Insurance GICs advisor resources

  • Superflex (Insurance GIC) provides a simple and sensible way to grow and protect savings and plan a legacy. It provides security with a guaranteed rate of return, allowing for reliable growth and protection from volatile markets.

  • Income Master is an excellent choice as part of a Client's retirement income plan. Typically, Clients at this stage of life are looking to generate a steady stream of income and want the peace of mind that comes with a guaranteed interest investment.

Large case support

To obtain a large case rate quote (minimum $100,000) call 1-800-800-4SUN/4786 or email Large Case Guaranteed Investments@sunlife.com.

Overview

 

Superflex

Income Master

Registration 

  • Non-registered
  • Tax-Free Savings Account (TFSA)
  • Registered Retirement Savings Plan (RRSP)
  • Locked-in retirement account (LIRA)
  • Locked-in RSP
  • Restricted Locked-in Savings Plan (RLSP)
  • Registered Retirement Income Fund (RRIF),
  • Life Income Fund (LIF) or
  • Restricted Life Income Fund (RLIF).
Maximum issue age
  • Non-registered – Annuitant age 90
  • Tax-Free Savings Account (TFSA) – Owner/Annuitant age 90
  • RRSP, LIRA, LRSP, RLSP – Owner/Annuitant age 71
  • RRIF, LIF, RLIF – Owner/Annuitant age 90

Available interest plans

  • Compound
  • Annual
  • Monthly interest payout
  • Annual interest payout
  • A daily interest investment is available. Minimum amount $250 or $50 ($25 for juveniles) pre-authorized chequing (PAC).
  • The policy is only available with compound interest.
  • A daily interest investment is available

Guaranteed interest investments

  • Available terms are 90 days, 1 to 10 years.
  • Minimum investment is $1,000.
  • Auto Ladder investment option available
  • Interest rates are guaranteed for 45 days.
  • Rates will be interpolated for Client-selected end dates.
  • There are no up-front or annual fees. All money earns interest immediately.
  • Available terms are from 1 to 25 years.
  • Minimums are:
    • policy set up $5,000
    • $1,000 per guaranteed investment
  • Auto Ladder feature available
  • Interest rates are guaranteed for 45 days.
  • Rates will be interpolated for Client selected end dates.
  • There are no up-front or annual fees. All the money earns interest immediately.
Investment term maturity action

Automatically reinvests to the same term at current posted interest rates

Legacy planning 

  • Only one annuitant is permitted.
  • Successor annuitant option is available on non-registered policies.
  • With a preferred beneficiary designation, money may be exempt from seizure by creditors.
  • Deposit protection offered through Assuris
  • The owner and the annuitant must be the same person.
  • With a preferred beneficiary designation money may be exempt from seizure by creditors.
  • Deposit protection offered through Assuris
Deposit / premium protection

Deposit protection offered through Assuris

Income options 

  • Monthly and annual interest payout plans pay interest to the Client via electronic funds transfer (EFT).    
  • Income payment types include annual minimum, annual maximum (applicable to locked-in funds only), level, no income and interest only - subject to legislative minimum payment requirements.
  • Scheduled income payments are pro-rated across all investment terms.
  • Income frequency can be monthly, quarterly, semi-annually or annually.

Withdrawals

  • Market value adjustment (MVA) may apply if cashed before maturity.
  • Daily interest investment can be withdrawn at any time without an MVA.
  • Market value adjustment (MVA) may apply if cashed before maturity.
  • Daily interest investment can be withdrawn at any time without an MVA.
  • No MVA is applied to RRIF income payments. (they are not considered withdrawals)

Legacy settlement option

Available 

Term certain or single life annuity

Beneficiary designation 

Available for all account types

Interest and Investments

There are 3 interest types available.

Superflex accumulation annuity (Insurance GIC*):

All interest types are available and different interest types can all be selected within the same policy (i.e. compound interest and annual interest within the same policy.)

Regardless of the interest type selected, each product offers:

  • a daily interest investment.
  • guaranteed interest investments (minimum investment $1,000).

Interest types

1.  Compound interest

  • After interest is added to the investment each day, the combined sum continues to earn the same rate as the original principal for the duration of the guaranteed investment.
  • Interest is quoted on an effective annual basis.
  • Interest rates are expressed as a rate per year compounded annually.

2.  Monthly interest - not available for Income Master RRIF

  • Interest is calculated and added to the value of each guaranteed interest investment daily.
  • The amount of interest earned each month will equal 1/12th the annual interest. The annual interest equals the principal multiplied by the applicable interest rate.
  • If the client chooses to withdraw the interest on a monthly basis, electronic funds transfer (EFT) will be used to transfer the amount to the client's bank account.
  • For the Superflex accumulation annuity, monthly interest must be paid out each month to the client via EFT

3.  Annual interest - not available for Income Master RRIF

  • Interest is calculated and added to the value of each guaranteed interest investment daily.
  • Interest is quoted on an effective annual basis.
  • The final year of interest will automatically roll with the principal amount to a new investment with the same term. (unless alternate directions are received for maturity action)
  • Alternatively an annual interest payout investment can be selected where the annual interest (including the final year) will be paid out to the client each year.
  • If the client chooses to withdraw the interest on an annual basis, there are 2 payment options; cheque or EFT.

 

When guaranteed interest investments end

At maturity, the investment will automatically re-invest to the same term at current posted interest rates. Requests to reinvest differently or withdraw must be received prior to maturity.

* This product is an accumulation annuity issued by Sun Life Assurance Company of Canada.

Income Master - Interest

Money can be invested in:

  • a daily interest investment and/or
  • guaranteed interest investments (minimum investment $1,000)

All guaranteed interest investments within the Income Master RRIF are compound interest investments

Interest

  • Interest rates are expressed as a rate per year compounded annually.
  • Interest is calculated and added to the value of the investment each day; the combined sum continues to earn the same rate as the original principal for the duration of the guaranteed investment.

 

This document provides information about contributions to a Superflex Registered Retirement Savings Plans (RRSPs).

The RRSP dollar limit

A taxpayer's RRSP dollar limit is identified on the Notice of assessment or Notice of reassessment produced by the Canada Revenue Agency (CRA). This is referred to as the RRSP contribution room. You can view RRSP limits on the CRA website.

 

The unused RRSP contribution room

The unused RRSP contribution room measures the amount of RRSP contribution that can be carried forward for future years. It is used for three purposes:

  1. The unused RRSP contribution room determines the amount of RRSP contribution that may be made and deducted in a year allowing a taxpayer to defer the contribution made to their RRSPs. This is the carry forward function.
  2. The unused RRSP contribution room limits the improvements that may be made to the past service benefits of a taxpayer under a Registered Pension Plan (RPP). The RRSP contribution room allows a person to integrate benefits provided under RPPs with contributions to RRSPs. The taxpayer must ensure that their total tax-assisted saving does not exceed the overall allowable limits.
  3. The unused RRSP contribution room is used to determine if a taxpayer has over-contributed to their RRSPs.

 

To determine the amount of the unused RRSP contribution room, Pension Adjustment (PA) and Past Service Pension Adjustment (PSPA) have to be taken into consideration.

The formula to calculate the unused RRSP contribution room is calculated at the end of a year as:

  1. the unused RRSP contribution room at the end of the preceding tax year plus
  2. the lesser of the RRSP dollar limits for the year and 18% of earned income for the previous year minus
  3. all PAs for the previous year, the net PSPA and RRSP contributions deducted in the year.

