participating life insurance - nbbn.ca · participating life insurance products from the canada...
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Participating life insuranceWealth achiever • estate achiever
advisor guide
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participating life insurance | the canada life assurance company
participate in the strength of canada Life’s participating life insurance productspurchasing life insurance is a very important
decision that benefits your clients and their
beneficiaries well into the future. this guide
will help you understand how participating life
insurance works and provides technical details
on the Wealth achiever and estate achiever
participating life insurance products from
the canada life assurance company.
Both products are built on the strength of
canada life’s participating account. the features
and benefits of each product can be tailored to
help meet your clients’ needs for protection today
and into the future.
What’s newfebruary 2010
■ child’s term life insurance rider
enhancements . . . . . . . . page 14
– effective for coverage dated
feb. 8, 2010 or later
– minimum issue limit of
$10,000
– convertible to a maximum of
$250,000
– can convert to term or
permanent life insurance
coverage
– can be added to canada life
participating policies dated
January 2007 or later
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learn how Wealth Achiever and Estate Achiever can provide your clients with:■ policy cash value that grows on a tax-advantaged basis■ cash value they can access during their lifetime■ dividends that can be used to pay some or all of
the out-of-pocket basic premiums or to buy more life insurance
■ riders and benefits that can be added to the basic policy to tailor coverage
■ a death benefit payout not subject to income tax
Participating life insuranceparticipating life insurance offered by canada life
combines permanent life insurance with a tax-advantaged
investment component. it provides insurance protection for
the insured’s lifetime as long as premiums are paid when
due and includes basic guaranteed death benefits and
basic guaranteed cash values. Benefits and riders can also
be added to the basic policy.
participating life insurance is particularly attractive to clients who:■ have low to moderate risk tolerance■ aren’t interested in the day-to-day management of the
investment component of their life insurance policy■ are attracted to the historical long-term stability of the
rate of return on participating account assets
■ are looking for guarantees
participating life insurance is flexible permanent life insurance with:■ guaranteed basic premiums ■ guaranteed basic death benefit■ guaranteed basic cash values■ policyowner dividends that can be used to purchase
additional life insurance or reduce out-of-pocket premiums (policyowner dividends aren’t guaranteed)
■ tax-advantaged investment component (particularly valuable as fixed-income component of their asset portfolio)
■ choice of riders and benefits that can be added to the
basic policy
■ premium flexibility
understanding participating life insurance from canada lifeWhen a client purchases participating life insurance, the
premiums paid go into an account called the participating
account with funds from other canada life participating life
insurance policies. premiums and other basic values for
these policies are calculated using long-term assumptions
for death claims, investment returns, expenses (including
taxes) and other relevant factors. the guaranteed premium,
guaranteed cash surrender values and guaranteed death
benefit are based on these assumptions and are in place
for the life of the policy.
earnings are generated in the participating account when
the actual experience for these factors is collectively more
favourable than the assumptions used when establishing
the guaranteed values. canada life may distribute a portion
of the earnings as declared by the Board of directors in
accordance with the policyowner dividend policy.
the amount available for distribution in any year will
vary upwards or downwards depending on the actual
and expected experience. the amount available is also
influenced by considerations such as:
■ the need to retain earnings as surplus to, among other
things:
– ensure financial strength and stability
– finance new business growth
– provide for transitions during periods of major change
– smooth fluctuations in experience■ practical considerations and limits
■ legal requirements and prevailing industry practices
the insurance companies act (ica) of canada contains
a number of provisions that govern how the participating
account is to be managed within a company with
shareholders.
participating life insurance | the canada life assurance company 3
4 participating life insurance | the canada life assurance company4
strength in canada lifeperformance and strength go hand-in-hand over the long
term. these factors are especially important when choosing
a participating life insurance policy because the net cost of
a participating life insurance policy depends on the
long-term performance of the participating account.
canada life has received very strong ratings on our
claims-paying ability and financial strength from the major
rating agencies.**
for more information on the management, performance
and strength of the canada life participating account,
see Participating life insurance financial facts
(form number 46-4758).
offering choice in participating productscanada life offers two participating life insurance
products: Wealth Achiever and Estate Achiever. Both
contain participating life insurance key features, but
emphasize these features differently to suit your clients’
financial needs and goals.
Wealth AchieverWealth Achiever provides higher short-term cash values
than Estate Achiever while still providing lifetime insurance
protection. it provides a choice of level basic premiums
payable for a maximum of 20 years, or to age 100. the
choice of premium-paying period impacts values such as
death benefit, dividend amounts and cash values.
Wealth Achiever may be suitable for individuals who:
■ are interested in accessing the cash value in
the early years
■ require premium flexibility to meet changing cash flows
from their business
■ are near retirement and want cash values they can
access in their lifetime**as rated by A.M. Best Company, Dominion Bond Rating Service, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s Ratings Services at the time of publication.
dividendsthe opportunity to earn policyowner dividends is unique
to participating life insurance policies. participating
policyowners share in the experience of the pool of
participating life insurance policies through the payment
of policyowner dividends.
dividends aren’t guaranteed and will fluctuate from
illustrated dividends, depending on future dividend scales.
the dividend scale, including dividends paid under it, is
affected by a number of variables such as investment
returns, mortality experience, expenses (including taxes)
and other relevant factors.
dividends credited to a policy have a cash value associated
with them. this cash value, once credited to the policy, is
vested and can’t be reduced or used in any way without a
client’s authorization, other than to pay premiums.
all premiums due or past due on the first policy anniversary
must be paid before the first-year dividend is credited.
policyowner dividends are determined according to canada
life’s dividend policy for participating policyowners, and are
declared by the Board of directors.*
policyowner dividends can provide clients with considerable
flexibility now and in the future.
policy cash valuethe cash value in a participating life insurance policy is
comprised of guaranteed basic cash values, as stated
in the policy, plus any cash value arising from dividends
(dividends aren’t guaranteed). all, or part, of the total cash
value, less any indebtedness, is paid to the policyowner if
he or she surrenders all or part of the policy.
*A copy of the Canada Life participating policyowner dividend policy is available on request. Please contact your regional marketing centre for more information.
participating life insurance | the canada life assurance company
Estate AchieverEstate Achiever provides higher long-term growth in total
cash values and death benefit than Wealth Achiever. it
provides a choice of basic level premiums payable for
a maximum of 20 years, or to age 100. the choice of
premium-paying period impacts values such as death
benefit, dividend amounts and cash values.
Estate Achiever may be suitable for individuals who are
interested in:
■ long-term cash value growth on a tax-advantaged basis
■ estate planning and enhancing estate values
■ accessing long-term cash value for retirement income
choice of premium-paying periodspay to age 100level basic premiums payable to a maximum of age 100.
max 20 level basic premiums payable for a guaranteed maximum
duration of 20 years.
policies may be eligible for premium offset prior to the
end of the premium-paying period depending on dividends
declared, whether policy loans have been taken and
other factors. refer to the premium offset section for
more details. the choice of premium-paying period impacts
values such as death benefit and cash values.
product detailsWealth Achiever and Estate AchieverWealth Achiever and Estate Achiever are participating
life insurance products with two guaranteed premium-
paying periods.
