,,,- t

CHAHP G POLICY

Account Value :..: 5Additional Life Insured ..•............................................................................................. 5Amount of Insurance 5Amount of Insurance at Risk 5Assignment.! ~ ~ 5

"--dA -Attame ge 5Attained Insurance Age ~ ~ 5·Beneficiary •...........•.......•... -...•...................... ~.............•.............................•.................... 5Cash Surrender Value .....•....•.....................•..........•.........•.•..••.•.•••..........••..........•.......... 5Date of Issue ......•................................................•.•.................................... ; 5Death Benefit 0 ••• 0 ••••••••••••••••••••••••••••••• -•••• 5Earning Factor '" _ :-.5Earning Factor Declaration Date .............................................•....................... 1( :.5Evidence of Insurability ...•.•..........•••......._.............•...•...•.................•.............•...e" 6Guaranteed Cost of Insurance .•......•.........•.•...........••.•.•.•....•.•••• ~••~•.•. A..\... .. 6Insurance Age •..•••.•......•.••.•••.......... ::..•.~.~-~....•:..:..: :.: :..•.~t£' - (};- ~ : :. 6Insurance Charges ~... . 6Lapse .•.........•.••....•...•...••...•.........•...••• ".,,"€;.£). "'. ..: ~~~ _ _ 6Life Insured ..' .-:.:..-..: ~~.- :.- # ••• 6Market Value Adjusttnent (MVA) .........•.. •....•..•.•..•.•.••.........•................... 6Maximum Premium •...•.••.....•..~.~ ..~...... .....•..••••...................•.••..................... 6Minimum Premhun/Minimum P emium ...........•..........•.••................................. 6Monthiversary ..:..••••.•.....•~.. .. ...; •.:.........•••...-•••....•...•....••.......•. : .- 6Monthly Deduction •...... .•...............•................•.........................•...................... 6Net prea~'" ... ... .. .•......•.................••..............•.•.•....•..•............................. 7O~er .•.... .....•........................................................................................... 7Patd-Up 7Policy An' rsary .........••.....................................•...................................................... 7Policy Date .......•.......•..•....•........•................................................................................. 7Premium ..................................•...•............................................................................... 7Principal Life Insured .......•••.............................................•.•.•.........•...•...•..................... 7Reinstatement ••..••....•.•..•.....•••................•....•..........••.................•.....•...•.•..•................... 7SmokerlN on-Smoker Declaration ....•..•.•...•................•..••••.••.••..••..•...........•.......•........... 7Split Feature •..•••.•.....••....•..•..•..................•..........•...•......•..•.•..•.•••...••............................. 7Surrender Charge •.......•.....•.•....•..•....•........................•.................................................. 7Tax Exempt Policy ..•.•.......•.•................•...........................•.•.•••.••.••.•...•......................... 7Total Annual Premium •.••......•..........•......•..•.•.....•...•.........•..•.•..•........•..•....................... 7

Beneficiary ..................................................•.........•......•....•.•.•...•.•......•......................... 8Irrevocable Beneficiary 8Owner ................•.....•...•.......................•........•.......•.•.....•.•••••••.•.•.•••.••..•.•.•................... 8Assignment ....•.................................................•.......................•..•.....•.•........................ 8Broker's Authority .................................................•.....•.•.•..•.....• ~.....•......•.................... 8

Common Disaster 8Incontestability 9Suicide 9Misstatement of Age or Sex 9Misstatement of Nicotine Use .................................................•.................................... 9Payment of Death Benefit 10Lapse 10Grace Period 10Coverage Continuation Guarantee .....................................................•.............•......... 10Reinstatements .•..••....•................................................................................................ 10

Death Benefit Amount ..•....•.................................•.............................•............•..•••..... 11Death Benefit Options •.•••.•.•....•........................................•..........•................•...•........• 11Change in Death Benefit Option .........•............. ~................•...........................•....••...... 11Change in Amount of Insurance ...............................•..................••...•...............•......... 12Amount of Insurance at Risk 12Premium 12Net Premium ...........................•........................................................................ ~ 12Premium Administration Charge eV'"12Flat Administrau.·on Charge •....•....•.......•..................•................... ~. ..A.1 .. . 12Additional Flat ~dmiDistration (;:harge ~ ••...Qt! 12Guaranteed CoSt OfInsutance· ...•.. ~......•......................... ~... ...• .••...•..•••..•••......•13Change in Cost of In$u..rance•.....•............... •.. .. .•..•......................... 13Critical ~ lleD~t. •....••..••...•...•.••........~ ~ O·" 13~overed Crlttcallllnesses ....•.. ~................. •••.••.•Xl ; 14Critical lilness Exclusions •..~..... .•..~ •....~.. ............•..............•.................••........ 14

INVESTMENT ACCOUNT 051 :~IONS •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••15Investment Account n ... .........................................................................•..... 15Guaran d Int r II 0 ptions ...................................................•..................... 15

