dominion life universal life product and administrative guide...insurance coverage issue age...

Dominion Life Universal Life

PRODUCT & ADMINISTRATIVE GUIDE

October 1, 2018

DL UL Product & Administrative Guide i July 5, 2004

TABLE OF CONTENTS

GENERAL INFORMATION ...................................................................................... 1

EFFECTIVE DATE OF THESE RULES ......................................................................................................................................... 1

PLAN VERSIONS ................................................................................................................................. 1

CURRENCY .................................................................................................................................................................................... 1

DL UL PRODUCT INFORMATION ......................................................................... 2

COVERAGE TYPE .......................................................................................................................................................................... 2

DEATH BENEFIT TYPES .............................................................................................................................................................. 2

INSURANCE COVERAGE ISSUE AGE LIMITS .......................................................................................................................... 2

INSURANCE COVERAGE FACE AMOUNT GUIDELINES ....................................................................................................... 3

MAXIMUM COVERAGE AMOUNTS ........................................................................................................................................... 3

COST OF INSURANCE RATES ..................................................................................................................................................... 3

Yearly renewable COI ........................................................................................................................ 3

Level COI ............................................................................................................................................ 4

ADMINISTRATION EXPENSE .................................................................................................................. 4

INSURANCE FEES .............................................................................................................................. 4

CANCELLATION CHARGES ....................................................................................................................................................... 4

FULL SURRENDERS ..................................................................................................................................................................... 4

ULTIMATE DATE ......................................................................................................................................................................... 4

TERMINATIONS ............................................................................................................................................................................ 4

Automatic insurance coverage terminations ...................................................................................... 4

Automatic rider coverage terminations .............................................................................................. 5

Requested terminations ...................................................................................................................... 5

PREMIUMS/PAYMENTS ........................................................................................... 6

PREMIUM FREQUENCIES ............................................................................................................................................................ 6

PERCENTAGE OF PREMIUM EXPENSE CHARGE ................................................................................................................... 6

MAXIMUM PAYMENTS ............................................................................................................................................................... 6

Payments after issue ........................................................................................................................... 6

Payments in excess of the maximum ................................................................................................... 6

Payments made on policies that are in grace or late payment offer .................................................. 6

INVESTMENT ACCOUNT ............................................................................................. 7

Savings account .................................................................................................................................. 7

PARTIAL WITHDRAWALS................................................................................................................ 7

Minimum and maximum withdrawal amounts ................................................................................... 7

Withdrawal effective date ................................................................................................................... 7

Automatic withdrawals ....................................................................................................................... 7

Withdrawals and the basic death benefit ............................................................................................ 7

POLICY LOANS ............................................................................................................................................................................. 8

Average balance ................................................................................................................................. 8

Interest capitalization ......................................................................................................................... 8

Pro-rated interest ............................................................................................................................... 8

PAC loan repayments ......................................................................................................................... 8

Loan payoff ......................................................................................................................................... 8

DL UL Product & Administrative Guide ii July 5, 2004

Loan payoff on death .......................................................................................................................... 8

SIDE ACCOUNT .......................................................................................................... 9

Side account ........................................................................................................................................ 9

Placing amounts into the Side account............................................................................................... 9

Minimum requirements ....................................................................................................................... 9

Automatic deposits into the policy ...................................................................................................... 9

Withdrawals from the Side account .................................................................................................... 9

Surrender value ................................................................................................................................. 10

Taxation and the Side account ........................................................................................................... 10

Assignment ......................................................................................................................................... 10

Termination of the Side account ........................................................................................................ 10

RIDERS ........................................................................................................................ 11

AUTOMATIC INCREASE RIDER (AIR) ........................................................................................... 11

Issue ages ........................................................................................................................................... 11

Substandard lives ............................................................................................................................... 11

AIR amount ........................................................................................................................................ 11

AIR and Waiver of monthly deduction rider ...................................................................................... 12

Termination of AIR coverages ........................................................................................................... 12

ACCIDENTAL DEATH BENEFIT (ADB) ........................................................................................................ 12

Issue ages ........................................................................................................................................... 12

Minimum and maximum ADB coverage amounts ............................................................................. 12

Forced decrease in ADB amount....................................................................................................... 12

ADB expiry date ................................................................................................................................ 12

GUARANTEED INSURABILITY RIDER (GIR) .............................................................................................. 13

WAIVER OF MONTHLY DEDUCTION (WOD) RIDER ...................................................................................................... 13

Issue ages ........................................................................................................................................... 14

Monthly deductions being waived ..................................................................................................... 14

WOD expiry date ............................................................................................................................... 14 CHILDREN’S PROTECTION RIDER (CPR) ............................................................................................................ 14

Children’s protection rider convertibility ................................................................................................................ 14

TERM INSURANCE RIDER (TIR) ........................................................................................................................... 14

Issue ages ........................................................................................................................................... 15

Minimum and maximum TIR coverage amounts ............................................................................... 15 Term insurance rider with Automatic increase rider ............................................................................................... 15

Term insurance rider convertibility ......................................................................................................................... 15

POLICY CHANGES ................................................................................................... 17

EFFECTIVE DATE OF CHANGES IN COVERAGE .................................................................................................................. 17

SWITCHING COI STRUCTURES ................................................................................................................................................ 17

Switching from yearly renewable to level COI .................................................................................. 17

Switching from level to yearly renewable COI .................................................................................. 17

DEATH BENEFIT TYPE CHANGES ........................................................................................................................................... 17

INCREASES IN COVERAGE ....................................................................................................................................................... 18

DECREASES IN COVERAGE ...................................................................................................................................................... 18

Requested decreases in yearly renewable COI insurance coverage ................................................. 19

CHANGES FROM SMOKER TO NON-SMOKER ...................................................................................................................... 19

Juveniles and changes to non-smoker rates ...................................................................................... 19