Issue agesthe issue age is based on the life insured’s age at his or
her nearest birthday.
pay to age 100■ Single life 0 - 85■ Joint first-to-die and joint last-to-die
– equivalent single ages (esa): 18 - 85
– each individual insured must be within the single
life issue ages.
max 20■ Single life 0 - 80■ Joint first-to-die and joint last-to-die
– equivalent single ages (esa): 18 - 80
– each individual insured must be within the single life issue ages.
Back-datinga policy may be back-dated up to 11 months from the
date of underwriting approval. all back-dated premiums
must be paid with interest. no other transactions can be
back-dated prior to the date the policy takes effect. the
incontestability and suicide exclusion periods will be in
effect from the later of the issue date of the policy and the
date the policy takes effect (note: if there is a later contract
amendment increasing coverage, the incontestability
and suicide provisions will restart, but for the increased
coverage only). any time a policy lapses and afterwards is
reinstated, the exclusion periods will recommence, from
the re-instatement date.
substandard livessubstandard lives may be accepted and the substandard
extra premium may be eligible for commissions –
see canada life’s commission schedule for details.
the guaranteed insurability rider and business growth
protection rider aren’t available for substandard lives.
5
6 participating life insurance | the canada life assurance company6
issue limits the minimum face amount is $25,000 for a single-life
coverage and $50,000 for joint first-to-die and joint
last-to-die coverage.
there is no preset maximum face amount; however, a
special quote is required if inforce coverage at canada life
on the prospective life insured exceeds $10 million.
for amounts over $10 million, please contact your regional
marketing centre for a special quote.
premium bands Premium band Coverage
Band 1: $25,000 to $99,999
Band 2: $100,000 to $249,999
Band 3: $250,000 to $999,999
Band 4: $1,000,000+
policy fee for pay to age 100 and max 20 there is an annual fee of $35. this fee, however, isn’t
charged separately, but is instead incorporated within
the yearly premium.
features
coverage options available■ single life
■ Joint first-to-die
■ Joint last-to-die, premiums payable by the policyowner
to first death
■ Joint last-to-die, premiums payable by the policyowner
to last death
single lifethe life of one individual is insured under the policy with
the death benefit payable on the death of the life insured.
Joint first-to-diethe lives of two individuals are insured under the policy.
the death benefit is payable when the first insured dies.
a joint first-to-die policy can be a cost-effective way to
provide income replacement, mortgage insurance, or
business insurance to fund a buy-sell agreement.
survivor benefitthe survivor benefit provides an option for the surviving
life insured on a joint first-to-die coverage to take out a
new participating life insurance policy without evidence
of insurability. Where the surviving life insured isn’t the
policyowner, and the policyowner doesn't exercise the
option, the survivor is entitled to exercise it and be the
owner of the new policy. the option must be exercised
within 60 days of the date of death of the first-to-die and
before the survivor has reached the insurance age 71.
under the survivor benefit, a second benefit may be
payable in accordance with the automatic temporary
coverage provision. if the survivor dies within 60 days of
the death of the first-to-die and hasn’t already exercised
the optional permanent coverage, and if the survivor
qualifies based on the criteria in the policy contract, an
amount equal to the face amount of the policy will be paid
as a second benefit. the amount of this second benefit
will be increased by any life insurance in effect under the
enhanced coverage option (eco) if this dividend option was
in effect at the first death.
7participating life insurance | the canada life assurance company 7
Joint last-to-diethe lives of two individuals are insured under the policy.
the total death benefit is payable only when the second
insured dies and therefore, generally costs considerably
less than two single-life policies.
there are two types of joint last-to-die policies available:
1. Premiums to first death
Basic premiums are payable by the premium payer to
the death of the first of the insureds. the additional
deposit option (ado) rider terminates when the death
of the first of the insureds occurs. additional payments
may be required after the death of the first of the
insureds to pay for eco shortfall amounts.
premiums to first death aren’t allowed if one of the life
insureds is declined. canada life reserves the right to
exclude premiums to first death from policies where
one or both of the joint applicants have been deemed a
substandard risk.
2. Premiums to last death
premiums are payable to the death of the last of the
insureds or esa 100, if earlier.
a joint last-to die policy shouldn’t be purchased if the
life insurance funds are required on the first death.
a joint last-to-die policy may be used to:
■ provide funds for the payment of taxes owing on the
death of the last-to-die of the lives insured
■ preserve a couple’s estate for their heirs or provide a
gift for a couple’s favourite charity
dividend optionscanada life offers participating policyowners a choice of
five dividend options. these options give policyowners
increased flexibility. if a dividend option isn’t indicated on
the application, dividends will be used to purchase paid-
up additions. dividend options can be changed upon the
policyowner’s written request, subject to limitations. a
change in dividend option may result in taxable income to
the policyowner. only one dividend option can be elected at
any given time.
paid-up additionsthe paid-up addition (pua) dividend option purchases
additional paid-up life insurance with each dividend that is
credited to the policy.
the key advantages of paid-up additions are:
■ coverage increases annually without evidence of insurability. this is generally a good way to offset the effect of inflation so the value of the policyowner’s coverage isn’t eroded over time.
■ dividends are used to pay for the additional paid-up life insurance coverage on a pre-tax basis. that is, dividends that are immediately applied to pay life insurance premiums within the same policy don’t attract income tax.
■ paid-up additions are eligible for their own dividends.
■ once paid-up additions are purchased, their value at purchase is guaranteed. the associated death benefit and cash value can only be reduced if the policyowner requests a partial surrender (e.g. premium offset or withdrawal) or, if the premium for the basic death benefit is unpaid, dividends may be used as specified in the policy to help keep the policy from lapsing (i.e.
automatic premium loan).
paid-up addition premiums will vary by:
■ smoking status■ substandard rating■ sex
■ attained age
the paid-up additions graph demonstrates how paid-up
life insurance coverage grows over time to supplement the
basic death benefit (i.e. face amount).
paid-up additions dividend option*
for the same premium, the paid-up additions dividend option provides higher early cash value and lower initial death benefit than the enhanced coverage option. it provides higher death benefit growth over the long term.
time
paid-up additionsTotal death benefit
Basic insurance
*These graphs are for illustrative purposes only. Actual proportions for PUA and ECO will vary by such factors as age, risk class, amount of life insurance, out-of-pocket premium payments and declared dividends. This example is not complete without the Canada Life illustration including the cover page, reduced example and product features pages having the same date.
participating life insurance | the canada life assurance company
enhanced coverage option dividends are used to buy additional life insurance that is
a combination of paid-up additions and one-year term life
insurance. the enhanced coverage option (eco) offers five
key advantages:
■ premiums for the one-year term coverage are paid
by dividends using pre-tax dollars. dividends that are
immediately applied to pay life insurance premiums
within the same policy don't attract income tax.
