Sun Par Accumulator II

 

Target client profiles: Sun Par Accumulator II may be ideal for clients looking for the comfort of early cash values coupled with the benefits of long-term growth. It may be ideal for pre-retirees looking for estate protection combined with cash value they can access throughout their lifetime.

Selling features: Sun Par Accumulator II is a participating permanent life insurance policy that offers two guaranteed premium payment options, four dividend options and a variety of optional benefits.

Product overview

Products at a glance

Target markets

May be suitable for clients ages 50+ looking for:

  • early cash values coupled with the benefits of long-term growth,
  • asset diversification
  • estate maximization
  • an opportunity for wealth transfer to their children and grandchildren,
  • a business insurance solution that provides high early cash values and long-term growth

Guaranteed premium payment options and issue ages

Single       
Life pay:  0 - 85   
10 pay:    0 - 85   
20 pay:    0 - 80   

Joint
18 - 85
18 - 85
18 - 80

Coverage options

Single Life
Joint first-to-die

  • Survivor benefit and Automatic survivor benefit are included
Joint last-to-die, premiums to first death (life pay only)
Joint last-to-die, premiums to second death

Premium bands

$250,000 - $499,999
$500,000 - $999,999

$1,000,000 - $15,000,000*
* Special quotes available for cases over $15,000,000

Underwriting classes

Non-smoker

Smoker

Juvenile

Dividend options

Paid-up additional insurance
Enhanced insurance

  • Lifetime guarantee

Annual premium reduction
Dividends on deposit
Cash payment

Guaranteed cash values

Typically begin at the end of year 1

Policy loans

From $250, up to 100% of the total cash value less one year's interest, less any existing indebtedness may be borrowed from your policy.

Non-forfeiture options

  • Reduced paid-up life insurance
  • Automatic premium loan

Policy fees and payment methods

  • $25.00 annually

$2.25 monthly pre-authorized cheque (PAC)

Optional benefits

Plus premium benefit

  • Available with Life pay and 20 pay only
  • Available with the following dividend options:
    • Paid-up additional insurance
    • Enhanced insurance

Additional non-par benefits

Accidental death benefit
Guaranteed insurability benefit
Total disability waiver benefit
Owner waiver benefit (death, disability or death and disability)

Child term benefit
Business value protection benefit
Term insurance benefit (T10, T10 with renewal protection benefit, T15, T20 and T30)

Special features

  • Living benefit
Sample policy pages

The following policy wording is provided solely for your convenience and reference. It is incomplete and reflects only some of the general provisions that may be found in some of our insurance policies. We periodically make changes to policy wording and therefore this incomplete sample may not duplicate the wording of any actual issued policy. It is not to be construed or interpreted in any manner as a contract or an offer to contract. The actual policy issued to any given client will govern that relationship.

Sun Par Accumulator II for children

Target client profiles: Sun Par Accumulator II is a smart solution for parents or grandparents looking to provide their children or grandchildren with a strong financial foundation through guaranteed, lifetime protection.

Speak to clients who have their own life and health insurance needs covered, their retirement savings plans well underway and additional funds available to protect their children, beyond their regular and future financial commitments. When you're considering what solution to recommend for children, consider the coverage need and ensure the solution fits the need and the budget.

Selling features: As a participating whole life policy, Sun Par Accumulator II can earn policyholder dividends. Sun Par Accumulator II provides compound growth over time through paid-up additional insurance, stable returns and tax-preferred cash value growth.

Benefits

Plus premium benefit

The plus premium benefit allows clients to pay an additional premium to make the most of tax-preferred cash value growth.