 

While a taxpayer's unused RRSP contribution room will normally be positive or zero, it can also be negative meaning they may have over-contributed.

  • A negative amount may also result where an improvement to the taxpayer's past service benefits under an RPP results in a PSPA that is greater than the available contribution room.
  • A taxpayer is permitted to over-contribute to their RRSP for a lifetime amount of $2,000.00 (but this limit is increased to $8,000.00 if the over contribution was prior to February 27, 1995).

 

Example 1: No carry-forward of unused RRSP contribution room

Let's track an example through 2019 and 2020 and assume a taxpayer has earned income of $150,000. The 2019 RRSP dollar limit was $26,500 and the 2020 RRSP dollar limit was $27,230.

  • He is not a member of an Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP), therefore, no Pension Adjustment (PA) or Past Service Pension Adjustment (PSPA).
  • He makes the maximum contribution each year.
  • The unused deduction room at the end of 2019 is as follows:

The unused contribution at the end of 2018

0.00

+ The lesser of RRSP limit and 18% of previous year (2018) earned income +$26,500
- RRSP contribution deducted in 2019

-$26,500

Unused contribution room in 2019

  • The unused contribution room at the end of 2020 is as follows:

0.00

The unused contribution room at the end of 2019 0.00
+ The lesser of RRSP limit and 18% of earned income +$27,230
- RRSP contribution deducted in 2020 -$27,230
Unused contribution room in 2020 0.00

Example 2: Carry-forward of unused RRSP contribution room

Let's track another example through 2019 and 2020.

  • Assume a taxpayer has earned income of $150,000.
  • He is not a member of an RPP or DPSP, so he has no PA or PSPA.
  • He did not make contribution in 2019 therefore he can carry forward unused RRSP contribution room.
  • The unused contribution room at the end of 2019 and 2018 is as follows:

The unused contribution room at the end of 2018

0.00

+ the lesser of RRSP limit and 18% of earned income +$26,230
- RRSP contribution deducted in 2019

-$0.00

Unused contribution room in 2019

  • The unused contribution room at the end of 2020 is as follows: 

$26,230

The unused contribution room at the end of 2019 $26,230
+ The lesser of RRSP limit and 18% of earned income +$27,830
- RRSP contribution deducted in 2020 -$27,830
Unused contribution room in 2020 $26,230

Deductible contribution

The contributor to an RRSP may deduct the lesser of:

  1. All contributions paid on or before the day that is 60 days after the end of the year; and
  2. Their RRSP deduction limit for the year.

Client-selected end dates (CSED), available on all Sun Life guaranteed interest products available for sale, allow Clients to select the end dates on their guaranteed interest investments. Having this option increases our competitiveness by spreading out both the workload and flow of funds to invest. This, in turn, helps you attract more Clients and retain the ones you have. It can also spread your workload throughout the year.

 

Client-selected end dates give Clients flexibility and control over their money by allowing them to:

  • Plan future guaranteed interest investments to roll over at the same time as existing investments, so they can take advantage of large case rate enhancements.
  • Choose an end date that suits their needs (planning for an upcoming large purchase, a vacation etc.).
  • Choose any length of investment as follows:
    •     Superflex annuity - between 1 and 10 years
    •     Income Master - between 1 and 25 years

Interest rates will be interpolated. Interpolation is calculated to the nearest .01%.

The formula for interpolation is RATE = R1 + (#days/365) x (R2-R1) where:

  • R1 = rate for the next lowest even year
  • R2 = rate for the next highest even year
  • #days = number of days into the non-even year

There are 3 types of investment options available to Clients:

  • Daily interest investment
  • Guaranteed interest investments
  • Auto ladder

Daily interest investment

Interest

  • The interest rate can fluctuate daily.
  • Interest begins when we receive the application and the money.
  • Interest is calculated and credited daily to the balance of the investment.

Note: Rate enhancement levels do not apply to daily interest.

 

Advantages

  • Money can be deposited or withdrawn at any time.
  • The money is accessible with no market value adjustment (MVA).
  • Deposits can be made by:
    • Pre-authorized chequing (PAC)
    • cheque,
    • external transfer, or
    • any combination of these.
  • Once $1,000 has accumulated in the daily interest investment, a Client may choose to transfer the money into a guaranteed interest investment.
  • If a PAC is set up, the minimum PAC amount is $50 per month into the daily interest investment.
  • If the PAC is not set up, the minimum amount required to open a Superflex accumulation annuity is $250.
  • The minimum required to open an Income Master is $5,000.

Note: The minimum opening investment should always be paid with application except in the case of an external transfer.

 

Guaranteed interest investments

  • The interest rate is guaranteed for a specific term.
  • The minimum amount required for a guaranteed investment (compound and annual interest) in a Superflex is $1,000.
  • The minimum amount required for a guaranteed investment (annual and monthly interest payout) in a Superflex is $5,000
  • Interest is calculated from the date the guaranteed interest investment is established.

 

Advantages

Superflex and Income Master allows the Client to have an unlimited amount of guaranteed interest investments in one policy in any of the terms and interest types available.

 

The interest rate is guaranteed for any period between:

  • 90 days for Superflex
  • 1 and 10 years for Superflex
  • 1 and 25 years for Income Master

 

This means the Client can select:

  • A certain term (e.g. 19 months, 3 years, etc.) or
  • If a certain term is selected, the investment will mature at the end of the selected number of years/months.
  • A specific end date (e.g. October 15, 2021, July 29, 2022, etc.) If a specific end date is selected, the investment will mature on that specific date.

Money can be withdrawn before the end of a guaranteed interest investment, but may have a market value adjustment (MVA).

Note: An MVA can be significant enough that it decreases the value to less than the original investment amount.

 

At the end of the Superflex / Income Master accumulation annuity guaranteed interest investment term, the Client can:

  • withdraw their money,
  • reinvest their money in a new guaranteed interest investment at the then current interest rate for the selected term,
  • leave their money in the daily interest investment.

The money automatically reinvests based on the posted rate available for that product for the same term, unless investment instructions are provided before the investment matures.

Note: Prior to maturity, notices will be mailed to Clients and maturity instructions can be provided up to 45 days before the investment matures.

 

Auto ladder

  • The interest rate is guaranteed for each specific term.
  • The minimum amount required to establish an auto ladder is $5,000.
  • The investment is split equally between each of the 1 to 5 year guaranteed interest investment terms.
  • Interest is calculated from the date the auto ladder is established.
  • The Client will have five guaranteed interest investments all within the same plan.
  • As each guaranteed interest investment term matures, the balance will be automatically invested in a new 5-year guaranteed interest investment at the then current posted interest rate.
  • A confirmation notice will automatically be sent out when the new guaranteed interest investment has been made.

 

Frequently asked questions (FAQs) - auto-ladder investment strategy

What is the laddering strategy?

Laddering is a technique to manage the ups and downs of interest rates. A deposit is split equally between five guaranteed investments ranging from one-year to five-year terms. As each guaranteed investment matures, it is reinvested in another five-year term.

This technique ensures the Client has one investment maturing each year minimizing the interest rate risk and allowing for some liquidity in their portfolio.

What is the auto ladder investment option?

The auto ladder option allows Clients to automatically apply a laddering strategy to their investments.

Their deposit will be split into five guaranteed interest investments and as each investment matures, it will be automatically invested in a new five-year investment at the applicable rate as of the maturity date.

How do I request the auto ladder investment option?

The applications have been updated to include this option. Simply indicate AL in the guaranteed period or end date column and the rate column in the Investment Direction section of the application.