■ a portion of the dividend is used to purchase paid-up
additions each year whenever dividends exceed the
eco one-year term cost. over time, the amount of term
life insurance may be completely replaced by paid-up
life insurance at which time the death benefit will begin
to increase.
■ Within limits at time of issue, the policyowner can
choose the amount of eco used to strike a balance
between affordability and future growth in cash value
and death benefit.
■ the eco one-year term life insurance can be converted
at the policyowner’s request to any permanent life
insurance policy, which is issued at the time of
conversion, prior to the policy anniversary nearest to
the life insured’s 65th birthday (or nearest to the joint
attained age for joint coverages), subject to certain
restrictions.
■ if the dividend scale is increased in the future,
the eco term may be replaced at a faster rate by
paid-up additions and vice versa if the dividend scale
is reduced.
eco term premiums will vary by:
■ smoking status■ substandard rating■ sex■ issue age and attained age
■ eco guarantee selected
enhanced coverage dividend option*
eco provides higher initial coverage for the same out-of-pocket premiums as the paid-up additions option.
enhanced coverage option guaranteesthe enhanced coverage option (eco) is available with a
10-year or lifetime guarantee of the enhancement amount.
the eco guarantee (for lifetime or 10 years) states that:
■ canada life will not ask for extra out-of-pocket
payments to cover any premium shortfall if, during
the guarantee period, current dividends are unable to
completely cover the entire cost of the eco one-year
term life insurance cost.
■ the enhancement amount will not be reduced during
the guarantee period.
certain options available to the policyowner, if elected,
cause the eco guarantee to cease or be forfeited. for
example, if dividends are used to support premium offset
or if they’re withdrawn from the policy, the eco guarantee
ceases. a policy loan doesn’t affect the eco guarantee.
if dividends are insufficient to pay for the eco term
coverage and the guarantee period has expired, additional
out-of-pocket premium payments may be required to pay for
any shortfall, or the policyowner may choose to have his or
her eco coverage reduced.
time
Basic insurance
eco
paid-up additionsone-year term life insurance
Total death benefit
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9participating life insurance | the canada life assurance company 9
premium reductiondividends are used to reduce the out-of-pocket premiums
for the current policy year. a billing notice is sent for any
remaining amount that the dividend doesn’t cover. if the
annual dividend credited exceeds the premium, the excess
may be applied to one of the following dividend options
of the policyowners choice -- paid-up additions, cash
accumulation or cash payment. dividends paid in cash,
left to accumulate or applied to pay premiums for non-life
insurance riders may be subject to taxation.
cash accumulationdividends can be left to accumulate with interest. the
interest rate is adjusted from time to time. interest is
credited on each policy anniversary. the accumulated
amount is added to the death benefit. all or a portion of
the annual dividend may be taxable in later policy years.
dividends paid reduce the policy’s adjusted cost basis
(acB) and are subject to tax when the acB is zero. any
interest earned on dividends on deposit is subject to tax.
clients may withdraw some or the entire accumulated
amount at any time
cash paymentdividends are paid to the policyowner each year. policy
cash values equal the contractually guaranteed cash
values with this option, and the death benefit remains
level. cash dividends reduce the policy acB and are subject
to tax once the policy’s acB is zero.
premium offsetafter out-of-pocket premiums have been paid for a number
of years, premiums may be able to be paid by current
dividends and/or withdrawal from any cash accumulations
or surrender of any paid-up additions.
since premium offset is dependent on dividends that are
credited to and retained in the policy over time (but aren’t
guaranteed), increases and decreases in the amount of
dividends credited over the life of the policy will affect the
availability of premium offset. such increases or decreases
may affect the length of time that the premium may be
paid in whole or in part by dividends. the rate of growth
in both the death benefit and cash value is reduced when
premiums are paid by using premium offset rather than by
out-of-pocket payments.
premium offset is dependent on dividends which aren’t
guaranteed. thus, the premium offset date shown on
illustrations isn’t guaranteed. it’s possible that a policy will
never be eligible for premium offset or that it will become
eligible and subsequently cease to be eligible. eligibility
for premium offset will be determined based on current
administrative rules at the time of application for premium
offset.
there are a number of events affecting the date that
premium offset will be available, such as:
■ increases or decreases in the dividend scale
■ Withdrawal of cash accumulations
■ surrender of any paid-up additions
■ changing a dividend option
■ adding a rider or supplementary benefit
■ changes to eco term rates or pua purchase rates
■ taking a policy loan or increasing an existing policy loan
■ increases or decreases in the policy loan rate
■ increases or decreases in the interest rate on
accumulated dividends
policies with the enhanced coverage option (eco) will be
affected to a greater extent by these changes than policies
with other types of dividend options.
other features
cash valuesa policy’s total cash value is comprised of two components:
1. guaranteed basic cash values, which are specified in
your client’s contract.
■ for Wealth Achiever, the guaranteed cash value is
available starting in year one.
■ for Estate Achiever, the guaranteed cash value is
available by the seventh policy year.
2. cash value arising from dividends which aren’t
guaranteed. these cash values accumulate in policies
with paid-up additions, eco and cash accumulation
dividend options.
participating life insurance | the canada life assurance company
accessing cash valuesPolicy loans
policy loans are available from canada life secured by
the cash value of the policy according to the terms of the
contract. interest on the policy loan will accrue from the
day the loan is taken at a rate set by canada life. if the
accrued interest at the end of a policy year isn't paid at
that time, canada life will add it to the amount of the loan.
the amount of the loan and the accrued interest are the
amounts owed on the policy.
policy loans aren’t taxable if the amount being borrowed is
less than the policy adjusted cost basis (acB) at that time.
policy loans reduce the policy acB. When the policy acB is
zero, any additional policy loans are taxable. repayments
of policy loans that were previously taxed are eligible for tax
deduction.
policyowners may borrow all or a part of the total loan
value. the total loan value at any time is the amount which
equals:
■ the loan value set out in the table of guaranteed values,
increased by any cash accumulations, plus 90 per
cent of the cash value of any existing paid-up additions
credited to the policy
less:
■ any amounts already owed on the policy, plus interest
which will have accrued (assuming no repayment of all
or part of the amounts owed on the policy)
this is all determined as at the next policy anniversary or, if
sooner, the next premium due date.
the policy will lapse if at any time, the accumulated loan
amount including any accrued interest exceeds the policy
cash value.