DailS. ter~c .......•...•........................................................................ 15Guara . ear Interest Account ....................................••.•..••...............•.••.... 15Guar e en-Year Interest Account ..........•............................•.............••.•....•..... 16

Index Linked Account Options .•................................................................................ 16Account Options •....•..•...•....................................................................................... 16Earning Factor .•.•......••............................................................................................ 16Guarantee on Death ..•.•••...•......................................................................•............. 17Description and Risks ••..••..•.................................................................................... 17

Performance Linked Account Options ........................................•......................•........ 17Account Options .........••......................................................................................... 18Earning Factor .••••.•.........•....................................................................................... 18Guarantee on Death ..•..•......................................................................................... 18Description and Risks .••...•..............................................................••...................... 19

Investment Account Choice 20Addition and Deletion of Investment Account Options 20Effective Date of Investment Accounts 20Transfer Among Investment Account Options 20Market Value Adjustment (MVA) 20

Monthly Deductions 22Survival Past Age 100 ............................................................................•................... 22Account Value Bonus 22Preferred Client Bonus 22Guaranteed Interest Account Value ; 23Index Linked Account Value 23Performance Linked Account Value .............................................•...............•............. 23Taxation Provision .•.•............•.................................................................................... 24Automatic Transfers - Maximum Transfer Account 24

Surrender Charge 25Cash Loan 26Cash Loan Interest .........................................................•.....•.................•................... 26Loan Repayment .....................................................................•....... : 26L~v~g Benef~tLo~n ~. ...:: 26Ll~mg Beneflt Loan Interest ..............................•............ ~ CV 27B:::~~~:=~~.;~~~;;~~~.:::::~::::::::::::::::::::::.~~~::~~~ ::..:::::::~~:Substttutton of Prmclpal Life Insured ••••.•..... "'n t.\.,. .- __ 28New Insurance Details for Substituted Liv ,0..· ~: ~.~ 28

ADDITIONAL UVES PROVISIO •••••.•.••••.•.. ••••••. •...•..•••...........•..••••.•.....•••••••••..•••.•. 29Add~~onal L~vesInsured •..•:...... ...~ .•................................•..........•....•..................• 29Addlttonal Life Common Di" ~ 29Addition or Delett~on0 'rio a . e Insured ......................•................•................. 29Death Be efit Op . 0 . onal Life 29Chang in D~ e t ..•.......•...............................................••.•................ 29Amoun s at Risk ••......................................................•••.......•.....•............. 29Guarante d of Insurance •••.•........•.........................................•........•................... 30Changes' ost of Insurance 30Continuation Feature for Additional Life Insured 30Split Feature for Additional Life Insured 31New Insurance Details for Additional Lives.......................................•...........•.•.......... 31

MAXIMUM TRANSFER ACCOUNT PROViSiONS ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••32Automatic Transfers - Maximum Transfer Account .....................•............................. 32Transfers ....................•...•.....•.....................................................................•.•............ 32Maximum Transfer Account Value .............................................................•.............. 32Rate of Interest ......................•................................................................................... 32Account Value Bonus ...•......••..................................................................................... 32Withdrawals 32Market Value Adjustment - Maximum Transfer Account 33Policy Loans 33Maximum Transfer Account Taxation 33

CONTRACTIn this policy, "you" and "your" refer to the Owner of this policy and "us", "we", "our" and"Company" refer to the Royal & Sun Alliance Life Insurance Company of Canada.

This policy, the application, (a copy of which is attached), any amendments agreed to in writingand any subsequent application for change or reinstatement of this policy form the entire contractbetween you and us. We will not be bound by any statement that is not part of the contract andnot authorized by us.

No provision of this policy may be waived or modified except over the signature of an AuthorizedOfficer of the Company. .. _.' '. - -.. ~ ~- '" .

This policy will terminate on the death of the Principal Life Insured. All insurance on anyAdditional Lives Insured will cease. (See "Continuation Feature for Additional Lives Insured" inthe Additional Lives Provisions section).

All payments to and by the Company will be made in Canadia~ dollars. ~

This policy does not share in the p~~fits of ~e Company. ~. C\., .Theheadingsappearingthroughoutthispolicyateforme~~~iJlr-.ce oplyanddonot

s~~~

Account ValueThe amount of Net Premiums plus earnings paid less Monthly Deductions taken out of the policyto cover all benefits.

Additional Life InsuredAn individual insured under the Additional Lives Provisions of this policy.

Amount of InsuranceThe total of all insurance coverage applied for and approved by us, less any reductions.

'"'

.Amount of Insurance at RiskThe Death Benefit minus the total Account Value.

Assignment - ~A transfer of some or all of the rights and privileges under this contract. r·:",Attained Age . _.- .'f.lt( ~\.IThe age of the Life Insured on. the current d~te. ~ ~}-.

Attained Insuran~~Age . ., - 0~)o-

Beneficiary ~ eThe person to whom~' 0 15policy are payable.