DL UL Product & Administrative Guide iii July 5, 2004

ADDING A LIFE ................................................................................................................................. 20

DELETING A LIFE ............................................................................................................................. 20

SUBSTITUTE LIFE ....................................................................................................................................................................... 20

POLICY SPLITTING .................................................................................................................................................................... 20

POLICY LAPSE .......................................................................................................... 21

LAPSE TEST ................................................................................................................................................................................. 21

LAPSE AND THE SIDE ACCOUNT .................................................................................................. 21

REQUIRED PAYMENTS .............................................................................................................................................................. 21

Gross insufficient amount .................................................................................................................. 21

Lapse notice amount .......................................................................................................................... 21

Payments made on policies that have lapsed .................................................................................... 21

LAPSE EFFECTIVE DATE........................................................................................................................................................... 22

REINSTATEMENT .................................................................................................... 23

REINSTATEMENT REQUIREMENTS ........................................................................................................................................ 23

REINSTATEMENT PROCESSING ............................................................................................................................................. 23

CHANGE IN SMOKING STATUS/INSURANCE RATING AND REINSTATEMENT ............................................................ 23

LEVEL COI AND REINSTATEMENTS ...................................................................................................................................... 24

PREMIUM EXPENSE-APPENDIX ....................................................................................................................... 24

The only edits to this guide, since July 2004, pertain to the Premium expense rates, effective October 1, 2018

DL UL Product & Administrative Guide 1 July 5, 2004

DOMINION LIFE UNIVERSAL LIFE PRODUCT & ADMINISTRATIVE GUIDE

GENERAL INFORMATION

EFFECTIVE DATE OF THIS GUIDE

The Dominion Life Universal Life Product and Administrative Guide has been updated to

reflect changes effective July 5, 2004: - New YRT COI rates

- Level COI rates available to age 80

This guide is effective July 5, 2004 and replaces the DL UL Administrative Rules.

PLAN VERSIONS

UL DL Universal Life policies issued from November 1981 to February 13, 1984.

UL2 DL Universal Life policies issued from February 14, 1984 to June 16, 1984

ULC DL Universal Life policies issued from June 17, 1984 to December 15, 1986. (These policies are the same as the UL2 policies except for a different monthly administration fee).

CURRENCY

Only Canadian dollar policies/premiums will be allowed.


DL UL PRODUCT INFORMATION

COVERAGE TYPE

There is one coverage type on DL UL policies:

• Single life.

Single life coverages insure only one person. Additional lives may be added at any time and each of these people will have a separate death benefit. These additional lives are referred to as other insured people and they are covered under a Term insurance rider.

DEATH BENEFIT TYPES

The following death benefit types are available on DL UL policies:

• Basic (type I)

The death benefit is equal to the specified amount, or the cash value plus $10,000, if greater

• Basis plus cash value (type II)

The death benefit is equal to the specified amount plus the cash value.

Only one death benefit type is available per policy; all of the insurance coverages on a policy must have the same death benefit type.

INSURANCE COVERAGE ISSUE AGE LIMITS

MINIMUM ISSUE AGE

OF EACH INSURED

MAXIMUM ISSUE AGE

OF EACH INSURED

Primary insured 0 75

Other insured person 18 75

Issue age is determined as the insured person’s age on their birthday nearest the policy date prior to the applicable coverage.

If an insured person’s birthdate is February 29th, we must show a date of February 28th, as the administration system cannot accommodate a date of February 29th.


INSURANCE COVERAGE FACE AMOUNT GUIDELINES

PLAN TYPE INSURANCE

COVERAGE

FACE AMOUNT Minimum initial face amount per insured UL Primary insured $10,000 person Other insured person $10,000

UL2 and ULC Primary Insured $15,000 Other insured person $10,000

Minimum increase in death benefit (with UL Primary insured $10,000 respect to adding an additional insurance Other insured person $10,000 coverage on an existing insured person

UL2 and ULC Primary insured $15,000 Other insured person $10,000

Minimum decrease in face amount UL, UL2 and Primary insured $10,000 ULC Other insured person) $10,000

** The maximum amount of the other insured person on UL2 and ULC policies cannot exceed the coverage amount on the primary insured.

The DL UL policies must always have an insurance coverage in effect on the policy (i.e. the insurance coverage cannot be terminated with only the riders/benefits on the policy remaining).

MAXIMUM COVERAGE AMOUNTS

Manulife Financial's retention limit depends on the age and insurance rating for each insured person. For most risks, the limit is $10,000,000. The following chart provides a complete breakdown of the limits.

AGE INSURANCE RATING STANDARD TO 200%

INSURANCE RATING 225% TO 300%

INSURANCE RATING

> 300%

0 - 70 $10,000,000 $6,000,000 $3,000,000

71 - 75 $5,000,000 $2,500,000 $1,500,000

For amounts in excess of these limits Manulife Financial will seek reinsurance. Please contact Underwriting for further details.

COST OF INSURANCE RATES

Two cost of insurance (COI) structures are available for insurance coverages under DL UL policies. They are:

• Yearly renewable; and

• Level.

Both yearly renewable and level COI insurance coverages are available on the same policy and on the same person or people insured. Both COI structures are available with both death benefit types.

Yearly renewable COI

The yearly renewable COI rates will be based on the attained age of the person or people insured by the coverage as of the policy anniversary coinciding with or immediately preceding the monthly anniversary day on which the rate is charged. These rates are gender and smoker/non-smoker distinct. Juvenile rates for ages 0 to 15 are standard rates.


Level COI

The level COI rates are available on primary and Term insurance rider(s) coverages only. (i.e. not available on any riders or benefits such as AIR or CPR) The level COI rates for an insurance coverage will be based on the age for that coverage when it was changed to (or issued as) level COI. These rates are gender and smoker/non-smoker distinct.