Withdrawalspolicyowners may withdraw cash values arising from policy
dividends without affecting the basic policy guarantees. if
the dividend option is puas or eco, the cash withdrawal
is made available by surrendering puas related to that
cash value. the death benefit will reduce by the puas
surrendered. any eco guarantee will be forfeited by
the withdrawal. Withdrawals of guaranteed cash values
require an amendment to the policy, which will revise the
guaranteed values in the policy including a reduction in
basic death benefit. any withdrawal of cash values, other
than cash accumulation dividends on deposit, may be
subject to taxation.
non-forfeiture optionsif a policyowner decides to discontinue paying premiums,
the policyowner may elect one of the following
non-forfeiture options to maintain coverage:
1. Automatic premium loan
if all or part of a premium due remains unpaid at
the end of the grace period, a premium loan will
automatically be taken from the policy cash value to pay
the premium owing.
2. Reduced paid-up life insurance
a policyowner can elect to use the total cash value of
the policy as a single premium to purchase participating
paid-up life insurance. the amount which can be
purchased will depend on the amount of cash value
available less any indebtedness, the insured’s age, sex,
smoking status and risk class. election of this option
may result in the loss of the tax-exempt status of the
policy which would result in the policyowner having to
report taxable income each year.
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participating life insurance | the canada life assurance company
3. Extended term life insurance
the extended term life insurance option (eti) allows you
to keep an amount of insurance under this policy inforce
for a period of time, without paying premiums which
would become due.
a policyowner may elect to purchase fully paid-up
term life insurance for a term, the length of which
will depend upon the amount of cash value available
less any indebtedness in the policy at the time this
option is exercised and the insured’s age, sex and
smoking status. the eti option isn’t available if any
insured was rated as shown on the policy details page.
election of this option may result in the loss of the tax-
exempt status of the policy, which would result in the
policyowner having to report income each year.
the amount of eti available will be equal to the face
amount of the policy plus puas, less any indebtedness
on the policy at the time of election.
4. Premium deferment
premium deferment allows the policyowner to maintain
the basic death benefit plus any coverage purchased by
the dividend option if a required basic premium isn’t
paid by the end of the 31-day grace period. Before the
grace period ends, the policyowner must request to
be placed on extended term life insurance. premium
deferment will automatically be applied when the
extended term life insurance is elected between the first
and fifth policy anniversaries, inclusive. any additional
benefits provided by riders aren’t included under the
extended term life insurance.
11
Before the next policy anniversary after the election of
this option (or before the extended term life insurance
period completes, if earlier), the policyowner must
restore the premium-paying status of the policy by
paying back the missed premium(s) with interest. the
policyowner may also restore any additional benefits
provided by riders at the same time premium payment
status is restored, but evidence of insurability may
be required. if the policy isn’t restored, it will remain
as extended term insurance and the policyowner
forfeits any ability to restore the premium-paying status
thereafter.
during the premium deferment period, charge-backs
will apply to both commissions and new business
credits. if the policy is restored, these charge-backs will
be reversed.
if the policy isn’t restored before the first policy
anniversary after election of this option, the policyowner
may lose the tax-exempt status of the policy.
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additional deposit option (ado) the additional deposit option (ado) enhances policy values
by allowing additional premium payments that purchase
additional paid-up life insurance over and above the puas
purchased by policy dividends. the dividend option on the
policy must be pua or eco to add ado to a policy.
for new policy issues, the ado is available on both
standard and substandard policies dated may 26, 2008
and later. ado is not available when flat extra premiums
are involved. the ado may increase the amount of
underwriting required before a policy is issued.
there are two versions of the ado:
riders and benefits
Wealth Achiever and Estate Achiever – riders and benefits availability Rider Issue ages –
max 20 policiesIssue ages - pay to age 100 policies
Single life Joint first-to-die
Joint last-to-die, premiums to last death
Joint last-to-die, premiums to first death
Additional deposit option (ADO) • Scheduled • Singlepremium
0-800-80
0-850-85
✓ ✓ ✓ ✓
Disabilitywaiverofpremium 18-55 18-55 ✓ ✓ ✗ ✗
Deathand/ordisabilitywaiverofpremium
18-55 18-55 ✓ ✗ ✗ ✗
Deathanddisabilitywaiverofpremium
18-55 18-55Not
applicableNot
applicable✓ Notapplicable
Guaranteedinsurabilityrider ✗ 0-45 ✓ ✗ ✗ ✗
Businessgrowthprotection ✗
10-yearoption:18 - 65 15-yearoption:18 - 60
✓ ✗ ✗ ✗
Accidentaldeathbenefit 0-65 0-65 ✓ ✗ ✗ ✗
Simply Preferred term life insurance rider –term10
✗ 15-75 ✓ ✗ ✗ ✗
Simply Preferred term life insurance rider –term20
✗ 15-65 ✓ ✗ ✗ ✗
Child’sterm`lifeinsurance ✗15 days – 17years
✓ ✗ ✗ ✗
participating life insurance | the canada life assurance company
1. Scheduled involves a regular premium payment
(monthly or annual) to purchase additional paid-up
life insurance.
2. Single premium involves a one-time purchase of
additional paid-up life insurance. this version will have a
higher maximum premium than the scheduled version.
scheduled and single premium ado premiums aren’t
waived under any benefit.
after the policy is issued, the rider may only be added on a
policy anniversary. the scheduled ado rider will terminate
when:
13participating life insurance | the canada life assurance company
■ a written request to terminate premiums for this rider is
received■ premium offset is elected■ the life insured reaches age 100 or the esa for a joint
policy reaches 100
– for max 20, ado can continue past the 20th
policy year.■ Waiver of premium comes into effect■ a dividend option other than paid-up additions or
enhanced coverage option is elected■ the first death occurs on a joint last-to-die policy with
premiums payable to first death ■ reduced paid-up coverage or extended term life
insurance is elected by the policyholder■ the policy is terminated■ premium payments for this rider have not been paid
for more than two consecutive years (more than 24
consecutive monthly payments)
Issue ages - Scheduled ADO
pay to age 100: 0-85
max 20: 0-80
Issue ages – Single premium ADO
pay to age 100: 0-85
max 20: 0-80
Issue amounts:
Minimum ADO premium: single premium: $1000
scheduled: $1000 annual premium mode
scheduled: $90 monthly premium mode (the
premium mode for ado must match
the base policy)
there may be situations where the illustration will allow you
to select an amount that is below the posted minimum. for
only those cases you can go below the posted minimum.