What rates will my Client receive?

The rates applied will be the rates in effect as of the application signed date if the committed rate box ‘yes' is selected and the application is faxed to Sun Life on the same date the application is signed. If the rate is not committed or faxed to our office the rates applied will be the rates in effect on the date the funds are received at Sun Life. Upon renewal, the investments will receive the five year rate in effect at the maturity date.

We "interpolate" interest rates for investment terms that lie between whole years. This interpolation will be calculated to the nearest .01%.

The formula for the interpolation is RATE = R1 + (#days/365) x (R2-R1) where:

  • R1 = rate for the next lowest even year
  • R2 = rate for the next highest even year
  • #days = number of days into the non-even year

E.g. If the 2-year rate is 5% and the 3-year rate is 6%, then the rate for 2 years and 8 days (time between start date and end date) is: 5% + (8/365) x (6% - 5%) = 5.021918% so that client would receive 5.02%.

 

Note: For short-term GIC products, #days/365 in the above formula becomes the #days beyond the lower term for which a rate is stated divided by the number of days between the lower and higher terms (e.g. for a 35-day rate, use (35-30)/(60-30)).

The method of determining the start date remains unchanged:

  • with fund commitment - date of commitment
  • without fund commitment - date funds and/or forms are received at head office

General information

  • A client may request an adhoc withdrawal at any time, subject to a Market Value Adjustment (MVA) if processed prior to an investment maturity date.
    • Note: An MVA can be significant enough that it decreases the value to less than the original investment amount.
  • The minimum unscheduled withdrawal amount is $500.
  • There is no MVA when taking a withdrawal from the Daily Interest Investment.

For Income Master RRIF, the first unscheduled withdrawal, of up to 10% (of the January 1st policy value), each calendar year is not subject to MVA. However, this withdrawal cannot be an amount that, given the income schedule, will deplete the investment prior to maturity. Additional withdrawals (after the 10% MVA free portion) are subject to an MVA.

How market value adjustments (MVAs) work

Financial institutions offering guaranteed interest investments are at an investment risk and suffer expense losses on early termination of these investments. Therefore, the market value adjustments are necessary to ensure money is not lost.

A Market Value Adjustment will occur whenever funds are withdrawn from a guaranteed interest investment prior to its maturity date. This may decrease the value to less than the original investment amount.

The MVA definition for Superflex/Income Master policies can be found on the back of the application.

The MVA definition for Sun GIC Max/GIC contracts can be found on the back of the application.

Are market value adjustments unique to Sun Life?

No. Adjustments of various sorts are used by all financial institutions. It's important Clients understand  MVAs can be significant.

How can you best deal with market value adjustments?

Don't let Clients put money into a guaranteed interest investment for a period extending beyond the foreseeable time the money will be needed.

Note: Money in the Daily Interest Investment can be withdrawn at anytime with no MVA.

How are market value adjustments calculated?

There are three parts to our market value adjustment:

  1. Investment adjustment to offset our investment risk
  2. Expense adjustment to recover upfront expenses
  3. Expense adjustment to account for liquidity risk

1. Investment adjustment to offset our investment risk

The objective of the investment adjustment is to compensate for current interest rates being different than the contract rate. The net result is the Client neither gains nor loses from a withdrawal which is subsequently reinvested at current rates. We must cash in the investments we have made (bonds, mortgages) so the loss or gain which we incur because of the Client's request to withdraw funds from their guaranteed investment term is passed on to the Client .

2. Expense adjustment to recover upfront expenses

The expense adjustment is used to recover the expenses incurred when the contract was issued such as selling and administrative expenses. These expenses are normally recovered on an annual basis throughout the duration of the contract. If an early withdrawal of the funds is made, we must recoup those expenses which have not yet been recovered. This adjustment also covers the extra expenses involved in processing the early withdrawal.

3. Expense adjustment to account for Liquidity Risk

Liquidity risk arises whenever the liability holders (AA/GIC Clients) demand immediate cash for their financial claims. There are times when this demand for cash results in larger than normal withdrawals for a financial institution. As a consequence, the institution may have to sell some of their less liquid assets to meet the withdrawal demands of the liability holders.

Also, some assets with thin markets generate lower prices when the sale is immediate than if the financial institution had more time to negotiate the sale. Sun Life must account for this expense associated with liquidity risk.

The calculation of the market value involves:

  • projecting the expected cash flows (maturity value on the Compound Interest Plan but also payments on the Annual Interest Plan/Monthly Interest Plan/Registered Retirement Income Fund) at the contract rate
  • finding the discount rate, which reflects current interest rates plus the expense adjustment for upfront expenses and liquidity risk
  • discounting the expected cash flows at the discount rate to the cash value date

The expense adjustments represent the adjustment to the interest rates used in determining the cash value. They vary by level, reflecting the fact that our expenses are lower as a percent of the overall accumulated value for higher levels.

These expense levels can vary by product and are subject to change. They are based on levels at the time of withdrawal, not at the date of deposit.

Superflex accumulation annuity

  • $1,000 for guaranteed investments (compound and annual interest)
  • $5,000 for annual and monthly interest payout guaranteed investments
  • $250 for daily interest investment
  • Pre-authorized chequing (PAC) available into daily interest - $50 monthly (not available on LIRA or locked-in RRSP)

Income Master RRIF

  • Initial policy minimum $5,000
  • No pre-authorized chequing (PAC)
  • Payment minimum - If the full amount of the legislated minimum income has not been met, the balance will be paid out December 31 each year

Minimum age requirement to purchase insurance GICs

  • RRSP/ RRIF / TFSA: age 18
  • Non-registered: age 16 (in Quebec, age 18)

Jointly-owned Superflex accumulation annuities (applicable to new contracts issued December 2009 and forward)

  • Upon the death of an owner who is not the last surviving annuitant, the other joint owner will be considered to be the contingent owner (in Quebec, subrogated policyholder) of the deceased owner’s share of the contract, unless otherwise stated on the application.
  • A successor annuitant can be named. If a successor annuitant is named and is alive upon the death of the annuitant, the contract will continue after the death of the annuitant and no death benefit will be payable.

 

Important points to remember on jointly-owned accumulation annuities (Superflex):

  • Joint ownership is only permitted on non-registered policies.
  • Accumulation annuities require that an annuitant be named.
  • Laws that apply are the Insurance Acts in common-law provinces and the Civil Code in Quebec.
  • For clarity, a contingent owner should be named for each owner who is not also the annuitant.

Information: What happens at death?

If the annuitant dies and no successor annuitant has been named:

  • The policy terminates – regardless of who the owner is.
  • The surviving joint owner(s) does/do not take over ownership of this policy and is/are not entitled to the death claim proceeds (unless they are also the named beneficiary, or no beneficiary has been named). The named beneficiary(ies) receive the death claim proceeds.

If the annuitant dies and a successor annuitant has been named:

  • If the annuitant is one of the joint owners, his or her share of the ownership will be transferred to the contingent owner for that share and the successor annuitant will become the annuitant. If there is no contingent owner, the other joint owner will be considered to be the owner of the deceased owner's share.
  • New owner(s) can update successor annuitant and contingent owner and beneficiary if desired.
  • If the annuitant is not one of the joint owners, owners will remain unchanged and the successor annuitant will become the annuitant.
  • No death benefit is payable.