Level COI rates are available if the attained age of the insured person is between 18 and 80.

See the Policy Changes section of these rules for information on switching from yearly renewable to level COI.

ADMINISTRATION EXPENSE

The following chart shows the administration fees applicable on the UL plans:

TYPE OF PLAN ADMINISTRATION EXPENSE (monthly)

ADMINISTRATION EXPENSE (annual)

UL N/A N/A

UL2 $3.00 per month $36.00

ULC $5.00 per month $60.00

INSURANCE FEES

The following chart shows the insurance fees applicable on the UL plans:

TYPE OF PLAN INSURANCE FEES

UL First year insurance fee on the first coverage for the primary insured

UL2 New insurance fee on new primary and increases to primary coverage for the first year only

ULC New insurance fee on new primary and increases to primary coverage for the first year only

Insurance fees are not applicable to policies issued to Manulife employees.

Insurance fees are based on the insured’s age at policy issue not coverage issue.

CANCELLATION CHARGES

There are no cancellation charges applicable to DL UL policies.

FULL SURRENDERS

If a policy is surrendered, the cash value will be the greater of:

• $0; and

• cash value, minus any outstanding policy loan balance

When a policy is surrendered, the effective date of the surrender will be the date we receive a written request from the policy owner. No insurance will be in effect on the policy after the effective date of the surrender.

ULTIMATE DATE

The ultimate date is the policy anniversary nearest the primary insured’s attained age 95. On the ultimate date the policy terminates and the net cash value is payable to the policy owner.

TERMINATIONS

Automatic insurance coverage terminations

On the death of the primary insured, all coverages on the policy are automatically terminated.


Automatic rider coverage terminations

All automatic rider coverage terminations will occur on policy anniversaries, NOT coverage anniversaries.

For example, the Waiver of monthly deduction rider will terminate on the policy anniversary nearest the insured person’s 60th birthday.

Requested terminations

At any time, the policy owner may request the termination of an insurance or rider coverage. The effective date of the requested termination will be the monthly anniversary day coinciding with or next following the date we receive the written request.


PREMIUMS/PAYMENTS

PREMIUM FREQUENCIES

The following premium frequencies are allowed on DL UL policies:

• Annual

• Semi-annual

• Quarterly

• Monthly by Pre-Authorized Cheque (PAC)

Head Office Payroll Deduction is NOT allowed.

PERCENTAGE OF PREMIUM EXPENSE CHARGE

The premium expense charge pays for a premium tax levied by all provinces, covers commissions paid on premiums and it covers the expenses of administering the premium.

The percentage of premium expense charge, by province of residence, can be found in the Premium Expense Appendix, at the end of this guide.

MAXIMUM PAYMENTS

Payments after issue

In subsequent policy years, on each policy anniversary, we automatically determine the approximate amount of additional funds that may be deposited into the plan at any time and still keep the policy exempt. This amount is shown on the policy statement.

Payments in excess of the maximum

Any portion of a payment that would make the policy non-exempt (i.e. payments in excess of the maximum for the policy year) will automatically be placed into the Side account as of the effective date of the payment. If, on any subsequent policy anniversary, we determine that an additional amount can be deposited into the DL UL policy without affecting its exempt status, we will automatically withdraw an amount from the Side account and deposit it into the Savings account under the policy. Please refer to the Side account section of these rules for further details.

Payments made on policies that are in grace or late payment offer

If the policy is in its grace period because the account value is negative, any payments received will be applied to the Savings account. If the policy has lapsed, any payments received to reinstate the policy will be applied to the Savings account, upon our approval of the reinstatement, as of the effective date of the reinstatement.

If the payments are applied through Workbench, they will automatically be directed as follows:

1) pay negative cash value (to zero) 2) to outstanding loans 3) to cash value


INVESTMENT ACCOUNT

The Savings account, a daily interest account, is the only investment account applicable on DL UL policies.

Savings account

Minimum deposit • $0.00

Interest is earned daily.

Any shortage amount (i.e. a negative cash value caused by a monthly deduction) will be taken from the Savings account.

PARTIAL WITHDRAWALS

If a policy has a sufficient cash value, the policy owner may withdraw some of that cash value from the policy.

On a policy with a basic death benefit, when a cash withdrawal is made, the face amount is reduced by the amount of the cash withdrawal.

There is a withdrawal fee of $25.00.

Minimum and maximum withdrawal amounts

The minimum withdrawal that can be requested is $100.

The maximum withdrawal amount is calculated as follows:

• Cash value less "n" months of monthly deductions

Where "n" is equal to the greater of 3 months or the number of whole policy months to the next policy anniversary.

The purpose of the maximum withdrawal limit is to attempt to ensure the policy remains in effect until the next policy anniversary.

We will not allow a withdrawal on a policy with a basic face death benefit if that withdrawal will cause the total amount of the insurance on the primary insured to reduce below $10,000. The primary insured’s insurance coverage has to remain at a minimum of $10,000. In this situation, the policy owner must provide evidence of insurability for the primary insured or reduce the requested withdrawal amount.

Withdrawal effective date

When a withdrawal is requested, the effective date of the withdrawal will be within seven days of when the request is received from the policy owner at one of our offices.

Automatic withdrawals

In order to maintain the policy's exempt status, we will examine the DL UL policy on each policy anniversary to ensure the policy remains exempt. An automatic withdrawal may be necessary to remove funds from the Savings account in order to maintain the policy's exempt status. These funds will be placed in the Side account as of the effective date of the automatic withdrawal. Please refer to the Side account section of these rules for further details.

Withdrawals and the basic death benefit

A requested withdrawal from a policy with a basic death benefit will result in a reduction of the face amounts, with the exception of withdrawals from the Side account, of ALL insurance coverages for the primary insured under the policy, unless satisfactory evidence of insurability is provided at the time of the withdrawal. We will not allow requested withdrawals that will lower the face amount of the primary insured’s insurance coverage below $10,000.