  • Available with the following guaranteed premium payment options:
    •  Life pay and
    • 20 pay
  • Available with the following dividend options:
    • Paid up additional insurance
    • Enhanced insurance
  • Any plus premium benefit payment you make is used to buy paid-up additional insurance. This amount is in addition to the paid-up additional insurance being purchased by dividends.
Additional non-par benefits

Term insurance benefit (TIB)

Issue ages:  Base life Additional life
T10:   18 - 75 0 - 75
T10 with RPB:   18 - 65  0 - 65
T15: 18 - 70   0 - 70
T20: 18 - 65  0 - 65
T30:   18 - 55 0 - 55
  • Availability: Single life/Joint first-to-die/Joint last-to-die
  • Expires on the policy anniversary nearest the insured person's 85th birthday, or 85th birthday of the oldest insured person
  • Minimum benefit amount: $50,000
  • Maximum benefit amount - Base life: $15,000,000 minus the basic insurance amount per insured person
  • Maximum benefit amount - Additional life: $15,000,000 per insured person
  • All or part of the TIB death benefit is convertible to permanent life insurance without additional medical evidence, up to the policy anniversary nearest the insured person's 75th birthday
  • Available after issue, subject to underwriting requirements
  • Optional Renewal protection benefit (RBP)
    • Available with T10, allows the client to pay additional costs today in exchange for lower renewal costs, compared to T10 without RPB.
    • Cannot be cancelled or added after issue.

Accidental death benefit (ADB)

  • Issue ages: 0 - 65
  • Availability: Single life/Joint first to die/Joint last to die
  • Minimum benefit amount: $10,000
  • Maximum benefit amount: Lesser of two times the insurance amount, including Term insurance benefits, and $1,000,000 ($250,000 for ages 0-17)
  • Expires at the policy anniversary nearest the insured person's 70th birthday
  • Premiums are level and are payable until expiry of the benefit.
  • Can be added after issue at the policy anniversary only

Child term benefit (CTB)

  • Issue ages: 18 - 55
  • Availability: Single Life/Joint first to die/Joint last to die
  • Child eligibility: 0-18 based on age nearest birthday
  • Covers any child named on the application (born, adopted and stepchildren) and automatically covers children born or legally adopted after the date of application. Stepchildren may be added after issue through an application
  • Minimum benefit amount: $10,000
  • Maximum benefit amount: $30,000 total across all CTB coverages with Sun Life
  • Premiums are payable to the earlier of 20 years and the policy anniversary nearest the insured person's 70th birthday
  • Benefit expires at the policy anniversary nearest the base insured person's 70th birthday 
  • Between the child's 18th and 25th birthdays, the owner will have the right to buy additional life insurance on the life of the child for up to 10 times the amount of the benefit
  • Can be added after issue at policy anniversary only

Total disability waiver benefit (TDB)

  • Issue ages:  0 - 55
  • Availability: Single Life/Joint first to die/Joint last to die
  • Expires at the policy anniversary nearest the insured person's 60th birthday
  • Benefit will waive up to $50,000 of annual premium/COI across all Sun Life policies
  • Premiums will be waived as long as the insured is disabled
  • Cannot be added after issue

Owner waiver death benefit

  • Issue ages: 18 - 60
  • Availability: Single Life/Joint first to die/Joint last to die
  • The owner must be different than the insured person
  • Expires at the policy anniversary nearest the owner's 70th birthday
  • Benefit will waive up to $50,000 of annual premium/COI across all Sun Life policies
  • Premiums will be waived as long as premiums are charged for the insurance amount and optional benefits in the policy when the owner dies
  • Not available when the Business value protection benefit has been selected
  • Cannot be added after issue

Owner waiver disability benefit

  • Issue ages: 18 - 55
  • Availability: Single life/Joint first to die/Joint last to die
  • The owner must be different than the insured person
  • Expires at the policy anniversary nearest the owner's 60th birthday
  • Benefit will waive up to $50,000 of annual premium/COI across all Sun Life policies
  • Premiums will be waived as long as the owner is disabled
  • Not available when the Business value protection benefit has been selected
  • Cannot be added after issue

Owner waiver death and disability benefit

  • Issue ages: 18 - 55
  • Availability: Single life/Joint first to die/Joint last to die
  • This optional benefit combines the coverages provided by the Owner waiver death and Owner waiver disability benefits, at a discount when compared to their individual benefit premiums.