 

If the joint owner dies (and that joint owner is not the annuitant of the policy):

  • If a contingent owner who is the surviving joint owner has been named, the deceased joint owner's share of the policy would pass automatically to the surviving joint owner, resulting in the policy being owned 100% by the surviving owner.
  • If a contingent owner who was not one of the joint owners had been named, the deceased joint owner's share of the policy would pass automatically to the contingent owner, resulting in the policy being 50% owned by the surviving joint owner and 50% owned by the former contingent owner. (The owners may wish to appoint new contingent owners at this time.)
  • If no contingent owner has been named, the other joint owner will be considered to be the contingent owner (in Quebec, subrogated policyholder) of the deceased owner’s share of the contract, unless otherwise specified.

Please view this chart  for different scenarios that may apply to your Client.

Tax note

One of the taxable benefits of a jointly-owned policy, either on an Insurance GIC or a Trust GIC product, is that the tax burden can be shared by the owners. The tax slip is issued to both owners, and it is between the clients and CRA, who claims the interest. CRA states that if Mr. & Mrs. Smith each put in 50% of the principal, then each owner should claim 50%.

The following information is designed to clarify how Sun Life administers a successor owner on a TFSA policy. Even though some applications do not specifically ask for a successor owner to be named, a TFSA policy allows the spouse the option of becoming the successor owner upon death of the owner.

TFSA regulations stipulate that only the spouse of an owner can become the successor owner (the survivor) of the TFSA policy.

In order to ensure that the spouse has the option of becoming the owner they must be the only beneficiary named on the policy. At death they will have the option of taking the value in cash or becoming the full owner of the policy who can exercise all of the ownership rights including the right to designate a beneficiary.

Note: If the owner chose to pay the death benefit as income to a beneficiary (including a spouse) under the Legacy Settlement Option, the details above do not apply.  We will establish an income stream for the death benefit as instructed.

TFSA Quick Tips

  • When transferring money from another institution watch out for transaction fees. Clients may want to check with the relinquishing institution to confirm whether or not a fee will apply.
  • Make sure you complete a transfer and not a withdrawal. If a withdrawal is completed, the contribution room will only return in the following calendar year and any deposit in the current year will count as a new deposit. Be sure to use Transfer registered assets from another company to a registered product (E63)  when completing a TFSA transfer from another institution.
  • Clients are able to hold more than one account as long as they adhere to the annual contribution limit. So don't forget to ask before they make a contribution to make sure they will not exceed their allowable contribution room. 
  • Don't forget unused contribution room from previous years can be carried forward and used in future years.
  • Maximize household deposits - spouses can give each other money to contribute to each other's TFSA without affecting their contribution room.
  • In a province where the legal age to enter a contract is 19? The contribution room counts when they are 18, so they are eligible to deposit double in their first year.
  • If a spouse is named as the sole beneficiary of the TFSA the spouse has the option of becoming the sole survivor of the plan. This means that they become the planholder and may exercise all of the planholder rights including the right to designate a beneficiary.
  • The contribution to a TFSA must come from either owner. We will accept a cheque drawn on a joint bank account provided the TFSA owner is one of the bank account holders. For example, a client cannot deposit a cheque into his or her adult child's TFSA or a cheque drawn on an individual's company account cannot be deposited to their personal TFSA.

  • Money from a non-registered or TFSA Superflex may be used to purchase a payout annuity, provided all minimums and requirements are met.
  • Money from an RRSP Superflex may be transferred to an Income Master RRIF or used to purchase a payout annuity, provided all minimums and requirements are met..

The maturity date is established as follows:

Non-registered and TFSA plans

The maturity date for non-registered plans is December 31st of the year in which the annuitant reaches age 100.

RRSP plans

The maturity date is December 31st of the year in which the annuitant reaches age 71.

Provincial insurance legislation contains special rules regarding claims by creditors in respect of life insurance policies and annuity contracts.

Although many provinces have enacted laws protecting registered funds from seizure, no matter what type of contract the funds are in, insurance based products have the added benefit of potential creditor protection for non-registered and TFSA funds.

Benefits payable on death

Provincial insurance legislation states a death benefit payable to a named beneficiary does not form part of the estate of the policyholder and is not subject to claims of the creditors of the policyholder. However, in situations where a deceased has failed to adequately provide for the support of a dependant, most jurisdictions have dependants’ relief legislation which permit a court to award a dependant money from an insurance contract even though there is a named beneficiary.

The situation is not nearly as clear for death benefits paid under beneficiary designations not governed by insurance legislation (e.g. designations in a trust company or bank RRSP). Some court decisions have found that these death benefits are subject to the claim of the deceased's creditors while others have come to the opposite conclusion. In BC there is specific legislation stating that the death benefit of an RRSP goes to the beneficiary outside of the estate.

Protection while a policy is inforce

Provincial insurance legislation states that, if certain conditions are met, in-force life insurance policies and annuity contracts may not be seized by a policyholder's creditors. The conditions depend on the province involved:

  • In all provinces, except Quebec the beneficiary must be either:
    • the spouse (married or common-law), child, parent or grandparent of the life insured; or
    • designated irrevocably (no specific relationship is necessary); or
    • a preferred beneficiary under the pre-1962 legislation.

 

  • In Quebec the beneficiary must be either:
    • the spouse of the policyholder (married or civil union), or an ascendant or descendent of the policyholder, or
    • designated irrevocably (no specific relationship required).

* The designation of a spouse in Quebec is deemed to be irrevocable unless otherwise stipulated.

Note: There may be no protection if the annuitant is different from the policyholder and the policyholder is the beneficiary.

The Federal Bankruptcy and Insolvency Act specifies that property that's exempt from seizure under provincial law, is not available to be divided among creditors when a client is in a bankruptcy situation. Protection may come from insurance or pension law. You will find more details on pension protection below.

Other forms of creditor protection

There are a variety of other circumstances in which a life insurance policy or annuity contract may have even greater protection from creditors:

  • Both the contract and pension money payments are creditor protected under pension legislation.

Limitations of creditor protection

Creditor protection available under provincial insurance legislation can be lost in a variety of circumstances. Transfers or beneficiary designations made within certain time periods prior to bankruptcy or insolvency, while insolvent, or with the intention of defeating the claims of known creditors can result in the loss of creditor protection.

On the other hand there have been other recent cases, not involving bankruptcy, where the courts have upheld transfers of funds to protected annuity policies, made shortly before a court order was made declaring that the policyholder owed a large sum of money.

The law in this area is inconsistent and is continuing to evolve. It is very difficult for even a very experienced lawyer to give firm opinions as to whether a particular policy is protected or not.

Sun Life and its advisors should not make any specific representations that a certain policy will be exempt from seizure. This will depend on a number of factors totally outside of its knowledge and control. It can only make best efforts to ensure that the client's wishes will be carried out. Special care should be taken however where creditor protection is a concern for a client or when the advisor knows or suspects that the client may be experiencing financial difficulties, bankruptcy, insolvency, divorce or separation. We recommend that clients be referred to their own lawyers for specific legal advice.

Please refer to the chart below for an overview of protection from creditors:

Protection against creditors1 - June 2011

Province2

Pension Plan

LIF/ LIRA3as well as payout from those plans

All RRSPs/ RRIFs/ DPSPs

 

In Bankruptcy only7

All RRSPs/ RRIFs/ DPSPs

Annuities/ insurance products with life insurance companies

(i.e. seg funds)

Annuity with a trust company

(policy value)

Quebec Civil Code Trust

NS

Yes

No

Yes

If preferred beneficiary5

No

N/A

NB

Yes

No

Yes

If preferred beneficiary5

No

N/A

P.E.I.