(The policy owner must provide evidence of insurability for the primary insured or reduce the requested withdrawal amount).

This does not apply to automatic withdrawals to keep the policy exempt. In other words, an automatic withdrawal will not cause the reduction of the insurance coverage face amounts on a policy with a basic death benefit.

POLICY LOANS

A policy loan may be obtained on the cash value of the policy. The amount of the loan cannot exceed the cash value of the policy less the minimum amount required to keep the policy in force for two months and less any existing indebtedness. Interest is charged on policy loans at a rate determined by Manulife Financial; which could vary during the period of the loan. The interest is payable at the end of each policy year and, if not repaid, will be added to the loan balance.

When a loan is repaid, the payment is first used to reduce the principle, then cover any interest charges of the loan. If the primary insured dies before having paid off the loan, the outstanding loan balance is subtracted from the death benefit.

Average balance

The amount of loan interest for the policy year is based on the average balance of the loan over the policy year. The average balance is calculated by multiplying the loan amount by the number of days remaining to the next policy anniversary divided by 365. The average balance amount is multiplied by the interest rate (for the past year) to arrive at the amount of loan interest due for the policy year.

Interest capitalization

Loan interest is capitalized on the policy anniversary when the loan interest is calculated in arrears. Loan interest is also capitalized when a loan repayment is made that is greater than the loan amount due, but less than the loan amount plus accrued interest.

Pro-rated interest

A pro-rated loan interest rate is applicable when an additional loan is added to a policy and there is an existing loan and it is not on the policy anniversary. At each policy anniversary, the loan interest rate will be updated to the current loan interest.

PAC loan repayments

Loan repayments can be made through monthly pre-authorized chequing. Loans can be paid via pre-authorized chequing even if the policy is on regular billing.

Loan payoff

The loan including interest is paid off when the amount of the loan repayment equals the loan balance plus accrued interest as of the date of the loan repayment, less $1.99.

Loan payoff on death

The loan is automatically paid in full when the primary insured dies. The outstanding loan balance is subtracted from the death benefit.


SIDE ACCOUNT

The Side account is available on all non-grandfathered DL UL policies.

The Side account is "external" to the policy and, as a result, interest earned by funds placed into this account is subject to annual taxation. Funds in the Side account do not form part of the account value or cash value of the policy.

The Side account is not protected from creditors, nor is it CompCorp. protected.

The Side account is not available on grandfathered and non-exempt policies. For grandfathered policies the Side account becomes available upon a tax status change from grandfathered to exempt.

Side account

The Side account operates the same way as the Savings account within the policy, except for the interest rate guarantee. The Side account guarantees that the interest rate will never be less than 90% of the yield on Government of Canada 91-Day Treasury Bills less 1.5%.

Placing amounts into the Side account

Amounts are placed into the Side account as follows:

1) The policy owner may place funds into the Side account in order to prepay future deposits.

2) Any portion of a deposit that would cause the policy to fail the exempt test at its next policy anniversary will automatically be placed into the Side account.

3) Any amounts automatically withdrawn from the Savings account to keep the policy exempt will be placed in the Side account, after any outstanding loan has been repaid.

A notice to the policy owner will be generated when any amounts are automatically placed in the Side account.

There is no premium expense charge or premium tax applied to funds placed into the Side account. Once the funds are moved into the policy, the premium expense charges and premium tax will apply.

Minimum requirements

• Minimum Deposit $0

Automatic deposits into the policy

If, on any policy anniversary, we determine that an additional amount can be deposited into the DL UL policy without affecting its exempt status, we will automatically transfer an amount from the Side account and deposit it into the policy’s Savings account, reduced by a deposit load.

If needed to prevent the policy from lapsing, an amount will automatically be transferred from the Side account and deposited into the Savings account in the policy on the monthly anniversary day.

The policy owner will receive a Transaction Confirmation Notice when any amounts are transferred from the Side account and deposited into the policy.

Withdrawals from the Side account

The policy owner may request a withdrawal of all or part of the funds in the Side account.

The current withdrawal fee for withdrawals from the Side account is $0.


When a withdrawal is requested, the effective date of the withdrawal will be the day the request is received from the policy owner at one of our offices.

Surrender value

If the policy is surrendered, the policy owner will receive the cash value of the policy plus the Side account cash value. The Side account cash value will equal the Side account balance. The Side account cash value will not be included in the proceeds of disposition used to determine any gain on surrender.

Taxation and the Side account

Any interest earned in the Side account will be reported to the policy owner annually for inclusion in his or her income for income tax purposes.

The Side account funds are NOT locked-in, and thus are not included in the policy's accumulating fund for tax purposes (for example, when performing the exempt test or when calculating the taxable portion of dispositions).

Assignment

If the policy is assigned, the Side account will also be assigned. If ownership of the policy is transferred, then ownership of the Side account will also be transferred. The policy owner must be the owner of the Side account.

Termination of the Side account

If the policy terminates, the Side account also terminates and the balance of the account is paid to the policy owner or the policy owner’s estate. On the death of the primary insured, the Side account balance is never paid to the beneficiary of the policy, but will be paid to the owner or the policy owner’s estate.


RIDERS

AUTOMATIC INCREASE RIDER (AIR)

The Automatic increase rider (AIR) is available on the primary insured and the other insured person or people covered under the Term insurance rider.

The Automatic increase rider provides a fixed increase of 5% of the specified amount annually on each policy anniversary. This increase is based on the initial specified amount and is not compounded.

Increases on the Automatic increase rider will stop at the earlier of:

• the policy anniversary nearest the insured person’s 65th birthday; or

• the 15th policy anniversary.

At this point, the AIR amount for that coverage remains level.

Yearly renewable COI rates are only available on AIR (i.e. level COI rates are not available).