Guaranteed insurability benefit (GIB)

  • GIB allows policy owners to purchase additional life insurance on insured persons at their attained age without providing evidence of insurability.
  • Issue ages: 0 - 45
  • Availability: Single life only
  • Minimum option amount:  $20,000
  • Maximum option amount:  Lesser of insurance amount (including Term insurance benefit and Enhanced insurance amount) and $300,000 across all Sun Life policies
  • Elections are available every 3 years and within 31 days of a special event (marriage, birth/legal adoption of a child)
  • A maximum of 8 elections up to a maximum face amount of $2,400,000 are available
  • Expires at the earlier of the policy anniversary nearest the insured person's 55 birthday or once the maximum amount of elections have been made
  • Not available if the Business value protection benefit has been selected
  • Not available after issue or for substandard risks

Business value protection benefit (BVPB)

  • Allows business owners to purchase additional insurance as their business grows without providing medical evidence
  • Issue ages: 18 - 60
  • Availability: Single Life only
  • Minimum option amount: $250,000
  • Maximum option amount: $2,500,000 across all Sun Life policies
  • Cumulative maximum equal to the lesser of $10,000,000 or 4 times the option amount
  • Options can be exercised annually within 31 days of the policy anniversary for the first 10 years
  • Expires at the earlier of the 10th policy anniversary or once the maximum amount of elections have been made
  • Not available if the Owner waiver or Guaranteed insurability benefits have been selected
  • Not available after issue or for substandard risks

Dividends

Dividend options
With Sun Par Accumulator II and Protector II, policyholders have the opportunity to earn dividends on the base insurance portion of their plan. Policyholder dividends are paid annually, on the policy anniversary date, and are not guaranteed. For more information please refer to the Advisor guide
or policy.

Paid-up additional insurance (PUA)

Any dividends credited to the policy are used to purchase paid-up additional insurance which is added to the base insurance amount, creating another layer of permanent protection. This layer, as well as the base insurance amount is the basis for earning dividends, resulting in a compounding effect of dividend earning potential. The paid-up additional insurance has a cash value accumulating over time on a tax-preferred basis.

Enhanced insurance

The enhanced insurance dividend option enables clients to establish a permanent life insurance policy in a cost-effective manner. On each policy anniversary any policy owner dividend credited is used to purchase a combination, determined by Sun Life, of yearly term insurance and paid-up additional insurance. This combined amount of insurance is equal to the enhanced insurance amount set out in the client's policy. Any paid-up additional insurance purchased is added to the existing paid-up additional insurance, creating another layer of permanent insurance. In addition to the base insurance amount, each layer is the basis for earning dividends, resulting in a compounding effect for dividend earning potential.

The maximum enhanced insurance amount depends on the insured person's issue age, smoking status, coverage type, and premium payment period. The minimum enhanced amount is $1,000.

Annual premium reduction

This dividend option can provide clients with a cost-effective way to pay their premiums. We use any policy owner dividends credited to the policy to reduce the premium for the next policy year. If in the future the policy owner dividends exceed the annual premium, then the excess is held in the withdrawable premium fund. This dividend option is only available if the client is paying premiums on an annual basis.

Dividends on deposit (DOD

With this dividend option, any policy owner dividends credited to the policy are automatically deposited into an account similar to a savings account with Sun Life. The policy owner dividends in this account earn interest daily at a rate we determine. The interest is compounded annually and clients have access to these dividends at any time. Any interest earned is taxable.

Cash payment

This option gives the client the opportunity to receive their annual dividends in cash. All or a portion of the cash dividends may be taxable as income.

Participating whole life insurance facts and figures

The following documents provide an in-depth view of participating life insurance and the Sun Life Participating Account. The booklet provides information on how participating life insurance works, the asset mix of the par account, its stability, strength and prudent management philosophy

The fact sheets complement the information in the booklet and are updated quarterly (available as PDFs only).