Maximum ADO premium:
this is the lower of either the preset maximum allowed by the tax exempt test or the amount for which the insured is underwritten (single or scheduled premium).
preset ado maximum premiums are designed to help
keep the policy exempt from accrual taxation based on
current canadian tax legislation. in some situations,
such as stopping and restarting ado premiums, dividend
withdrawals or dividend scale increases, a partial surrender
(or reduction in ado amount) may be necessary to help
maintain the tax exempt status and this could generate
taxable income.
the preset maximum scheduled ado premiums in Zoom
assume starting payments immediately and continuing
to age 100. the maximum for the single premium ado
assumes an immediate payment.
issue maximums will vary by:
■ smoking status■ substandard rating■ sex■ Issue age■ Basic policy ■ premium-paying period (max 20 or pay to age 100)■ rider version (single premium or scheduled with annual
or monthly)■ Basic death benefit ■ policy duration when the coverage is added to an
inforce policy
ado administrative feethe ado administrative fee is guaranteed not to increase
once the coverage is added. it is currently eight per cent
to cover compensation, premium tax and issue and
administration expenses. the administrative fee amount
may differ for ado coverage added at a later date.
for annual payments the cash value at the point where the
pua is purchased is 92 per cent of the premium paid.
for more details on ado, see the appendix section within
this guide.
start and stop of additional deposit option premiumsduring the deposit period illustrated, deposits can stop
and start again without underwriting up to and including
missing two consecutive annual payments or 24 monthly
(auto-pay) deposits. for example, a policyowner could pay
the scheduled year one ado premium, then miss years
two and three, and then resume payment of the scheduled
ado at the start of year four without providing new
evidence of insurability. if the policyowner does not resume
payment of scheduled deposits after having missed two
consecutive annual payments or 24 monthly deposits, the
rider will terminate. Note: If the deposits stop and restart, no FYC override will be paid on the restarted deposits, unless underwriting is involved. It is a continuation of an existing sale not a new sale for restarts within three years of the policy issue date, unless basic coverage is increased.
for more details on start and stop of ado premiums, see
the appendix section within this guide.
Simply Preferred term life insurance term 10 and 20 ridersThe Simply Preferred term life insurance riders provide
additional life insurance with a 10 and 20-year premium
renewal period. the term life insurance may be converted
to a permanent life insurance policy and is automatically
renewable at the end of each 10 or 20-year term period
until the policy anniversary nearest the insured’s 85th
birthday. these riders are available for all policies issued
after may 1999. the rider is available on single-life
coverages only.
Simply Preferred term life insurance riders allow for lower
premium rates for clients who demonstrate good health.
each rate class is based on specific measurable criteria.
preferred underwriting is available for face amounts of
$250,000 or more. for amounts less than $250,000 our
competitive gold or silver classes apply.
minimum issue amounts for Simply Preferred term life
insurance riders are $50,000.
Simply Preferred term life insurance term 10 to term 20 conversions
all or part of a term 10 rider may be converted to a term
20 policy, without evidence of insurability. the conversion
may be requested after the rider’s first anniversary and
prior to the earlier of rider’s fifth anniversary or the
anniversary nearest to the insured person’s 65th birthday,
whichever comes first. the new premiums are offered on
the insureds attained age, calculated on an age-nearest
basis and the first renewal occurs 20 years from the date
of conversion, regardless of how many years the term 10
coverage was inforce prior to the change.
a conversion is not available if the insured person is totally
disabled and the premiums on the term 10 rider are being
waived.
in a partial conversion, part of the term 10 rider can be
retained as a term 10 rider, provided all product minimums
are met for the remaining term 10 rider and the new term
20 policy.
For more information on our Simply Preferred term life insurance riders, refer to Canada Life’s Simply Preferred term life insurance advisor guide (558 CAN).
child’s term life insurance riderthe child’s term life insurance rider provides increasing
term life insurance coverage on all children in a family. on
each rider anniversary date, the coverage amount for the
child’s life insurance rider automatically increases by four
per cent of the original amount. the coverage ceases, with
respect to any particular child, on the rider anniversary
following that child’s 25th birthday, or the basic life insured
turns 65, whichever is earlier. however, the policyowner
can extend the coverage beyond the basic life insured’s
65th birthday, if any insured children are still under 25 at
that time. the policyowner must request this extension
within 60 days of the insured parent turning 65.
at the death of the basic life insured, the then existing
coverage on each child is automatically converted to paid-
up term life insurance, convertible to age 25.
the term “children” includes natural, adopted and
stepchildren of the basic life insured. after the rider is in
place, any additional children who are born to or legally
adopted by the life insured prior to his or her 60th birthday
are automatically included under the contract regardless
of health, at 15 days of age. the initial coverage in these
cases, for each added child, is the amount inforce on each
of the children already covered, at the time the additional
child is added.
the current child’s life insurance rider can be added to
policies issued after Jan. 1, 2007. the rider isn’t available
on max 20 policies.
Issue ages
Basic life insured: up to and including age 59
children insured under rider: 15 days up to and including
17 years of age (on an age nearest basis)
Issue limits
minimum: $10,000
maximum: $25,000
Substandard:
■ if the primary insured is rated over 200 per cent
(pre-astra rating), the rider is not available.
■ if any child born to or adopted by the primary life
insured at the time the rider is underwritten, is rated
over 200 per cent (pre-astra rating), they will be
excluded from the rider. additional children born to
or adopted by the life insured within the limitations
described above are automatically included under
the contract.
participating life insurance | the canada life assurance company14
participating life insurance | the canada life assurance company
Premiums
the annual premium is level and isn’t dependent on the
number of insured children. the premium-paying period is
the greater of 25 years or to the basic life insured’s age 65
as long as the coverage is in effect. the premium period
may be extended to additional years of coverage to protect
all children who haven’t yet reached age 25.
Conversion
the coverage on each child may be converted to a term
or permanent policy, either when the child turns 25, or
within 31 days of the insured child’s marriage, if the child
marries between their 21st and 25th birthday. the amount
of coverage converted may not be more than $250,000 of
new life insurance.
if the policyowner does not exercise the conversion option
by the insured child’s 25th birthday, the insured child will
be entitled to exercise it in place of the policyowner and
will be the owner of the new plan.
death and/or disability waiver of premium Basic premium payments (and some rider and benefit
premium payments) will be waived if the individual with the
waiver of premium coverage (waiver life insured) dies or
becomes completely disabled for six consecutive months
and continues to be disabled. for waiver of premium on
disability, the disability must occur before the waiver life
insured’s 60th birthday. for waiver of premium on death,
death must occur before the waiver life insured’s 65th
birthday. the policy benefits will continue as if the premium
had been paid by the premium payer.
Definition of disability
total disability is defined as a bodily injury or disease
resulting in the following:
a) during the first two years, the waiver life insured
is prevented from engaging in his or her regular
occupation for payment or profit
b) thereafter, the waiver life insured is prevented from
engaging in any occupation for which he or she is or can
become qualified by training, education or experience
there are several types of waiver of premium
riders available:
1. disability waiver of premium for the owner/insured of
single-life and joint first-to-die policies
2. death and/or disability waiver of premium for the payer
of single-life policies
3. disability and death waiver of premium for either or
both lives of joint last-to-die policies
Where the life insured is under age 16, the waiver of
premium terminates on the day before the anniversary
nearest the child’s 25th birthday or the waiver life insured’s
(payer’s) 60th birthday, whichever occurs first.
Where the owner-applicant (payer) is other than the basic
life insured, evidence of insurability will be required.