Issue ages

MINIMUM ISSUE AGE MAXIMUM ISSUE AGE



Substandard lives

AIR is not available on substandard medical risks. However, it may be allowed by Underwriting on insured people who have a temporary, occupational or aviation extra.

AIR amount

Eligible insurance coverages

Eligible insurance coverages are selected by the policy owner and approved by Underwriting, and must insure the same insured people, based on the same smoking status and insurance rating of each insured person, as the AIR Coverage.

Once increases on the AIR coverage stop, the AIR amount applicable to that coverage will remain level.

If the eligible insurance coverages are decreased (except where the decrease results from a partial withdrawal of cash value), the AIR is cancelled.

Stopping future AIR amount increases

At any time, the policy owner may request that future increases for a particular AIR coverage stop. The effective date of this change will be the monthly anniversary day coinciding with or next following the day we receive the written request.

The AIR amount for that AIR coverage will then remain level unless decreased by the policy owner.

Restarting future AIR amount increases


The policy owner may request that future increases, for a particular AIR coverage, resume. Subject to evidence of insurability satisfactory to us, this request may be permitted provided the AIR insured person meets the issue requirements for AIR. The effective date of this change will be the monthly anniversary day coinciding with or next following the date the request is approved. No adjustment will be made for annual increases which were missed during the "stopped" period.

AIR and Waiver of monthly deduction rider

If a policy with AIR also has a Waiver of monthly deduction rider, no increases will be allowed while the monthly deductions are being waived.

Termination of AIR coverages

The policy owner may terminate an AIR coverage at any time. The AIR amount for any terminated AIR coverage will become zero as of the monthly anniversary day coinciding with or next following the date on which we receive the written request.

An AIR coverage should be terminated if there is no longer an insurance coverage under the policy of the same coverage type and insuring the same insured people as the AIR coverage.

ACCIDENTAL DEATH BENEFIT (ADB)

The Accidental death benefit is available on the primary insured and the other insured person or people.

The Accidental death benefit may be available on substandard lives at the underwriter's discretion.

Issue ages




Minimum and maximum ADB coverage amounts

Minimum ADB amount • $15,000 on primary insured $10,000 on other insured person

Maximum ADB Amount • Lesser of:

(1 x total existing insurance coverage per ADB insured) - any existing ADB coverage

AND

Forced decrease in ADB amount

$300,000 total ADB coverage (with Manulife Financial and/or any other insurance company)

If the policy owner decreases the insurance coverage applicable to an ADB insured person such that the ADB amount exceeds the maximum allowed, we will decrease the ADB amount applicable to that ADB insured person to the maximum ADB amount (i.e. we will maintain the 1 to 1 ratio as described above in the maximum ADB section). This decrease in the ADB amount will be effective on the monthly anniversary day coinciding with the effective date of the decrease in insurance coverage.

ADB expiry date

The ADB coverage will expire on the policy anniversary nearest the ADB insured person’s 70th birthday.


GUARANTEED INSURABILITY RIDER (GIR)

The Guaranteed insurability rider is available on the primary insured and the other insured person or people.

The Guaranteed insurability rider is available on standard lives only.

Issue ages




Minimum and maximum GIR amounts

Minimum GIR amount: • $15,000

Maximum GIR amount • Lesser of $50,000 OR 1 x total face amount

where total face amount is equal to the GIO insured person’s insurance coverage

GIR option dates

Scheduled GIR option dates will occur on the policy anniversaries nearest the GIR insured person’s 25th, 28th, 31st, 34th, 37th and 40th birthdays. Alternative option dates will occur on the birth or legal adoption of a child, or upon the marriage of the GIR insured person. The maximum number of options exercised cannot exceed six options, scheduled and alternative, under a particular GIR coverage.

The policy owner has 30 days following a scheduled option date, and 75 days following an alternative option date to exercise the option, otherwise the option will expire.

The policy owner will be reminded of their next scheduled option date on their Policy Statement. We will also send a reminder (Notice of a Guaranteed Insurability Rider Option Date) to the policy owner 60 days prior to a scheduled option date.

GIR expiry date

A GIR coverage will expire at the earlier of: • the policy anniversary nearest the GIR insured person’s 40th birthday; and

• the date on which six options have been exercised.

WAIVER OF MONTHLY DEDUCTION (WOD) RIDER

The Waiver of monthly deduction rider may only be elected by the primary insured.

WOD is available on substandard lives at the Underwriter's discretion, but is not available on corporate-owned policies. (Exceptions will be considered on a case-by-case basis; please contract Underwriting).

The WOD rider will cover the monthly cost of insurance and any rider costs associated with the policy while the WOD insured person remains totally disabled.


Issue ages


18 55

Monthly deductions being waived

Any monthly deduction that has been deducted and is later waived will be reapplied retroactively to the balance of the Savings account.

If the policy owner has a policy with a basic face death benefit, the policy will automatically be changed to a basic face plus cash value if the primary insured becomes disabled. After we stop waiving monthly deductions, the policy owner may request a change back to a basic face death benefit type.

While a policy is on waiver, increases in the Automatic increase rider will be stopped. Once monthly deduction are no longer waived, the Automatic increase rider will be put back in force.

Also, while a policy is on waiver, we will not allow any changes that constitute an increase in risk. (i.e. change to level COI, increase in coverage, add a new life/rider, death benefit option change, etc.).

WOD expiry date

The WOD coverage will expire on the policy anniversary nearest the primary insured’s 60th birthday.

CHILDREN’S PROTECTION RIDER (CPR)

The Children’s protection rider provides level convertible term insurance on the primary insured’s children aged 15 days to 18 1/2 years.

Coverage is automatically provided without evidence of insurability to children born or legally adopted after issue of the plan. The coverage on each child will terminate when that child reaches age 25.