You can order the booklet and print the fact sheets to share with clients.

Fact sheets:

as of September 30, 2017

as of June 30, 2017

as of March 31, 2017

as of December 31, 2016

as of September 30, 2016

as of June 30, 2016

Administrative information

Process for signed illustrations
Making changes to Plus premium benefit

With the Plus premium benefit, clients can increase the amount of paid-up additional insurance and make the most of the tax preferred cash value growth available with participating life insurance.

For policies issued before 2017, some changes are not permitted as they’ll cause the policy to lose its grandfathered status. In some cases, limited underwriting questions will be required.

Plus premium change

Policies issued before January 1, 2017
(G2 tax rules)

Policies issued after 
January 1, 2017
(G3 tax rules)

Allowed? Additional underwriting? Allowed? Additional underwriting?
Add at issue Yes No Yes No
Add within 2 years of issue date Yes No Yes No
Increase within 2 years of issue date Yes No Yes No
Decrease then increase up to maximum within 2 years of issue date Yes No Yes No
Decrease then increase back to original amount within 2 years of decrease Yes No Yes No
After 2nd policy anniversary - stop payments and restart within 2 years at same or lower premium level Yes No Yes No
Add more than 2 years after issue No n/a Yes Limited questions
Increase more than 2 years after issue No n/a Yes Limited questions
Decrease then increase back to original amount more than 2 years after decrease No n/a Yes Limited questions
Decrease then increase up to maximum more than 2 years after issue No n/a Yes Limited questions
Stop payments and restart more than 2 years after stopping No n/a Yes Limited questions
Add Plus premium at or after a conversion Yes Limited questions Yes Limited questions

Limited underwriting questions

  1. Has the proposed insured ever been treated for or had any symptoms or indication of:
    1. heart attack or any other heart disease or disorder, stroke/TIA, cancer or any other growth(s) or malignancy, diabetes or kidney, lung or liver disease or disorder?
    2. AIDS, HIV infection or any other disease or disorder of the immune system?
  2. Is the proposed insured aware of any symptoms for which they have not yet consulted a physician or received treatment?
  3. Has the proposed insured ever had any medical conditions, not already mentioned, for which they have been or are being investigated, under observation or treated for, or for which they are currently awaiting investigation or test results? (Do not tell us about genetic testing or genetic test results.)
  4. Have the proposed insured ever had any application(s) for life, disability, critical illness or long term care insurance declined, rated, postponed, cancelled or modified in any way?

If your client answers 'yes' to any of the questions, please provide additional information where possible. Underwriting will assess these details when determining insurability for the requested dividend option. Sun Life may request additional evidence.

PUA conversions

Sun Par Protector II , Sun Par Accumulator II and Sun Par Accelerator

Without providing evidence of insurability, subject to the maximum insurance amounts1 listed below, clients can:

  • Convert to Sun Par Protector II and Sun Par Accumulator II and select paid up additional insurance or enhanced insurance as their dividend option, or
  • Convert to Sun Par Accelerator with enhanced insurance as their dividend option.
Conversion age Maximum insurance amounts
0 - 18 $1,000,000
19 - 34 $3,500,000
35 - 44 $5,000,000
45 - 54 $7,500,000
55+ $10,000,000

If the original policy's (converting policy's) face amount exceeds the maximum insurance amount, limited underwriting will be required, regardless of the amount being converted.

We will require the answer to limited underwriting questions below for the following transactions:

  1. Conversions to paid up additional insurance or enhanced insurance that exceed the maximum insurance amounts.
  2. Conversions to paid up additional insurance or enhanced insurance, where the original policy (converting policy) exceeds the maximum insurance amounts.
  3. Adding the Plus premium benefit at time of conversion, regardless of the face amount.
  4. Adding the Plus premium benefit to a policy more than 2 years after the issue date.
  5. Switching the dividend option to paid up additional insurance after issue.
  6. Any increases to Plus premium benefit more than 2 years after the issue date.