Issue age
18 - 55
Purchase limit
the maximum amount available is $50,000 of premium
including any amount applied for and inforce from other
companies.
guaranteed insurability riderthe guaranteed insurability rider (gir) allows the life
insured to purchase additional life insurance on specified
option dates without providing new medical evidence
of insurability. the additional life insurance may be any
permanent individual life insurance policy issued by
canada life at that time, with canada life’s consent.
premiums are based on the attained age, using the same
class of risk as the basic policy. this rider may be
included at the time of issue or added subsequently to
standard policies. it automatically ceases if the base
policy is terminated.
Issue age
0 - 45
Benefits and riders
■ if the base policy includes a waiver of premium rider,
then this rider may be added to the new policy without
medical evidence when a gir option is exercised.
however, if the insured is disabled due to a condition
that existed before exercising the gir option, the
premium for the new policy isn’t waived for by that
disability rider.
■ if the base policy is on the life of a minor and includes a
waiver of premium rider, canada life’s current practice
is the waiver of premium rider is automatically added to
the new policy when a gir option is exercised.
■ if the base policy does not include a premium waiver,
then when a gir option is exercised, a waiver of
premium rider may be added to the new policy with
satisfactory evidence of insurability.
15
1616 participating life insurance | the canada life assurance company
■ if the policy contains an accidental death benefit (adB)
rider on the life insured at the date of option, then a
similar rider may be included with the new insurance
plan or coverage. the amount of the new rider may not
exceed the new insurance amount applied for at the
date of option and must be within the maximum and
minimum amounts we would then allow for the new
plan or type of coverage.
■ if the base policy includes any other rider, it may be
added to the new policy with satisfactory evidence of
insurability.
Option amounts
When a gir option is exercised, the new policy face
amount must be within the following limits:
■ minimum: $25,000
■ maximum is the lesser of:
• two times the face amount (including term riders)
• $300,000■ the total life insurance amount of all gir optioned
new policies may not exceed the cumulative maximum
amount allowed under the gir option, as illustrated in
the table below
Issue limits
Original policy Cumulative maximum of issue age all options is the lesser of:
0-36 $1,200,000orfourtimesselectedoptionamount
37-39 $900,000orthreetimesselectedoptionamount
40-44 $600,000ortwotimesselectedoptionamount
45 $300,000oronetimesselectedoptionamount
Option dates
option dates are the policy anniversaries nearest the
insured’s following birthdays: 25, 28, 31, 34, 37, 40, 45 or
50. alternative option dates occur on the 91st day after:
■ marriage
■ Birth or adoption of a child
the alternative option dates negate the next available
option date. if a regular option date falls within the 90-day
period before the alternative option date, it’s cancelled. if
an option date doesn’t fall within the 90-day period and
the insured purchases additional life insurance on the
alternative option date, the next available option date is
cancelled. requests for other special option dates are
considered.
a written application must be received at canada life’s
head office within 60 days before or 31 days after the
option date. provided the insured is still living, coverage
takes effect upon the later of:
■ the option date
■ receipt by head office of the first premium no later than
31 days after the option date
Business growth protection (Bgp) rider (10 or 15-year option period)the business growth protection (Bgp) rider gives business
owners the option to purchase additional life insurance
coverage on the life insured at their attained age, without
providing additional medical evidence of insurability.
designed to make it easier for business owners to increase
their insurance when their share of the business grows in
value, this rider is available to businesses and to business
owners, whether shareholders, partners or sole proprietors,
for a business insurance need. the business must be
headquartered in canada, and have been operating at
least three consecutive years. operations in the u.s. will
be considered on a case-by-case basis.
the rider is available for:
■ single-life policies – only one Bgp rider is allowed per
business per policy. if the applicant has more than one
business, then a separate policy and Bgp rider must
be issued
■ Joint policies – available on a single-life basis
participating life insurance | the canada life assurance company
each rider can cover only one life and the life insured’s
interest in only one business
the rider is not available for substandard risks. the risk
must be standard before astra programs are applied.
Issue age
10-year option: 18 - 65
15-year option: 18 - 60
Issue requirements
the rider can be added at issue or after issue, subject to
medical evidence of insurability and financial underwriting
approval. at the time of underwriting, a rider option period
of 10 years or 15 years must be chosen.
in to the application, the business must provide:
■ financial statements for the company’s last three fiscal
years. these financial statements must be prepared
using generally accepted accounting principles (gaap)
by an accountant whose qualifications are acceptable to
canada life.
■ documentation acceptable to canada life establishing
the applicant’s current ownership interest in the
company
the valuation of the business and the life insured’s share
of it for the purposes of the rider will be as determined by
canada life using one of the following methods:
■ asset-based valuation – this method is used for
businesses with low earnings, where value is based
on the underlying assets. for example, a real estate
holding company or construction company.
■ earnings-based valuation – if the business has a stable
track record and predictable prospects, then this
method uses capitalized earnings or cash flow. if the
business has fluctuating earnings or cash flow, then this
method uses discounted earnings or cash flow.
canada life may accept alternative methods of valuation.
Cost
rates vary by the chosen option period (10 years or 15
years), age, sex, and smoker status. the premium for the
rider is not banded. the cost is a level rate per thousand of
the option amount.
the Bgp rider is priced on the basis that the premium
remains level even as options are exercised.
17
Option amount limits
issue minimum: $100,000
issue maximum: $2.5 million
financial underwriting by canada life will determine the
value of the business for an option date, based on the
financial statements provided from the last three fiscal
years (and other information as is deemed necessary).
Cumulative maximum amount
the cumulative maximum amount of new insurance
coverage that can be purchased under rider is the lesser
of:
■ $10 million
■ four times the rider’s option amount limit
■ the life insured’s ownership share of any increase in
the business value measured from the rider date
increases in the option amount, and therefore in the
cumulative maximum, are not permitted. decreases
in coverage are permitted, subject to the minimum
amounts of $100,000 and canada life’s then current
administrative rules.
Exercising an option
the option dates are on each rider coverage anniversary
from years one through 10, or years one through 15,
depending on the chosen option period. a letter of
notification is mailed 60 days in advance to remind the
policyowner of the option date. the option expires 31 days
after its option date.
options may be exercised to:
■ Buy a stand-alone term 10 policy: preferred rates are
not available on the new coverage
■ Buy a stand-alone term 20 policy: preferred rates are
not available on the new coverage
■ Buy a permanent life insurance policy (subject to
administrative rules at that time):
• if universal life insurance is elected for the new
coverage
– additional coverage can either be a stand-alone
policy or added as coverage on an exisiting policy.