Minimum and maximum CPR amounts

Minimum CPR amount all DL UL versions $2,000 (2 units)

Maximum CPR amount UL $10,000 (10 units) UL2 and ULC $15,000 (15 units)

Children’s protection rider convertibility

For UL policies, the Children’s protection rider is convertible to any permanent plan currently offered by Manulife Financial without evidence of insurability on expiry of the rider.

For UL2 and ULC policies, the Children’s protection rider is convertible to any permanent plan currently offered by Manulife Financial without evidence of insurability, for 1, 2, 3, 4 or 5 times the amount of the rider. Conversion dates are the policy anniversaries nearest the 21st and 25th birthdays of the insured child, the 31st day following the marriage of the insured child (prior to age 25), or when the rider expires. The total amount purchased at all option dates may not exceed five times the amount under the Children’s protection rider.

TERM INSURANCE RIDER (TIR)

Additional lives on DL UL policies are referred to as other insured people and can only be insured under a Term insurance rider. The Primary insured may also have TIR coverage.

Level COI rates or yearly renewable COI rates are available on Term insurance rider coverages.


The Term insurance rider will terminate on the earliest of the following dates:

• on the policy anniversary nearest the TIR insured person’s 95th birthday;

• the day the policy terminates;

• the day the Primary insured or the TIR insured dies; and

• the monthly anniversary day coinciding with or next following the day on which a request by the policy owner to terminate the Term insurance rider is received in Head Office.

Issue ages


18 75

Minimum and maximum TIR coverage amounts

Minimum TIR amount • $10,000

Maximum TIR amount • The maximum TIR amount on UL2 and ULC policies cannot exceed the amount of coverage on the primary insured

Term insurance rider with Automatic increase rider

For Term insurance rider coverages with AIR, on each policy anniversary, the AIR amount will be increased automatically by 5%.

Increases on the Automatic increase rider will stop at the earlier of:

• the policy anniversary nearest the insured person’s 65th birthday

• the 15th policy anniversary following the date of issue of the Term insurance rider

Yearly renewable COI rates are only available on AIR (i.e. level COI rates are not available).

If the policy contains a Monthly of deduction rider, the rider amount will not be increased while monthly deductions are being waived.

The Automatic increase rider will terminate on the earlier of the following:

• the fifteenth policy anniversary following the date of issue of the Term insurance rider;

• the policy anniversary nearest the insured person’s 65th birthday;

• the date on which notification is received by Head Office that an automatic increase to any insurance coverage on the insured person is not accepted by the policy owner;

• the effective date of a decrease in any insurance coverage on the insured person; and

• the date on which the Term insurance rider terminates.

Term insurance rider convertibility

The term insurance rider can be converted on an attained age basis, without evidence of insurability to new permanent life insurance, subject to the following:


1. The new permanent life insurance can be an insurance coverage on an existing policy (if permitted) or a permanent life plan offered by Manulife Financial on the conversion date.

2. The new insurance must insure only the TIR insured person for an amount not to exceed the amount of the Term insurance rider.

3. We must receive an application for the new insurance and the first premium (if applicable) within 31 days after the termination of the Term insurance rider.

4. The conversion date is the date the new insurance will take effect. It will be the monthly anniversary day following the date on which the insurance being converted terminated. If the insured person dies before the conversion date, the new permanent insurance will not take effect and we will refund any premium paid for it.

5. The premiums for the new insurance will be based on the TIR insured’s attained age and on his or her sex, smoking status and insurance rating .

6. The face amount of the new insurance must be level. If the new insurance provides an increasing death benefit, evidence of insurability satisfactory to us and our Reinsurers may be required for any amount over and above the conversion amount. Please contact Underwriting for requirements.

7. The new insurance must conform to our rules for issue ages, minimum/maximum face amount and minimum premiums.

8. The suicide and contestability/validity provision will apply from the coverage issue date of the TIR insured person’s coverage being converted.


POLICY CHANGES

EFFECTIVE DATE OF CHANGES IN COVERAGE

The effective date of any change in coverage is the monthly anniversary day coinciding with or next following the date on which the coverage change is approved.

SWITCHING COI STRUCTURES

Switching from yearly renewable to level COI

Level COI rates are available on Primary insureds and Term insurance rider(s) coverages only (i.e. not available on any riders or benefits such as AIR or CPR).

A change to level COI rates is not allowed if insurance costs are being waived under the Waiver of monthly deduction rider.

Yearly renewable COI insurance coverages may change to level COI rates provided the issue guidelines for level COI are met.

The level COI issue age is determined as the insured person’s age on his or her birthday nearest the policy anniversary coinciding with or immediately preceding the effective date of the change.

A change to level COI rates will be effective on the monthly anniversary day coinciding with or next following the date on which the change is approved. Evidence of insurability is not required to change to level COI rates.

A change from yearly renewable COI rates to level COI rates may cause a grandfathered policy to lose its preferred tax status (i.e. it may become subject to exempt testing).

If changing to level COI rates and no specific coverage has been selected, the insurance coverages processed will be on an “oldest coverage first” basis.

Switching from level to yearly renewable COI

A change from level COI rates to yearly renewable COI rates will only be permitted for error-correction purposes. A special exception may be permitted by Actuarial Support if the producer presents a valid case for the exception and the change is clearly in the best interest of the policy owner. Evidence of insurability will be required for a change from level COI rates to yearly renewable COI rates.

If additional insurance is issued with level COI rates and a request to change to yearly renewable COI rates is received in the first twelve months, this request will be processed as a plan exchange and the level COI coverage will be rescinded and reissued as yearly renewable COI coverage with the same effective date.

DEATH BENEFIT TYPE CHANGES

The policy owner can change the policy's death benefit type at any time.

Satisfactory evidence of insurability may be required for a change in death benefit type; please refer to the following chart for details and/or contact Underwriting.

If the insurance coverage is based on level COI rates, these rates will continue to be based on the original Level COI issue age for any increased coverage due to a death benefit type change.

Please refer to the chart below to determine what types of changes are permitted, and their requirements:


TYPE OF CHANGE Evidence of

Insurability

Requirements

Impact on

Face

Amount

Impact on

Net

Amount at Risk

Impact on

Compensation

Basic to:

Basic plus cash value

Same death benefit

Non-medical Decreases No change Possible chargeback

Same face amount

Full EOI No change Increases N/A

Basic plus cash value to:

Basic Same death benefit

N/A Increases No change N/A

Same face amount

N/A No change Decreases N/A

INCREASES IN COVERAGE

Increases in death benefit may be requested at any time, subject to satisfactory evidence of insurability and maximum issue age restrictions. Increases in death benefit are accomplished by adding a new insurance coverage on the proposed insured people and will be based on the following, determined as of the effective date of the increase: the insured person’s attained age, sex, smoking status and insurance rating. The minimum increase in coverage is $10,000 if the insured person or people already has insurance coverage on the policy.

For UL2 and ULC an insurance fee will be charged for increases in coverage on the primary insured. The insurance fee is based on the insured person’s age at policy issue.

The effective date of the requested increase will be the monthly anniversary day coinciding with or next following the day we approve the increase in coverage.

Except for increases in coverage due to a change in death benefit type, all increases in coverage will be handled by adding an additional insurance coverage to the policy.

DECREASES IN COVERAGE

The minimum decrease in insurance coverage is $10,000. The total amount of all insurance coverages for the insured person cannot be less than $10,000.

If the policy owner decreases the insurance coverage applicable to an ADB insured person such that the ADB amount exceeds the maximum allowed, we will decrease the ADB amount applicable to that ADB insured person to the maximum ADB amount (2 to 1 ratio as described in the maximum ADB section). If the policy owner decreases the insurance coverage applicable to an AIR insured person, the Automatic increase rider is cancelled.

The policy owner should indicate the type of insurance coverage to be reduced: yearly renewable COI or level COI. Insurance coverages will be reduced on a "last on, first off" basis. For example:

• $100,000 coverage at issue (yearly renewable COI)

• $25,000 coverage added in 1990 (was yearly renewable COI and changed to level COI)

• $50,000 coverage added in 1992 (yearly renewable COI)


If the policy owner requests a $75,000 decrease in yearly renewable COI, we would reduce the $50,000 coverage added in 1992 first, then $25,000 of the initial $100,000 from issue (now $75,000) and leave the $25,000 added in 1990 (as it is level COI)....this would also include any yearly renewable COI rider coverages such as Automatic increase rider, etc.

Requested decreases in yearly renewable COI insurance coverage

The policy owner may indicate the type of yearly renewable COI insurance coverage to be reduced: Automatic increase rider or yearly renewable COI insurance coverage. If the policy owner does not state the type of coverage to be reduced, the requested decrease in yearly renewable COI insurance coverage for a life will be processed in the following order:

• Automatic increase rider coverage; then

• Yearly renewable COI insurance coverages added after issue in “last on, first off” basis (to the minimum insurance coverage face amount allowed); then

• The initial coverage (if it is yearly renewable COI)

CHANGES FROM SMOKER TO NON-SMOKER

Changes to non-smoker cost of insurance rates can be done at any time while the policy is in effect subject to satisfactory evidence that:

• the insured person does not smoke cigarettes and/or marijuana and has not done so for at least the preceding 12 months, and

• there has been no material change in the insured person’s health or insurability from the coverage date to the date of the application for non-smoker cost of insurance rates, and

As of the effective date of the change, the following items will adjust, for the applicable coverage(s), to reflect the change in smoking status:

• cost of insurance rates; and

• any applicable rider costs that are non-smoker/smoker distinct; and

The following item will remain the same after the change in smoking status:

• any rider costs that are not non-smoker/smoker distinct.

Juveniles and changes to non-smoker rates

Juveniles are defined as insured people between the ages of 0 and 15. All juvenile rates are based on standard rates. Yearly renewable rates are based on standard rates until attained age 16, at which time we automatically start charging smoker rates. Level rates (such as GIR rates) are based on standard rates for the duration of the coverage. On insurance or rider coverages with a yearly renewable, smoker-distinct rate structure, an insured person who is 16 or older may change to non-smoker rates, subject to requirements for changes to non-smoker status. If the change request is submitted within the 12 month period immediately following the insured person’s 16th birthday, evidence of insurability will not be required to change to non-smoker rates.

We will send a Non-Smoker Eligibility Notice to the policy owner 60 days before the juvenile’s attained age 16 (i.e. policy anniversary nearest the insured person’s 16th birthday). This notification will advise the policy owner that the insured person may be eligible for non-smoker rates and will include a Smoking Questionnaire to be used to apply for non-smoker rates.


ADDING A LIFE

The policy owner can add an additional person on a policy by completing an application on the proposed insured person. The effective date of the addition will be the monthly anniversary day coinciding with or immediately following the date the coverage is approved. Any insured people other than the Primary life insured will be insured under a Term Insurance Rider coverage; the Primary insured may chose additional Primary insurance coverage, or Term Insurance Rider coverage.

DELETING A LIFE

The policy owner can delete an insured person from a policy by submitting a written request. The effective date of the deletion will be the monthly anniversary day coinciding with or next following the day we receive the written request.

The cost of insurance for the terminated coverage will stop as of the monthly anniversary day coinciding with or next following the date we receive the request.

SUBSTITUTE LIFE

Substitution of a life is not allowed on DL UL policies.

POLICY SPLITTING

Policy splitting is not allowed on DL UL policies; however, the TIR coverage is convertible; see the Term insurance rider convertibility section.


POLICY LAPSE

LAPSE TEST

A policy will lapse on the day it fails the lapse test (described below). Coverage under the policy will continue for a grace period of 31 days from the date of lapse.