Limited underwriting questions

  1. Have you ever been treated for or had any symptoms or indication of:
    a) heart attack or any other heart disease or disorder, stroke/TIA, cancer or any other growth(s) or malignancy, diabetes or kidney, lung or liver disease or disorder
    b) AIDS, HIV infection or any other disease or disorder of the immune system.
  2. Are you aware of any symptoms for which you have not yet consulted a physician or received treatment?
  3. Are you aware of any symptoms for which you have not yet consulted a physician or received treatment?
  4. Have you ever had any medical application(s) for life, disability, critical illness or long term care insurance declined, rated, postponed, cancelled or modified in any way?

If your client answers 'yes' to any of the questions, please provide additional information where possible. Underwriting will assess these details when determining insurability for the requested dividend option. Sun Life may request additional evidence.

1 If enhanced insurance is elected as the dividend option, the maximum face amount includes the base amount plus the enhancement.

Accessing your life insurance policy's cash value

Understanding your life insurance policy cash value

When people think of life insurance, they often think of a beneficiary receiving a lump sum of money (or death benefit) after the insured person passes away. Your need for insurance must be the reason for buying life insurance, but there are other advantages. What you may not know is that your permanent life insurance may also have a savings component (or cash value) that can grow tax preferred throughout the life of the policy 1. You can access the cash value through loans or withdrawals. There can be very good personal or business reasons to do this. But note, using policy cash values may reduce your policy's death benefit.

Accessing Your Life Insurance Policy's Cash Value

There are three options available for you to access the cash value in your life insurance policy, each having their own advantages and disadvantages:

  1. Policy loan
  2. Policy withdrawal
  3. Collateral assignment

If you choose to access the cash value in your policy, your financial and tax advisors can help you determine which option is best for you.

Depending on which option you choose, the policy's adjusted cost basis (ACB) must be considered for tax purposes. The ACB is the non-taxable part of the policy's cash value, calculated according to a complex formula in the Income Tax Act. The Canada Revenue Agency (CRA) uses a policy's ACB to decide if you will need to report any income when you access your policy's cash value.

In general, the ACB equals:

Total premiums paid (excluding premiums paid for attached benefits or substandard premiums) less policy dividends not used to pay premiums (if applicable) less accumulated net cost of pure insurance determined by CRA 2 less total policy loans on the policy.

Accessing the policy's cash value through a policy loan 3

With this type of borrowing, Sun Life issues a loan that is secured by the policy's cash value. A policy loan does not affect the cash value growth, and interest is often charged at a variable rate. There is no application process, and there are no fees for creating the loan arrangement.

Policy loan amounts equal to or less than the policy's ACB are tax-free. But policy loan amounts greater than the policy's ACB will be taxable. Sun Life will issue a T5 slip to report the taxable gain.

Let's look at a policy loan example.

You want to take a policy loan in the amount of $30,000. Here are two scenarios showing the tax implications of the loan depending on the amount taken in relation to the policy's ACB:

 

Policy loan taken 
within the ACB amount

Policy loan taken with a portion greater than the ACB amount

Cash value of the policy

$100,000

$100,000

ACB

$40,000

$20,000

Policy loan taken

$30,000

$30,000

Amount in excess of the ACB amount (Taxable gain)

$0

$10,000

If a policy loan is greater than the ACB, the amount of the loan that exceeds ACB will be taxable. If the policy loan had a taxable portion, loan repayments will reduce the taxable part of the policy loan first. You can deduct loan payments that repay the taxable portion of a policy loan.

If the insured person dies, and there is a policy loan outstanding, the death benefit will first pay the policy loan plus accumulated interest. The remainder will be paid to the beneficiary.

Accessing the policy's cash value through a policy withdrawal 4

A policy withdrawal involves withdrawing (or surrendering) cash from the policy, and results in a decrease to both the cash value and the death benefit. Funds withdrawn from a policy can't be returned. This means that the remaining cash value and death benefit may not have the same opportunity to grow over time, if the withdrawal wasn't made.