• if participating life insurance is elected for new
coverage
– there are no dividend option restrictions on that new
insurance
– the additional deposit option (ado) is available,
subject to medical evidence for the ado amount.
an option may only be exercised if a the financial
underwriting review concludes that the value of the
insured’s share of the business has increased since the
rider date.
typically, the policyowner would apply for and be the
policyowner of the new insurance. if the policyowner
doesn’t wish to apply for new insurance, the rider
provisions allow the life insured to apply with the written
consent of the policyowner. in this situation, the life insured
would be the owner of any new insurance issued. this
may result in tax implications and the policyowner and life
insured should seek advice from their tax advisor.
the additional coverage which can be purchased at
a single option date cannot be less than the policy
minimums for the new insurance at that time. it also
cannot exceed any of the following:
■ the maximum option amount
■ the life insured’s ownership share of any increase in
the business value measured from the rider date,
minus all amounts of new insurance previously
purchased under the rider
■ the cumulative maximum amount, minus all amounts of
new insurance previously purchased under the rider.
Other riders and benefits
■ if the base policy for the Bgp rider includes a waiver of
premium rider, then at the policyowner’s request that
benefit can also be added to the new policy, without
medical evidence of insurability, provided the insured
person is not disabled at the time of opting. if the new
policy is Millennium universal life insurance, then the
premium waiver amount is the minimum premium or
target premium for the opted coverage, whichever is
bigger.
■ if the base policy contains an accidental death benefit
(adB) rider on the life insured at the date of option,
then at the policyowner’s request a similar rider may be
included with the new insurance, without evidence of
insurability, unless prohibited by the terms of the rider
or by our then current administrative rules. the amount
of the new rider may not exceed the new insurance
amount applied for at the option date and must be
within the maximum and minimum amounts we would
then allow for the new insurance policy or coverage.
■ if the base policy includes other riders, then they can
be added to the new policy with medical evidence of
insurability.
Termination
the rider will terminate automatically on the earliest of the
following dates:
■ date of the life insured’s death;
■ rider expiry date (the 10th or 15th anniversary of the
rider, as applicable);
■ date the cumulative maximum amount has been
reached;
■ date the remaining cumulative maximum amount is less
than any available product minimums; and
■ date the base policy to which this rider is attached is
fully converted, terminates, or lapses.
accidental death benefit the accidental death benefit (adB) provides additional
coverage if the death of the insured is caused by an
accident prior to the policy anniversary nearest the
insured’s age 70 and within 365 days following the
accident. the beneficiary will receive a death benefit
in addition to the original basic life insurance amount.
premiums for this benefit are required until the policy
anniversary nearest the insured’s age 70.
Issue age
0 - 65
Issue limits
the maximum amount available is the lesser of:
■ the basic death benefit plus any term rider
■ $400,000 of accidental death benefit applied for and
inforce with all insurance companies
18 participating life insurance | the canada life assurance company
participating life insurance | the canada life assurance company 19
appendixhow does ado affect the life insurance policy?that depends on the dividend option selected:Paid-up addition (PUA): additional premiums will increase the paid-up additional death benefit and related cash value. this can help provide an earlier premium offset date or help build funds for concepts that involve accessing your cash values.
Enhanced coverage option (ECO): additional premiums will buy paid-up additions and reduce the term portion of eco coverage faster. this will reduce term costs and can result in an earlier cross-over where the term is totally replaced by paid-up additions. the death benefit will then
begin to increase.
paying ado annually versus monthlypua is purchased when ado premiums are received. for
monthly payments, an eight per cent monthly premium
mode charge applies (same as for the base coverage).
in addition, an eight per cent ado administrative fee
is subtracted prior to purchasing the pua. the paid-up
additions are purchased throughout the year (each month),
however they receive the same annual dividend as paid-up
additions purchased at the beginning of the policy year.
annual ado payments made at the beginning of the year
buy pua using the beginning of the policy year purchase
rates. monthly ado payments buy pua as the money
is received using purchase rates that are interpolated
between the last and next policy anniversary. this means
the purchase rates increase over the course of the year.
for monthly ado payments, Zoom uses the purchase rates
at the next policy anniversary. this may result in actual
pua amounts which are equal or higher than those on the
sales illustration. paying monthly rather than annually will
generally result in slightly lower values.
underwriting requirements for ado:
When scheduled ado is added at issue:■ the annual premium (regardless of premium mode)
is used, less the eight per cent ado administration
fee, divided by the single premium purchase rate to
calculate the first year face amount. this face amount is
then multiplied by three and added to the base policy.
When single premium ado is added:■ use the same calculation as scheduled ado, except the
face amount is not increased (not multiplied by three).
after issue:
if it is determined that there is an additional amount to
be underwritten, it is added to the basic amount, and age
and amount requirements are determined based on that
amount (using canada life’s age and amount table).
■ the amount of single premium ado must be added to
the basic amount to determine the underwriting risk if
enhanced coverage option (eco) is not selected.
■ for scheduled ado with annual premiums, an amount
equal to three times the amount of coverage purchased
in the first year less the amount of enhanced coverage
(if selected) must be added to the initial risk. if this
amount is negative, there is no adjustment amount, so
the initial risk would be added to the eco amount to
determine the amount to be underwritten.
20 participating life insurance | the canada life assurance company20
stop and start of additional deposit option premiums:■ stopping and restarting premium payments without
underwriting is governed by the start and stop section
below
■ the ongoing scheduled ado policy year maximum
premium is governed by a review of the last three policy
years as outlined in that section below. if the start and
stop premium payment rules aren’t met, the policy year
maximum will be reset to zero.
ongoing scheduled ado policy year maximumif the highest amount paid during the preceding three
policy years is a partial payment, that amount becomes
the new maximum deposit amount without underwriting.
any portion of a scheduled deposit that is missed in a
particular year is forfeited and cannot be recovered in a
subsequent year without underwriting. this is true even
if the regular scheduled additional deposit is reduced by
the tax test in a particular year. Within a policy year the
policyholder can top up the ado premium to the maximum
for that policy year without underwriting.
Example:
$5000 scheduled ado
Monthly
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
90 90 90 90 90 90 90 90 90 90 90 90 90
Months
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
$0
Months
$0
$
90 90 90 90 90 90 90 90 90 90 90
Note: The $90 monthly payment can be made at the beginning of year four without underwriting.
Note: As 25 consecutive monthly payments were missed, additional ADO payments will require underwriting.
Examples:
stop and start of ado
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
$1000 $0 $0 $1000
Months
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months
Note: The $1000 annual payment can be made at the beginning of year four without underwriting.
Note: As three consecutive annual payments have been missed, additional ADO payments will require underwriting.
Annual
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0$0
$00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
$1000 $0 $0 $0
90$0 90$
0
0
0
$90$0
0
Note: Maximum ADO amount in the 5th policy year is $4000, the maximum paid in the previous three policy years.
$5000 $3000 $2500 $4000 $4000
Year 1 Year 2 Year 3 Year 4 Year 5
21
frequently asked questionsCan the policyowner elect scheduled monthly or annual ADO and be underwritten today and then commence payments at the start of year three? scheduled payments must start when the coverage is
approved. ado is not intended to be a form of guaranteed
insurability option at issue.
If the policyowner makes the first monthly payment and then doesn’t make any payments for the next 25 months can they restart payments without underwriting? at least one payment must be made within the last 25
months to avoid underwriting.