The policy fails the lapse test if the cash value less outstanding indebtedness is less than zero.

LAPSE AND THE SIDE ACCOUNT

If we determine that the policy will enter the grace period, and there are funds in the Side account, we will:

• withdraw an amount from the Side account equal to the lesser of the Side account balance and the maximum payment amount allowed under the policy; and

• deposit that amount into the Savings account, effective that monthly anniversary day.

REQUIRED PAYMENTS

The lapse warning, typically sent 12 days after lapse is detected, includes both the gross insufficient amount and the lapse notice amount.

Gross insufficient amount

The gross insufficient amount is the shortage amount and is first determined when the lapse is detected. The actual shortage amount changes daily to reflect interest and monthly deductions.

The gross insufficient amount is calculated as the greater of A plus B where:

A is equal to the negative cash value grossed up to cover the percentage of premium expense charge (negative cash value / (1 - percentage of premium expense charge)); and

B is equal to the principle loan amount plus interest the date the policy went into grace.

Since the gross insufficient amount changes daily, we also show a recommended payment amount on the notice called the lapse notice amount.

Lapse notice amount

This is the amount required that is communicated to the policy owner on both the lapse warning and late payment offer notices. The lapse notice amount is calculated as:

• the gross insufficient amount; plus

• two month's charges.

This amount is calculated on the date the lapse warning notice is produced (typically 12 days after the lapse is detected). The lapse notice amount will not change other than to reflect any payments received while the policy is in grace. If, at the end of the grace period, we have not received sufficient payments to reduce the lapse notice amount to $0, we will refund any payments received during the grace period.

Payments made on policies that have lapsed

If the policy is in its grace period, any payments received will be applied to the Savings account. Please see the Premiums/Payments section of these rules for more information.


LAPSE EFFECTIVE DATE

A policy will enter the grace period as of the processing date on which we detect a lapse rather than the effective date of that lapse detection. For example, if on backdating an NSF deposit we discover that the policy should have entered its grace period two months ago, we actually start the grace period today rather than two months ago. The intent of this procedure is to give the policy owner sufficient notice and time to put their policy back in effect without the loss of insurance coverage. The amount required to keep the policy in effect will reflect the number of months that the policy has actually been in a lapse position.

If, at the end of the grace period, the policy owner has not made a sufficient payment to put the policy back in effect, the effective date of the lapse will be equal to the date the policy entered the grace period.


REINSTATEMENT

REINSTATEMENT REQUIREMENTS

A UL policy may be reinstated at any time within three years after the end of the grace period. Reinstatement will be subject to the following conditions:

1) receipt of the application for reinstatement;

2) receipt of satisfactory evidence of insurability of all insured people;

3) payment of 2 months future premiums; and

4) repayment of indebtedness.

A UL2 and ULC policy may be reinstated at any time within three years after the end of the grace period. Reinstatement will be subject to the following conditions:

1) receipt of the application for reinstatement;

2) receipt of satisfactory evidence of insurability of all insured people;

3) payment of 2 months future cost of insurance and administration fees; and

4) repayment of indebtedness.

The effective date of reinstatement will be the monthly anniversary day coinciding with or next following the date on which we approve the application for reinstatement.

REINSTATEMENT PROCESSING

On reinstatement of a policy, the policy will be brought up-to-date by processing all the monthly anniversary days for the lapsed period excluding the applicable monthly deductions and monthly fees and any interest on the account balance. If the account balance is positive during the lapsed period, interest will be earned based on the applicable Savings account interest rates during that period. If the account balance is negative during the lapsed period, interest will be charged based on the applicable Savings account interest rates during that period.

Any payments received to reinstate the policy will be applied to the Savings account, upon our approval of the reinstatement, as of the effective date of the reinstatement. Please see the Premiums/Payments section of these rules for further information.

On reinstatement of a policy with an Automatic increase rider, because increases will have occurred, the cost for the total increases will be charged.

On reinstatement of a policy with an outstanding loan, interest will be charged.

The effective date of any reductions in coverage requested at the time of reinstatement (i.e. decreases and/or coverage terminations) will be the same as the lapse effective date.

CHANGE IN SMOKING STATUS/INSURANCE RATING AND REINSTATEMENT

Any change in the smoking status or insurance rating of the insured people will be effective on the monthly anniversary day coinciding with or next following the reinstatement effective date. If there has been a switch from yearly renewable to level COI on the coverage, the issue age of each insured person used in this calculation will be the insured person’s age on his or her birthday nearest the policy anniversary coinciding with or immediately preceding the effective date of the switch.


LEVEL COI AND REINSTATEMENTS

For level COI insurance coverages, the level COI rates on reinstatement will be based on the insured person’s attained level COI age.

Premium Expense - Appendix

Premium expense charge

A deduction taken from each premium at the time the premium enters the policy (not the Side Account). After a premium is allocated to the investment account, a Premium expense is deducted. The Premium expense rates are based on the primary owner’s province of residence in Canada. Premium expense rates, as of October 1, 2018, are as follows:

Province/Territory

Staff

Premium

expense

rates

Premium

expense

rates

Alberta 3.00% 8.50%

British Columbia 2.00% 7.50%

Manitoba 2.00% 7.50%

New Brunswick 2.00% 7.50%

Newfoundland 5.00% 10.50%

Nova Scotia 3.00% 8.50%

Northwest Territories 3.00% 8.50%

Nunavut 3.00% 8.50%

Ontario 2.00% 7.50%

Prince Edward Island 3.75% 9.25%

Quebec 3.48% 8.98%

Saskatchewan 2.00% 7.50%

Yukon Territory 2.00% 7.50%

• The above percentage rates can change.

The only edits to this guide, since July 2004, pertain to the Premium expense rates, effective October 1, 2018.

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