Sun Lifetime Alternative
- Sun Lifetime Alternative re-pricing - 2013
In a recent review of Sun Lifetime Alternative, we've determined a pricing adjustment is required due to a decline in economic conditions since this product was originally introduced in September 2003. For clients who own this product, starting with the 2014 policy anniversaries, their Sun Lifetime Alternative premium will increase, as applicable under the terms of their contract.
There are two series of Sun Lifetime Alternative:
- Series 2002 includes policies which were sold from 2002 to 2004
- Series 2005 includes policies which were sold from 2005 and continue to be sold today for group conversions, term conversions and exercising options such as guaranteed insurability.
As outlined in the policy, Sun Lifetime Alternative has adjustable premiums after the 10-year guaranteed premium period and adjustable cash values. The decision for these policies was to increase premiums and make no change to the adjustable cash values.
Generally, the increases range from 15.5 per cent at the older issue ages to 27.5 per cent at the younger issue ages. As shown in the sample chart below, the premium increases are relatively low and will vary by risk class, issue age and smoking status.
Sun Lifetime Alternative Series 2002
Average monthly premium increases - $50,000 death benefit
The death benefit for the principle insurance is guaranteed and, therefore, is not affected by this change. Premiums for any other benefits are guaranteed as outlined in their policy.Series 2005
Since these policies are all still in the 10-year premium guarantee period until January 1, 2015, no adjustments to this series will occur at this time. We will re-assess this block based on the experience expectations at the time of our next review beginning in 2015.How will customers find out about the increase in premium?
We will include an insert with the annual policyholder statement at the anniversary when the adjustment occurs. We will begin mailing information about these changes to clients next week, for those with a January 2014 anniversary date. The premium increase occurs on the policy anniversary between January 1, 2014 and December 31, 2014.
In addition to this insert, customers who pay by pre-authorized chequing (PAC) will also receive notification of the premium increase through their (PAC) notices.Will I get a list of Sun Lifetime Alternative policies affected by these adjustments?
On December 9, 2013, you will receive an email list of the Sun Lifetime Alternative policies in your block of business. The email will include the policy number and the anniversary month/day so you can identify the policyholders who will be impacted by the premium increase.
Although these changes will affect the premium clients are required to pay, these policies continue to offer exceptional value.
- Product at a glance
Sun Lifetime Alternative is a straightforward answer for permanent insurance protection. It offers affordable lifetime coverage with guaranteed level premiums for the first 10 years. After that, the premiums may be adjusted annually depending on mortality experience, interest rates, investment performance, expenses, taxes and other relevant factors, but a client will never pay more than the guaranteed maximum outlined in their contract.General rules
- non-participating permanent product
- available for group conversions and conversions from Sun One Year Term and SunTerm to 65
- policy is paid up at age 100
- $150 policy fee
single life: 0 - 65 (unless the group plan allows for conversions past age 65)Maximum volume
- $200,000 for group conversions (exceptions are available if group coverage permits)
- smoker (standard)
Band 1 $0 - $99,999
Band 2 $100,000 - $249,999
Band 3 $250,000+Additional benefits
(Note: When converting to Sun Lifetime Alternative, these benefits are available only if they were included on the policy being converted.)
issue ages: 0 - 60
expiry: policy anniversary after age 70
minimum volume: $10,000
maximum volume: lesser of base amount or $250,000Product featuresAdjustable cash value
The adjustable cash value can increase or decrease. In some situations it may be zero, depending on Sun Life Financial's experience with investment performance, mortality, expenses, taxes and other relevant factors.
For example, let's assume that based on current experience,the adjustable cash value in year 5 is $3,600. However, if within the same time frame, investment returns on the overall portfolio of investments decrease by 1%, mortality worsens by 10% and expenses increase by 10%, then the adjustable cash value would be $3,200.
No portion of the adjustable cash value is guaranteed at any duration.What is the adjustable cash value based on?
Adjustable cash value is based on the average yield of a block of investments that's called the average money fund.
The fund is a long-term fund, consisting primarily of government and corporate bonds, loans, mortgages, equities and real estate. Performance is not consistent because volatile equity earnings can impact the average rates.
Once the costs of issuing a policy are recovered, a portion of each premium is invested into the average money fund. The fund currently has assets of more than $6 billion Cdn that were bought over a number of years.Policy loans
No cancellation fee
- up to 75% of the adjustable cash value
- minimum loan is $1,000
- The client may cancel the coverage at any time without paying a fee.