Yes4

If preferred beneficiary5

Yes

If preferred beneficiary5

No

N/A

NFLD & Labrador

Yes

Yes

Yes

If preferred beneficiary5

No

N/A

QC

Yes

No

Yes

If preferred beneficiary5

If preferred beneficiary

Yes, if withdrawal is not allowed8

ON

Yes

No

Yes

If preferred beneficiary5

No

N/A

MB

Yes

Yes

Yes

If preferred beneficiary5

No

N/A

SK

Yes

No

Yes

If preferred beneficiary5

No

N/A

AB

Yes Yes, as of June 20096

Yes

If preferred beneficiary5

No

N/A

B.C.

Yes

Yes, as of Nov. 2008

 

Yes

If preferred beneficiary5

No

N/A

NWT

Yes

Non

Yes

If preferred beneficiary5

No

N/A

 

1

There are exceptions to non-seizability : garnishments by Federal Government, debt for family support, family patrimony, fraudulent acts with respect to bankruptcy.

2

For the Northwest Territories, Yukon & Nunavut  - Given that these jurisdictions do not currently have laws excluding RRSPs from seizure, it is quite likely that creditors will be able to seize these assets.

3

Except voluntary contributions in certain provinces.

4

Pension legislation still not in force, but if pension locked-in, the creditor cannot redeem the product.  As well, if we are in the presence of a “preferred” beneficiary, the plan is protected by the Designation of Beneficiaries under Benefit Plans Act.

5

Preferred beneficiary refers to: married spouse and common law spouse (except in Quebec: married spouse/civil union spouse), child, grandchild or parent (Quebec:  ascendant/descendant) and the irrevocable beneficiary Quebec – presumption of irrevocability if married spouse/civil union spouse).  In Alberta, “common law spouse” is referred to as “adult interdependent partner”.  Divorce does not have the same effects in all provinces.  For example, in Quebec, since 1982 the divorce makes null and void the beneficiary designation, but this is not the case in other provinces.  In other provinces, even though the divorce does not make null and void the beneficiary designation, it loses its preferred characteristic.  In Quebec, the relationship of the beneficiary is with the owner.  In other provinces: relationship is with life insured/annuitant.

6

The new legislation states that the exemptions for RRSPs, RRIFs and DPSPs do not apply to a "life insurance contract" (including an annuity) under the Alberta Insurance Act.  Insurance companies will continue to have creditor protection under the provincial insurance act.  The creditor protection under the Insurance Act is not as broad as this legislation.  CLHIA sought to have this section removed.  It appears that Alberta is not going to change the provision.

7

In all provinces/territories creditor protection does not apply to contributions made 12 months prior to bankruptcy.  Federal legislation enacted July 2008 (Bill C-12).

8

Bagnoud (Syndic de), J.E. 2005-978 (C.A.).

   
     

Introduction

A Registered Retirement Income Fund (RRIF) takes the savings of an RRSP and turns that into an income that is spread over the owner’s retirement. The owner is required to take a minimum amount of income each year. The money left in the policy remains invested.

The Income Master RRIF contains two separate account structures to which premiums may be directed - Income Builder and Income Provider.

 

Income Builder

Capital is deposited and maintained in the account, and is primarily intended for the continued accumulation of assets and tax deferral. For example, a Client may not need any retirement income from their RRIF. Once the annual minimum is paid, they may choose to invest their funds in one of the short term accounts in the Income Builder.

 

Income Provider

This account is more flexible; it can provide a customized payment stream that allows for the reduction of capital. Under this structure there are more investment options and flexibility in structuring retirement income. For example, a Client may choose to accumulate a portion of their funds in a Builder account and invest the remainder in a Provider account with an income stream that suits their needs today. As their income needs grow they will ultimately invest the funds from the Income Builder account into the Income Provider accounts.

 

Payments from RRIFs

Minimum Annual Payment

RRIF legislation requires that a minimum dollar amount must be withdrawn each year except for the year in which the plan is established. Prior to the owner’s 71st birthday, the minimum amount is a fraction of the fair market value of the RRIF at the beginning of the year (fair market value divided by 90 minus the age elected by the owner). At age 71 and after, the minimum amount is determined by multiplying the fair market value of the RRIF by a prescribed factor (based on the age of the owner or the owner’s spouse) at the beginning of the year.

On January 1, 1993 the Income Tax Act of Canada introduced new RRIF minimums. Prior to January 1, 1993 the funds in a RRIF would be depleted by age 90. However, the new minimums meant that a RRIF would now provide a lifetime minimum income payment. The minimum percentage for a qualifying RRIF (issued prior to January 1, 1993) differs from those for a RRIF purchased on or after January 1, 1993. The annual minimum for a qualifying RRIF is lower between the ages of 71 and 78. By age 78, the minimums for both RRIFs are exactly the same.

The owner can elect to use their spouse’s age at the beginning of a year to determine the minimum amount. Once this is elected, the RRIF owner cannot switch back to his or her own age at a later date. This choice can only be made at the time the RRIF is established.

Amounts in excess of the minimum may be withdrawn from the plan in any year, but the amounts are subject to withholding tax. There is no limit on the excess amount that can be withdrawn. Scheduled payments are not subject to a Market Value Adjustment (MVA).

If the minimum annual payment for that year has not been paid by the end of that year, we will make a payment that meets the required minimum from the policy value.

General investment and scheduled payment information

  Builder account Provider account
Account types
  • Daily interest
  • 1 year terms for annual interest
  • 2-10 year terms for compound interest
  • 1-35 year terms for compound interest
  • 5-35 year terms at issue
  • 1-4 year terms at renewal
Scheduled payment
  • Interest and principle are withdrawn proportionately from all of the investments
  • One schedule for all investments
  • Minimum payment per schedule is $50, payable by EFT or annually by cheque
  • Each investment has it’s own payment schedule
  • Minimum payment per schedule is $50, payable by EFT or annually by cheque
Scheduled payment types
  • Minimum annual payment
  • Interest payment
  • Specified level payment- amount must be between the minimum annual amount and the interest earned
  • No scheduled payment- payment is made at year end if required
  • Minimum annual payment
  • Interest payment
  • Specified level payment- may be indexed, may change maturity depending on interest rates at renewal
  • Specified payout period- may be indexed, may change at m ay change maturity depending on interest rates at renewal

Payment frequency

  • Monthly, quarterly, semi-annually or annually
  • Can select any date from the 1st to the 31st
  • Can request a change once per calendar year; it will not be effective until the following calendar year
  • Monthly, quarterly, semi-annually or annually
  • Can select any date from the 1st to the 31st
  • Can request a change once per calendar year; it will not be effective until the following calendar year
Changes to payment type
  • May be requested at any time and will be effective at the date of request; must fall within the 15% guideline described below
  • May be requested at any time and will be effective at renewal (if the change is to be effective immediately, the investment will be closed, an MVA applies, and a new investment will be opened)

Changes to payment amount

  • The payment can be increased or decreased 15% once per year provided it does not deplete the investment before maturity
  • The payment can be increased or decreased 15% once per year provided it does not deplete the investment before mat

Subsequent deposits

Subsequent deposits must come from registered money, subject to Sun Life Assurance Company of Canada limits, and may be added at any time. The minimum for a guaranteed investment into an Income Builder account is $1,000. The minimum investment into an Income Provider account is $10,000.

 

Interest

Interest rates are subject to change at any time as dictated by market conditions. The interest rate assigned to a guaranteed investment will be the rate in effect on the date of the rate guarantee. A rate guarantee may be used to guarantee the current interest rate for 45 days.