To determine the taxable amount of the withdrawal, we compare the policy's ACB to the cash value. The percentage of ACB is then applied to the withdrawal amount. For example, if 40% of the policy's cash value is tax-free ACB, then 40% of the withdrawal will be tax-free. If some of the withdrawal is treated as taxable gain, Sun Life will issue a T5 tax slip to report the gain as income to the policy owner.

Let's look at an example of a policy withdrawal.

You want to withdraw $30,000 from your policy. Your policy's total cash value is $100,000, and the ACB is $40,000. Since 40% of your policy's cash value is tax-free ACB, 40% of your withdrawal will be treated as having come from tax-free ACB. The rest of your withdrawal will be treated as taxable income.

 

Policy withdrawal taken

Cash value

$100,000

ACB

$40,000

Percentage of ACB in the policy's cash value

40%

Policy withdrawal amount

$30,000

Amount of withdrawal treated as ACB

40% x $30,000 = $12,000

Amount of withdrawal treated as taxable gain

$30,000 - $12,000 = $18,000

Policy withdrawals reduce the policy's cash value by the amount of the withdrawal. In the above example, the remaining cash value would be $70,000. The withdrawal also causes the policy's ACB to decrease. Any taxable part of the withdrawal will cause the policy's ACB to then increase. For example:

The withdrawal caused a decrease in the policy's ACB of $30,000 leaving $10,000 in ACB. Since $18,000 of the withdrawal was taxable, this amount was then added back to the ACB leaving a final ACB of $28,000 ($10,000 + $18,000 = $28,000).

Accessing the cash value through policy withdrawals does not carry any interest rate risk like a policy loan or collateral assignment. If interest rates rise in the future, the interest required on the policy loan or collateral assignment loans may become greater than anticipated.

Accessing the policy's cash value using a collateral assignment 5

As the owner of a life insurance policy you can apply for a loan with a third party lender using the cash value of your policy as security for the loan. Depending on the type of loan you take, the interest on the loan may be payable or may be added to the loan balance every year. Often the loan will be provided to you as a line of credit. You must qualify for the loan based on the lender's criteria. The lender may consider your ability to repay the loan, your net worth and the value of any other collateral you may have. If approved, a loan agreement will be created outlining the borrowing limits, repayment terms, collateral requirements and the rights and obligations for both parties. Lenders may also charge fees to set up this type of arrangement.

At the insured person's death, the death benefit will be used to repay the total amount of the loan plus any interest that has accumulated. If any balance from the death benefit remains, it will be paid to the beneficiary you have named.

This type of arrangement is attractive because collateral loans are not currently considered taxable income, so no additional tax will be due on your tax return.

If accessing the cash value of your permanent insurance policy is something you would like to learn more about, your advisor can give you more information and help you to determine which option best fits your financial plans.

At Sun Life Financial, our goal is to provide relevant and candid advice, encourage you to be proactive about your finances and give you the tools to help create the life you want to lead. When you work with us, you're joining millions of Canadians who trust in our ability to give them the products, knowledge and confidence they need to build a solid financial plan and put it into action.

For over 150 years, Sun Life Financial has been one of the most trusted names in financial services. In 2016, Canadians named Sun Life the most trusted brand in life insurance in Canada for six years in a row, according to a consumer poll commissioned by Reader's Digest for its 2016 Trusted Brands™ awards program.

Reader's Digest Trusted Brand 7 years in a row
Living Benefit

This benefit is offered on Sun Life Assurance Company of Canada life insurance products and is a non-contractual arrangement that we may approve at our discretion on a case-by-case basis. If an insured person is diagnosed with a terminal illness, an application can be made by the policy owner for a lump sum advance of 50% of the insurance amount, to a maximum of $250,000. The lump sum, plus interest, is deducted from the death benefit when paid. This benefit follows the rules of the living benefit program in effect when the policy owner applies to receive the benefit.