- Partial surrenders are not available.
- Anyone who has used ANY tobacco products (including cigarettes, cigars or cigarillos, pipes, chewing tobacco and marijuana) in the last 12 months is considered a smoker.
- If the applicant is younger than age 20, the client pays a non-smoker rate.
- When the insured person becomes age 21:
- premiums remain non-smoker only if the client signs a non-smoking declaration form. (We will send a form to the client when they turn 21.)
- premiums increase if the client is a smoker.
An added incentive to quit smoking
- All group conversions will be issued as smoker unless the group plan coverage is non-smoker.
- To change from smoker to non-smoker rates, evidence is required.
- Only clients currently with non-smoker coverage will qualify for non-smoker rates without evidence.
Cash values differ for smokers and non-smokers to reflect the higher premiums that smokers are charged. If the client stops smoking and qualifies as a non-smoker, there is a partial refund of the adjustable cash value.
Additionally, the new non-smoker premium will be based on the client's age at issue.Non-forfeiture options
Should the client not be able to make premium payments, these options can help prevent the policy from being terminated. These alternatives are available only if there is a buildup of the cash value in the policy.Automatic policy loan
When a premium payment is missed, a loan is automatically taken against the adjustable cash value to pay overdue premiums and keep the policy active for as long as the cash value lasts. The amount of the automatic policy loan cannot be more than the adjustable cash value of the policy. We set the daily interest rate at the time the loan is taken. The rate may change annually. We add the accumulated daily interest to the balance of the policy loan at the end of each policy year. At that time, we notify the client of the outstanding balance. The client may repay the policy loan at any time.Reduced paid-up at year 20
The client may choose to stop making payments after 20 years and the policy will remain in force for life with a reduced death benefit. The death benefit is determined by the net cash value available at the time a written request to stop payments is made. When changing to a paid-up plan, any additional benefits under the policy end - only the reduced principal insurance death benefit remains.Paid-up extended term at year 20
The client may choose to stop making payments after 20 years and the policy will remain in effect for an extendedterm with the same principal death benefit. The length of the term insurance is determined by the net cashvalue available at the time a written request to stop payments is made.
When changing to a paid-up plan, any additional benefits under the policy end - only the principal insurance deathbenefit remains for a limited period of time.
- Product details
Sun Lifetime Alternative is a permanent product solution available only for the conversion of Sun Life Financial group insurance coverage and conversions from Sun One Year Term or SunTerm to 65. The plan provides lifetime coverage and also offers a cash value. Premiums are guaranteed for the first 10 years with a guaranteed maximum premium after the first decade.
The coverage or benefit being converted will determine the base insurance coverage and benefits available to you. Additional insurance coverage or benefits illustrated will be subject to underwriting review and approval.
Sun Lifetime Alternative is a permanent product with a guaranteed 10-year premium then premiums may be adjusted annually subject to a guaranteed maximum.
- Issue ages 0 to 65
- Paid up at age 100
- Death benefit is level and guaranteed
- Accidental death benefit
The coverage or benefit being converted will determine the base insurance coverage and benefits available to you.
Adjustable cash values
Cash values aren’t guaranteed. They can increase or decrease depending on Sun Life Financial's experience with investment performance, mortality, expenses, taxes and other relevant factors.
- Up to 75% of the adjustable cash value
- Minimum loan is $1,000
Sun Lifetime Alternative provides the client with several alternatives that can prevent the policy from terminating when a premium is not paid.
- Automatic premium loan: A loan is made against the adjustable cash value to pay overdue premiums and keep the policy active, as long as the cash value lasts.
- Reduced paid up at year 20: Your client may stop making payments after 20 years and the policy, with reduced benefits, will remain in force for life.
- Paid extended term available at year 20: Your client may stop making payments after 20 years and the policy, with the same benefits, will remain in effect for an extended term.
- One insured person
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.printable copy: Sun Lifetime Alternative (one insured person)
The product guides have been written for advisors and assume an existing level of product knowledge. They are intended as information only, for the convenience of the advisors. Sun Life Assurance Company of Canada and its affiliated companies will not be bound by or liable for any inaccurate, incomplete or out of date information or any loss or damages or actions taken in reliance on this information.