 

Policy value

The policy value on any date will be the total amount in all investments on that date, including accrued interest.

If the policy value is less than $500 at any time, we may pay the policy value to the client, subject to the MVA calculation, and thereby terminate the policy.

 

Investment maturities

Money in any guaranteed investment will renew automatically at the maturity date, into a new investment with the same term, except if the new term exceeds the age limits and/or payout period.

On or before the maturity, the owner may advise us to direct the funds into an investment of a different term. Instructions received after the maturity will incur an MVA.

 

Annuity benefit

At any time, the owner may elect to transfer all or part of their Income Master RRIF policy to a payout annuity, subject to an MVA if applicable.

The type of payout annuity chosen is subject to those available, based on tax status and the client’s age at the time of purchase.

 

Death benefit

The policy owner may choose for the spouse to receive continuation of annuity payments or a lump sum.

Designating a spouse to receive continuation of payments will make the spouse a successor annuitant. A successor annuitant takes over all ownership rights of the policy. They control the funds and may designate beneficiaries. However, there can be no changes in the life whose age has been designated to calculate the minimum annual payment. Upon entering a legal or common-law marriage, the successor annuitant may name the new spouse as successor annuitant to the policy.

Naming a spouse as the recipient of a lump sum enables the surviving spouse to transfer the lump sum to his/her RRSP or RRIF and have full control of the policy.

A person other than the spouse can only be named to receive a lump sum. A lump sum death benefit is the policy value at the date of death after the full minimum annual payment for the year of the death has been paid. The MVA calculation will not apply.

Upon death of all payees if no designation has been made, the death benefit will be paid to the estate of the last survivor of the payees. Designation of a payee on the death of the owner can be made either in the application or in the owner’s will.

Withdrawals and transfers

A Client may request an unscheduled payment at any time, subject to an MVA. Currently, the unscheduled payment minimum is $500.

The funds in an investment may be withdrawn and transferred to open a new investment at any time. The amount transferred must meet the minimum required to open the new investment. Any transfer is subject to an MVA.

The client MUST select either the Builder account or the specific Provider investment from which the withdrawal is to be made. All withdrawals from the Builder account will be withdrawn from both the interest and principal portion of each of the investments, in proportion to the value of that investment on the payment date.

Once per calendar year, withdrawals of up to 5% of the policy balance can be made and are not subject to MVA, provided the withdrawal does not deplete the investment prior to maturity.

Withdrawals may affect the selected payment schedule.

 

Market Value Adjustment (MVA)

If a guaranteed investment is terminated before maturity, the investment is subject to an MVA. No MVA applies to withdrawals from the Daily Interest Account. The amount of an MVA is the difference between the accumulated value and the cash surrender value.

One of the least understood concepts is the MVA. Understanding how and why the MVA works is something you can use effectively to your advantage.

 

Why are MVAs necessary?

Financial institutions offering guaranteed investments are at an investment risk and suffer expense losses on early termination of these investments. Therefore, MVAs are necessary to ensure money is not lost.

 

When do MVAs occur?

Whenever funds are surrendered from a guaranteed investment prior to the investment’s end date.

 

Are MVAs unique to Sun Life?

No. All financial institutions use adjustments of various sorts. It’s important your clients consider these adjustments when comparing the guaranteed investments of financial institutions.

 

How can you best deal with MVAs?

Don’t let your clients put money into a guaranteed investment for a period extending beyond the foreseeable time that money will be needed.

 

How are MVAs calculated?

There are three parts to our MVA:

 

Investment adjustment to offset our investment risk

The objective of the investment adjustment is to compensate for current interest rates being different than the contract rate. The net result is the client neither gains nor loses from a withdrawal which subsequently reinvested at current rates. We must cash in the investments we have made (bonds, mortgages) so the loss or gain that we incur as a result of the client’s request to withdraw funds from their policy is passed on to the client.

 

Expense adjustment to recover upfront expenses

The expense adjustment is used to recover the expenses incurred when the contract is issued such as selling and administrative expenses. These expenses are normally recovered on an annual basis throughout the duration of the contract. If an early withdrawal of the funds is made, we must recoup those expenses that have not yet been recovered. This adjustment also covers the extra expenses involved in processing the early withdrawal.

 

Expense adjustment to account for liquidity risk

Liquidity risk arises whenever the liability holders (Clients) demand immediate cash for their financial claims. There are times when this demand for cash results in larger than normal withdrawals for a financial institution. As a consequence, the institution may have to sell some of their less liquid assets to meet the withdrawal demands of the liability holders. Also, some assets with thin markets generate lower prices when the sale is immediate than if the financial institution had more time to negotiate the sale. Sun Life must account for this expense associated with liquidity risk. The expense adjustments represent the adjustment to the interest rates used in determining the cash value.

 

These expense adjustments can vary by product and are subject to change. They are based on levels at the time of withdrawal, not at the date of deposit.

 

The calculation of the market value involves:

  • projecting the expected cash flows (maturity value) at the contract rate
  • finding the discount rate, which reflects current interest rates plus the expense adjustment for upfront expenses and liquidity risk
  • calculating the cash surrender value by discounting the expected cash flows at the discount rate to the cash value date
  • the MVA is the difference between the accumulated value and the cash surrender value

Superflex is a deferred annuity designed to accumulate funds. It is considered an annuity because at some point in the life of the contract, the product is expected to turn into a payout type of investment.

Superflex was issued as a non-registered contract, a Registered Retirement Savings Plan (RRSP), a locked-in retirement account (LIRA) or a locked-in RRSP.

Investment types

There are 4 different investment types available:

  • compound interest, available for one to ten year terms
  • annual payout, available for one to ten year terms
  • monthly payout, available for one to ten year terms, and
  • daily interest.

 

Subsequent deposits

Older versions of the Superflex are closed to new sales however we do accept additional deposits to existing policies. The minimum amount for an investment is $1000 for compound interest plans and $5000 for annual or monthly payout plans. If at any time the policy value is less than $500, and we are not making regular payments, we will terminate the policy and forward the balance to the client. This does not apply to a LIRA, as the value may only be paid out according to the rules of the governing pension legislation.

 

Interest

Interest rates are subject to change at any time as dictated by market conditions. The interest rate assigned to a guaranteed investment will be the rate in effect on the date of the rate guarantee. A rate guarantee may be used to guarantee the current interest rate for 45 days.

 

Policy value

The policy value on any date will be the total amount in all investments on that date, including accrued interest.

 

Policy maturity date

The policy maturity date for RRSPs is December 31st in the year of the annuitant’s 71st birthday. The policy maturity date for non-registered contracts is December 31st in the year of the annuitant’s 90th* birthday. If we do not receive directions prior to the policy maturity date, we will apply RRSP funds to a RRIF or in the case of non-registered funds, apply the policy value to establish a payout annuity payable for 10 years, or until the death of the annuitant. If the amount of the monthly annuity payment is less than the amount of our minimum required annuity payment, we have the right to pay the total sum to the owner instead of applying the policy value to provide a payout annuity.

* This was updated via an amendment mailed to affected clients effective December 8, 2018 to age 100.

 

Investment maturities

Investments within a Superflex policy automatically renew to the same term at maturity. The owner may also advise us to direct the funds to an investment of a different type and/or term or to the daily interest investment on or before the maturity date.

 

Death benefit

Upon the death of the annuitant and receipt of satisfactory proof, we will pay the policy value in effect on the date of death. We will make the payment to the beneficiary listed on the policy records, or to the estate if no beneficiary is listed. The death benefit is not subject to an MVA calculation. If the policy is a LIRA or locked-in RRSP, we will pay the policy value in accordance with the applicable pension legislation.

 

Withdrawals and transfers

All or part of an investment may be withdrawn at any time, except for a LIRA or Locked-in RRSP. The minimum withdrawal is $500 and an MVA calculation will apply. The client must specify from which investment we are to take the withdrawal. If the remaining investment balance does not meet the minimum, it will be transferred to the daily interest investment.

 

Market value adjustment (MVA)

If a guaranteed interest investment is terminated before its end date, the investment is subject to MVA. No MVA applies to withdrawals from the Daily Interest Investment. The amount of a MVA is the difference between the accumulated value and the cash surrender value.

One of the least understood concepts is the MVA. Understanding how and why the MVA works is something you can use effectively to your advantage.

Why are MVAs necessary?

Financial institutions offering guaranteed interest investments are at an investment risk and suffer expense losses on early termination of these investments. Therefore, MVAs are necessary to ensure money is not lost.

When do MVAs occur?

Anytime funds are surrendered from a guaranteed interest investment prior to the investment’s end date.

Are MVAs unique to Sun Life?

No. All financial institutions use adjustments of various sorts. It’s important your clients compare these adjustments when comparing the guaranteed interest investments of financial institutions.

How can you best deal with MVAs?

Don’t let your clients put money into a guaranteed interest investment for a period extending beyond the foreseeable time that money will be needed.

How are MVAs calculated?

There are 3 parts to our MVA:

1.  Investment adjustment to offset our investment risk

The objective of the investment adjustment is to compensate for current interest rates being different than the contract rate. The net result is the client neither gains nor loses from a withdrawal which subsequently is reinvested at current rates. We must cash in the investments we have made (bonds, mortgages) so the loss or gain that we incur as a result of the client’s request to withdraw funds from their policy is passed on to the policyholder.

2.  Expense adjustment to recover upfront expenses

The expense adjustment is used to recover the expenses incurred when the contract is issued such as selling and administrative expenses. These expenses are normally recovered on an annual basis throughout the duration of the contract. If an early withdrawal of the funds is made, we must recoup those expenses that have not yet been recovered. This adjustment also covers the extra expenses involved in processing the early withdrawal.

3.  Expense adjustment to account for liquidity risk

Liquidity risk arises whenever the liability holders (clients) demand immediate cash for their financial claims. There are times when this demand for cash results in larger than normal withdrawals for a financial institution. As a consequence, the institution may have to sell some of their less liquid assets to meet the withdrawal demands of the liability holders. Also, some assets with thin markets generate lower prices when the sale is immediate than if the financial institution had more time to negotiate the sale. Sun Life must account for this expense associated with liquidity risk.

The expense adjustments represent the adjustment to the interest rates used in determining the cash value. These expense adjustments can vary by product and are subject to change. They are based on levels at the time of withdrawal, not at the date of deposit.

The calculation of the market value involves:

  • projecting the expected cash flows (maturity value) at the contract rate
  • finding the discount rate, which reflects current interest rates plus the expense adjustment for upfront expenses and liquidity risk
  • calculating the cash surrender value by discounting the expected cash flows at the discount rate to the cash value date
  • the MVA is the difference between the accumulated value and the cash surrender value.

Statements

Superflex statements are issued annually in January for the previous year.

Maturity notices will be sent to the client 45 days in advance of a maturity. Confirmation statements will be sent to the client to confirm a new deposit or reinvestment of a matured investment.

Tax and information on death

Death benefit before the maturity date:

  • Pay the accumulated value as of the date of death.
  • Legacy Settlement Option (LSO) can be chosen to provide income to a beneficiary as an alternative to the death benefit being paid as a lump sum.
  • If the policy is a LIRA or locked-in RRSP, we will pay the policy value in accordance with the applicable pension legislation.

Note: On the death of the annuitant, the beneficiary of a Superflex may choose to maintain the guaranteed interest investments that existed on the date of death, without a market value adjustment unless an LSO is on file for the beneficiary.

Maintaining the investment without a market value adjustment

The beneficiary transfers the investments to their own new or existing Superflex by signing and completing part C of form Beneficiary Claim Statement - E84

Note: If the owner chose to pay the death benefit as income to a beneficiary (including a spouse) under the Legacy Settlement Option and there is no successor annuitant, the details below do not apply.  We will establish an income stream for the death benefit as instructed.

For these claims form E5051 - Beneficiary claim statement for Insurance GICs* and Trust GICs must be completed.

If there are multiple beneficiaries

Multiple beneficiaries may also transfer their portion intact into new or existing individual non-registered Superflex policies provided the transferred amounts meet product minimums

If a successor annuitant exists (not applicable to TFSA)

At death of the annuitant the named successor annuitant will replace the deceased annuitant on the contract, the contract will continue and no death benefit will be payable.

 

Superflex TFSA

Spouse named as beneficiary

If a spouse is named as the sole beneficiary they have the option of assuming ownership as the successor holder. This means that they become the planholder and may exercise all of the planholder rights including the right to designate a beneficiary. In this case investment growth and interest earned after the date of death continue to be tax-free.

If the spouse chooses not to become the planholder they may choose to transfer any or all of the assets to their own TFSA. This transfer will not affect their contribution room as long as they elect this option before the end of the year following the year of death. They must complete and file a government prescribed form RC240 - Designating an Exempt Contribution to a Survivor Tax-Free Saving Account (TFSA) within 30 days of the transfer of funds to their TFSA plan.

If they do not wish to transfer the assets or become the planholder, the proceeds can be paid to them in cash. Any interest earned after the date of death is taxable to the surviving spouse in this case.

 

Non-spouse beneficiary

If the spouse is not the sole beneficiary, the accumulated value of the policy on the date of death is paid to the beneficiary(ies) in a lump sum. Any interest earned or investment growth after the date of death is taxable to the beneficiary(ies).

Death benefit before the maturity date:

  • Pay the accumulated value, date of death
  • Legacy Settlement Option (LSO) can be chosen to provide income to a beneficiary as an alternative to the death benefit  being paid as a lump sum.
  • If the policy is a Life Income Fund (LIF) or Restricted Life Income Fund (RLIF), we will pay the policy value in accordance with  the applicable pension legislation.

Note: If the owner chose to pay the death benefit as income to a beneficiary (including a spouse) under the Legacy Settlement Option, the details within each section below do not apply. We will establish an income stream for the death benefit as instructed

 

If the beneficiary is the spouse as sole beneficiary:

  • Purchase a Life, Joint Life or Term Certain (to age 90) payout annuity
  • Transfer on a tax-sheltered basis to an Registered Retirement Savings Plan (RRSP) (available until December 31 of the year in which age 71 is attained by the beneficiary)
  • Transfer on a tax-sheltered basis to another Income Master Registered Retirement Income Fund (RRIF):
    • Transfers to a contract in the name of the beneficiary must be done by December 31st of the year following the year of death.
  • Assume ownership of the RRIF and continue to receive payments. As owner the spouse may exercise all rights, including the right to designate a beneficiary.

If the beneficiary is any beneficiary other than spouse as sole beneficiary (includes estate):

  • Receive the value (as above) at the date of death, with no tax deducted at source.
    • the value at date of death will be taxed to the deceased
    • any increase in value from date of death to date of settlement will be taxed to the beneficiary

Note: A mentally/physically dependent child/grandchild may transfer to an RRSP, RRIF or purchase an annuity upon receiving Canada Revenue Agency's confirmation of the dependent status.