Could the policyowner just make one monthly payment every 24 months to continue to be eligible for the stop and start feature?
yes, however at the end of three years the policy year
maximum deposit amount would drop to the highest policy
year payment total during the last three policy years. a
reduced yearly maximum would still have to meet the ado
minimums in effect at the time, otherwise the ado will
terminate. underwriting would be required to restore the
original maximum.
Can the maximum premium change after the start of the policy year? yes. the policyowner can choose to reduce the maximum.
the maximum will be reduced to zero if there are no
payments made over the last 25 months and the rider will
terminate.
If the policyowner pays the full maximum premium in year one, zero in year two, zero in year three and misses the first monthly or annual premium payment for year four, how long will he have to make the payment before further payments under the rider are forfeited?in this case, the rider would be terminated on the missed
payment at the start of year four. the policyowner would
have to make an ado payment at the beginning of the
fourth policy year. if this isn’t done then the rider would be
terminated and new underwriting would be required for a
new rider.
If a scheduled monthly ADO rider is added mid-policy year how does the maximum work for that policy year?the coverage is added as at the last policy anniversary.
the policyowner can deposit up to the maximum
underwritten for within the first policy year. for example,
if $100 per month was elected and the first payment is at
the end of month 6 the policyowner could make a single
premium payment up to $600 so the total paid for the
policy year would be $1,200.
If the policyowner switches the premium mode for the policy to annual after issue from paying $90 monthly what would the maximum annual premium deposit be without underwriting? it would be reduced to the equivalent annual amount (i.e.
$1,000 for the policy year, which excludes the monthly
premium mode charge).
Can the policyowner have single premium and scheduled monthly ADO in effect at the same time? the policyowner can only illustrate one or the other in a
sales illustration. after issue, it may be possible to make a
single premium deposit while monthly ado payments are
in effect, provided there is tax exempt room, the minimum
amount is met and the underwriting is approved.
If cash is withdrawn from the policy, reducing the face amount (not a policy loan), will that affect the ADO rider?the ado rider would have to be retested to determine
whether the maximum has to be reduced to keep the policy
from failing the tax test. taking a policy loan won’t affect
the ado maximum.
participating life insurance | the canada life assurance company
22
taxationin this guide, all tax references are to canadian tax law, applicable to residents of canada. at the time of issue, policies are exempt from accrual taxation under canadian federal income tax legislation. this tax-exempt status is subject to change. for example, certain elections made by policyowners under their policies might cause the loss of tax-exempt status and make them subject to accrual taxation.
if policies become subject to accrual taxation, they can’t
be returned to their former tax-exempt status. policyowners
will be required to report income under their policies
each year.
a partial or complete disposition of a policy may result in
the policyowner having to report income for tax purposes.
a partial or complete disposition of a policy includes, but is
not limited to:
■ a policy loan that isn’t immediately applied to pay a premium under the policy
■ the partial or full surrender of the paid-up life insurance benefit, if any
■ the partial or full surrender of the contract for its cash value, or some portion thereof
■ transfer of the policy ownership
if the dividend option is cash payment or cash
accumulation, the crediting of any dividends may require
an amount to be included in the policyowner’s income
for tax purposes. interest credited to any accumulated
dividends is taxable.
new business illustrationWhile an illustration is a valuable tool for understanding
how a policy will work given a certain set of assumptions, it
isn’t an estimate or projection of future policy performance.
actual experience will differ from the assumptions used in
the illustrations; therefore, the non-guaranteed values in
the policy will differ from those illustrated.
canada life’s participating life insurance illustrations
provide an alternate scenario to show the sensitivity of the
non-guaranteed values to changes in the dividend scale.
this sensitivity is shown by a percentage reduction in the
interest component of the dividend.Note: the interest rate is only one component of the dividend scale calculation. Changes to any of the other components, such as mortality, expenses and taxes, will also affect the non-guaranteed values in the illustration. Guaranteed values and features are marked as such. Values and features that depend on dividends will vary from those illustrated and aren’t guaranteed.
canada life requires an illustration with the application
and a signed illustration before a policy is issued.
annual statement and inforce illustrationprior to each policy anniversary, participating policyowners
will receive a detailed annual statement. the statement
contains a summary of the death benefit and the cash
value, as well as the current dividend amount and how it
was credited to the policy.
you should provide your clients with an inforce illustration.
the inforce illustration provides a current and an alternate
scenario to show the sensitivity of non-guaranteed values
to changes in the dividend scale. values are shown based
on the current dividend scale, as well as an alternate scale
with a reduction in the interest component.
Wealth Achiever and Estate Achiever contractsWhile every effort has been made to ensure the accuracy
of the information in this guide at the date of printing,
some errors and omissions may occur. this guide is
intended to provide a general overview for information and
education purposes only. in the event of a discrepancy, the
terms of the Wealth Achiever or Estate Achiever contract
will prevail.
please contact your mga, branch office or regional
marketing centre for a sample contract. sample contracts
are also available in the Zoom illustration software. in
advising any client on his or her particular policy, the terms
of the actual policy must be consulted.
Assuris canada life is a member of assuris. assuris is a
not-for-profit corporation, funded by the life insurance
industry, that protects canadian policyowners against
loss of benefits due to the financial failure of a member
company. details about the extent of assuris’ protection
are available at www.assuris.ca or in its brochure, which
can be obtained from assuris by e-mailing [email protected]
or by calling 1-866-878-1225.
participating life insurance | the canada life assurance company
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participating life insurance | the canada life assurance company
Whom do i call for help? if you would like more information on how the Wealth Achiever or
Estate Achiever participating life insurance products can help you achieve
your business goals, please contact your mga, branch office or regional
marketing centre.
don’t forget to register for RepNet, canada life’s online marketing and
sales support website, which can be found at http://repnet1.canadalife.com.
Why canada life? the canada life assurance company provides insurance and wealth
management products and services. founded in 1847, canada life is
canada’s first domestic life insurance company.
twenty years prior to confederation, canada life began serving the needs
of the people who inhabited the land that would become canada.
over 150 years later, through offices from coast to coast, canada’s first
domestic life insurance company continues to provide canadians and
their families with financial protection. canada life is a subsidiary of
the great-West life assurance company and a member of the
power financial corporation group of companies.
visit our website at http://repnet1.canadalife.com.
Canada Life and design and “Helping people achieve more” are trademarks of The Canada Life Assurance Company. 560 CAN-2/10
British columbia ......................... 1-800-663-0413
Prairie ........................................... 1-888-578-8083
ontario ..........................................1-877-594-1100
Eastern .........................................1-800-361-0860
helping people achieve moretm
canada life regional marketing centres
canada life marketing consultants are available to assist with
marketing materials, professional advice and onsite case
consultation to help with marketing and sales.
for more information about our products, visit canada life™
RepNet (http://repnet1.canadalife.com) or contact your mga,
branch office or a canada life regional marketing centre
nearest you: