth Fund*

Name change

Sun Life MFS U.S. Growth Fund*

August 29, 2013

Sun Life MFS McLean Budden U.S. Value Fund*

Name change

Sun Life MFS U.S. Value Fund*

August 29, 2013

Sun Life Managed Conservative Portfolio

Name change

Sun Life Granite Conservative Portfolio

July 30, 2015

Sun Life Managed Moderate Portfolio

Name change

Sun Life Granite Moderate Portfolio

July 30, 2015

Sun Life Managed Balanced Portfolio

Name change

Sun Life Granite Balanced Portfolio

July 30, 2015

Sun Life Managed Balanced Growth Portfolio

Name change

Sun Life Granite Balanced Growth Portfolio

July 30, 2015

Sun Life Managed Growth Portfolio

Name change

Sun Life Granite Growth Portfolio

July 30, 2015

Sun Life Beutel Goodman Canadian Bond Fund*

Name change

Sun Life Multi-Strategy Bond Fund*

May 2, 2016

SunFlex Sun Life MFS Canadian Equity Value Fund*

Merged into

Sun Life MFS Canadian Equity Growth Fund*

October 27, 2017

Post sale communications
Customer confirmation form (proof of survival)

We periodically send a customer confirmation form to clients who are receiving payments to confirm that they are still living.

This form helps to ensure we make payments according to terms of the contract and maintain current client information such as address, Power of Attorney and authorization documents.

We do a mailing every two years on the annuitant's birthday. We send a covering letter and the form to all clients who have life policies. 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 another four weeks, we'll suspend payments until we receive the form.

Post sale - Advisor service

It's important to meet with clients regularly to review their investment choices, help them with any contractual conversions or other product features and ensure their information is up-to-date (e.g. beneficiary designations).

Sample contracts
Transfer income to a payout annuity

Clients who want to lock in income gains, take advantage of increasing interest rates or escape market volatility in their bonus income can transfer all or a portion of their income to a payout annuity from Sun Life Financial.

Clients may want to receive their income in one of these ways:

  • have all income come from a Sun Life payout annuity,
  • leave a certain dollar amount of income in SunFlex Retirement Income and have the balance come from a Sun Life payout annuity, or
  • to have a certain dollar amount of income come from the Sun Life payout annuity and the balance come from SunFlex Retirement Income.

The new Sun Life payout annuity will be the same annuity type (single or joint life) and have the same remaining guaranteed period, annuitants, frequency and payment start date as the SunFlex Retirement Income policy. The date of the first payment from the payout annuity will be on the same day that the next payment is due on the policy.

Example:

SunFlex payment dates

Client requests transfer to payout annuity

First payment annuity payment

Quarterly: January 1, April 1, July 1, October 1

February 3

April 1

April 15

July 1

August 20

October 1

December 1

January 1

If the original SunFlex Retirement Income policy had an impaired rating, the new Sun Life payout annuity will have the same impaired rating. If the original SunFlex Retirement Income policy was a joint life annuity and one of the annuitants has died, the SunFlex Retirement Income policy and the new payout annuity policy will be treated like single life annuities.

It's important to note that:

  • The income from the new Sun Life payout annuity could be higher or lower than the income amount being transferred.
  • A partial transfer of some of the income from the SunFlex Retirement Income will decrease:
    • the performance income,
    • the lifetime minimum income,
    • any bonus income, and
    • any death benefit available on the SunFlex Retirement Income policy.
  • A transfer of all the income will end the SunFlex Retirement Income contract.

To request an income transfer to a Sun Life payout annuity

  1. Clients must first contact you with the request.
  2. You must request an illustration from Sun Life that will show how the request will affect the client's income.
  3. We will send you the illustration to discuss with the client.
  4. You must send the completed form to Sun Life within two weeks of the day the illustration was produced.
Calculating a transfer of income to a Sun Life payout annuity
Full transfer

For clients that want to transfer all their income to a Sun Life payout annuity, we'll:

  1. Perform an unscheduled reset and, based on the performance income of the policy and payments we expect to make to the client over the rest of their life, calculate the value of the remaining payments.
  2. Use the lump sum value calculated in Step 1 to open a Sun Life payout annuity.

Example:

  • We perform an unscheduled reset and calculate the client's new performance income to be $1,000 per month and determine that the value of their remaining payments is $100,000.
  • We use the $100,000 to open a payout annuity that, using current rates, provides an income of $1,110 per month.

In this example the client transfers $1,000 of income from their SunFlex policy and receives $1,110 income from the payout annuity.

Partial transfer

For clients that want to transfer a portion of their income to a Sun Life payout annuity, we'll use the ratio between income from the SunFlex policy and the new payout annuity to calculate the income from an annuity.

Example: A client wants to move $500 of monthly income from a SunFlex Retirement Income (SunFlex) policy to a Sun Life Payout Annuity.

Using the values from the full transfer example, if the full transfer of $1,000 will result in $1,110 of payout annuity income, then a transfer of 50% of the SunFlex income ($500) will result in $555 of payout annuity income.

Restrictions
  • We won't allow transfers before we have made the first income payment.
  • Clients are allowed three transfers during the life of a policy.
  • Clients can't:
    • transfer back to SunFlex Retirement Income from the Sun Life payout annuity,
    • combine the income they transfer from SunFlex Retirement Income with other funds to purchase a Sun Life payout annuity,
    • add new annuitants to the payout annuity,
    • change the income frequency, or
    • change the remaining guaranteed period.
  • Income from the SunFlex Retirement Income or Sun Life payout annuity must be at least $50 per payment.
  • If a transfer would cause the lifetime minimum income to drop below $50, clients could:
    • transfer a smaller income amount, or
    • move all of the remaining income to a Sun Life payout annuity.