Advisor support materials

PDF Title and description Last update Ordering
810-5203 "Borrowing an Age" Strategy
Depending on the product your Client(s) wish to purchase, your older Clients (usually over age 90) can name a younger individual as annuitant.
December 2022

PDF only - Please print the PDF

810-5037 Simplify legacy planning – Advisor brochure April 2022  

810-3571

Advisor guide - Sun Guaranteed Investments (23 page guide)
This guide provides product and administration details on the entire suite of guaranteed products offered by Sun Life including Insurance GICs (Superflex/Income Master) and more traditional Trust GICs (Sun GIC Max/SLF Trust GIC). This guide is for advisors' use only.

December 2022

PDF only - Please print the PDF

810-3575

Sun Guaranteed Investments - A comparison (4 page fact sheet)
Provides a brief overview of 3 of the guaranteed investment options available from Sun Life: Superflex accumulation annuity, Sun GIC Max, and SLF Trust GIC.

April 2021

PDF only - Please print the PDF

860-3575

永明保證投資 Sun Guaranteed Investments - A comparison (4 page fact sheet)

Traditional Chinese.

Provides a brief overview of 3 of the guaranteed investment options available from Sun Life: Superflex accumulation annuity, Sun GIC Max, and SLF Trust GIC.

December 2022 Order
870-3575

永明保障投资 Sun Guaranteed Investments - A comparison (4 page fact sheet)

Simplified Chinese.

Provides a brief overview of 3 of the guaranteed investment options available from Sun Life: Superflex accumulation annuity, Sun GIC Max, and SLF Trust GIC.

December 2022 Order
810-3569 Income calculator (2 panel slide rule calculator)
You and clients can use this simple income calculator to see the amount of savings clients will need in retirement. The calculator provides a variety of rates of return and monthly withdrawal values.
April 2021 Order
810-3743 Peace of mind for your investments – CDIC and Assuris protection (2 panel case study)
This case study explains how your investments can be protected through both CDIC and Assuris.
July 2023 Order
860-3743

讓你安心地投資 Peace of mind for your investments – CDIC and Assuris protection (2 panel case study)

Traditional Chinese.

This case study explains how your investments can be protected through both CDIC and Assuris.

July 2023 Order
870-3743

您的投资,让您安心 Peace of mind for your investments – CDIC and Assuris protection (2 panel case study)

Simplified Chinese.

This case study explains how your investments can be protected through both CDIC and Assuris.

July 2023 Order

Offer clients a surprise-free plan! You have all the tools you need to help clients understand the benefits of an insurance GIC. You can order the applicable piece(s) below:

PDF Title and description Last updated Ordering

PPT

Advisor seminar
PowerPoint presentation to educate clients on estate planning and how investing with a life insurance company is beneficial.

February 2021

 

Access webpage

Insurance GICs* - 6 things you need to know client piece (1 page fact sheet) Help clients understand the benefits of an Insurance GIC* with this fact sheet.

October 2020

Webpage

810-4847

Meet Joanne - Insurance GIC* case study (2 page case study)
Read about how an Insurance GIC* helps this recent widow make sure her financial goals are met.

April 2021

Order

810-5036

Simplify your legacy plan – Client brochure

December 2020

Order

860-5036

遺產規劃 Simplify your legacy plan – Client brochure 

Traditional Chinese.

December 2022 Order
870-5036

简化 遗产规划 Simplify your legacy plan – Client brochure 

Simplified Chinese.

December 2022 Order

810-3574

Superflex accumulation annuity (4 page product feature sheet)
Designed for you to walk through the features and benefits of a Superflex accumulation annuity with clients.

April 2021

Order

810-3572

Superflex Insurance GIC – Retirement (5 page case study)
This case study shows two examples, nearing retirement and in retirement. One of the examples uses Superflex with the laddering strategy while the other explains how investing in a five-year investment term continually over 15 years offers security and can help to protect and grow investment.

April 2021

PDF only - please print the PDF

Application for Superflex Deferred Annuity: RSP/LIRA/Non-registered or Income Master Annuity: RIF/LIF/RLIF (810-3549)

Point of sale instructions

  • Review rates and obtain a rate commitment or request a large case rate enhancement
  • Complete and have the client sign the appropriate product application.
  • The policy provisions for annuity products are part of the application and a copy of the application including the policy provisions should be given to the client at the point of sale.
  • A policy number will be assigned by us and the client will receive a confirmation statement.
  • Alternatively you can contact the Advisor Service Centre at 1-800-800-4SUN (4786) to have a policy number assigned.
  • If the beneficiary is to receive their portion in the form of an income stream, rather than a lump sum (Legacy settlement option (LSO) - E5029 - Legacy settlement option - Insurance GIC

 

Non-registered Superflex policies:

  • For non-registered products that are individually or jointly owned (including sole proprietor), complete form 4830-E - Identity verification, third party determination and politically exposed persons (PEP) for individuals if:
    • the owner/applicant(s) answered Yes to the following question(s) in the Identity verification, third party determination, PEP and HIO section of the application:
      • Is the policy to be paid for by a third party or used by or on behalf of a third party?
      • To the best of the policy owner's knowledge, has the policy owner, their family member or close associate, held any of the politically exposed person (PEP) positions or a head of an international organization (HIO) position as listed on the back of this application
    • additional space is required in the Identity verification, third party determination, PEP and HIO section.
  • Note: If only the name on the bank account is different from the policy owner complete form 4557-E - Third party determination.  A form 4830-E will not be required.  

 

For an entity-owned (corporation, partnership, trust, etc.) non-registered policy, complete:

 

Successor annuitant:

  • can be named on non-registered Superflex products.
  • can be subsequently named by having the owner complete the Successor annuitant change form - E4391
  • can be revoked or changed while the annuitant is still alive.
  • will replace the deceased annuitant if alive on the death of the annuitant. The contract will continue and no death benefit will be payable at that time.

Application for Superflex annuity: Tax-Free Savings Account (TFSA) (810-3584)

Point of sale instructions

  • Review rates and obtain a rate commitment or request a large case rate enhancement
  • Complete and have the client sign the appropriate product application.
  • The policy provisions for annuity products are part of the application and a copy of the application including the policy provisions should be given to the client at the point of sale.
  • A policy number will be assigned by us and the client will receive a confirmation statement.
  • Alternatively you can contact the Advisor Service Centre at 1 800 800-4SUN (4786) to have a policy number assigned.
  • If the beneficiary is to receive their portion in the form of an income stream, rather than a lump sum (Legacy settlement option (LSO) - E5029 - Legacy settlement option - Insurance GIC

Signature requirements:

  • Rate commitment and large cast rate enhancement information
  • All new policies are required to have a signature.
  • If the annuitant is someone different from the policy owner (non-registered only), they must sign the application.
  • The application forms must be signed in a province where you, the advisor, are licensed.

When we receive the application we will:

1. Review it to ensure we have all the required information and signatures needed to establish the policy/contract.

  • if there is missing information, we will send you a secure message asking for the information
  • if there are missing signatures or missing information that require a signature to be accepted, for example a beneficiary designation, we will return the application to you  for you to return it to us with the required signatures or missing information.

2. A policy number will be assigned by us.

3. Once the funds have been received, we will mail a confirmation statement to your client and send a copy to you.

Note: For applications that are in good order, we will issue the policy effective the date the application is signed. The funds will be deposited to the contract effective for the date the funds are received. The rate applied will be the one in effect on the date the rate is committed.