Cash SUbAl~~)- .An amount p J ~u when the policy is surrendered. (See "Cash Surrender Value" in the Cashand Loan P ions section).

Date of IssueThe date this policy is signed at our Head Office. The Date of Issue for any subsequent change oraddition to the policy that requires evidence of insurability is the date of such change or addition.

Death Benefit-The amount paid on any Life Insured's death. (See "Payment of Death Benefit" in PolicyProvisions section).

Earning FactorThe factor used to determine the earnings on the Index Linked and Performance Linked Accounts.

Earning Factor Declaration DateThe date we calculate earnings on Index Linked and Performance Linked Accounts.

Evidence of InsurabilityMedical and other evidence provided with respect to any Life Insured that establishes, to oursatisfaction, whether the Life Insured qualifies for insurance under our requirements.

Guaranteed Cost of InsuranceThe deduction from the Account Value used to pay for the insurance under this policy.

Insurance AgeThe Life Insuredts age on his or her last birthday on the Policy Date.

Insurance ChargesThe Guaranteed Cost of Insurance for all Lives Insured plus the Flat Administration Charges, costof any rider(s) and any supplementary benefits charges.

LapseThe termination of the life insurance coverage due to nonpayment of Monthly DeductiQns ..

Life Insured .. _ _ _ 0 - • _ - 0 ~~ c_

An individual whose death or disability requires that we pay an amo . ~e with thispolicy's provisio= Anyd <beindividual benefitsoontaine<iin'a'~y 00_ more thanone Life Insured. ~ '\.,)., .

If more than one individual is covefl!d"by ane e\l..~efits, any reference to <be"LifeInsured" means all lives covered ythat ben "t.. _

Market Value Adjustment M ·0 • • -~~~":~~c:;;:, e ustment" in <beInvestmentAccount Option Provisions

MaXimu~~The maximum amount that you can pay into this policy in the first year and maintain its taxexempt status. (See "Taxation Provision" in the Account Value Provisions).

Minimum Premium/Minimum Annual PremiumThe lowest premium you are allowed to pay in the first year you own this policy. It is shown onthe Policy Details page&

MonthiversaryThe date the Monthly Deduction is taken from your Account Value. It is the day in each monththat corresponds with the Policy Date, as shown on the Policy Details page.

Monthly DeductionsThe deduction made each month from the Account Value to pay for all benefits under this policy.

Net PremiumThe gross premium reduced by the Premium Administration Charge. (See "PremiumAdministration Charge" in the Plan Provisions section).

OwnerThe person who or entity that owns this policy and enjoys all rights and privileges under thispolicy.

Paid-Up InsuranceA redu~ed Amount of Insurance for which no further Monthly Deductions are required.

Policy Anniversary -The beginning of each policy year, measured from the Policy Date.

Policy DateThe date from which all policy Monthiversaries and Policy Anniversaries are measured. The:::i::is shown on the Policy Details page. . . ~ C"'(~e ~~ount you paid into this policy. . .. ~ t (}it .Prmclpal Life Insured - EjTO<\~ -- --~y reference in the policy provisions to "Pr cipal ~~~ means the Life Insured identifiedin the first section of the Policy D~ails page.. .

Reinstatement eThe restoration of a ma s QSmoker~~R r ~~iOi1Evidence mo~ sured meets our non-smoker definition regarding use of nicotine.

Split FeatureThe ability to separate insurance coverage on multiple Lives Insured into individual policies.

Surrender ChargeA charge to the Account Value that you may incur when the policy is surrendered. (See"Surrender Charge" in the Cash and Loan Provisions section).

Tax Exempt PolicyAny policy where the earnings on the Account Value are not subject to annual accrual taxation.

Total Annual PremiumThe sum of the Minimum Premium plus the cost of any rider(s) and any supplementary benefits.This amount is shown on the Policy Details page for the Principal and Additional Lives Insured.

BeneficiaryUnless subsequently changed, the Beneficiary(ies) is as designated in the appl~cation. We mustreceive a written request to change the Beneficiary at our Head Office.

At the death of a Life Insured under this policy, the policy proceeds are payable to the livingBeneficiary(ies) according to his or her respective interests. If no Beneficiary survives, theproceeds will be paid to either you or your estate.

Irrevocable BeneficiaryTo designate a Beneficiary as irrevocable, we must receive your signed written request at our HeadOffice. Thereafter, written consent of the Irrevocable Beneficiary must be provided with anyrequest to change this policy in any way. .

Owner ..;.,Unless subsequently changed, the own. er of this policy is as shown in the appe· ¥n. Subjecttocertain restrictions, all the rights and privileges in this policy beIOng~o. 0 e~\?ile thePrincipal Life Insured is alive.··· - . . .

If a contingent Owner is not named", and if you die befo~e~~) .. . e Insur~d, your rightspasson to yourestate. If thispolicyisjOintle~ ~e individua~on thedeathofany of the joint Owners, all rights and privil. es of de ed Owner pass to the surviving jointOwner(s). ~ ..

ASSignment· i e ...You may assign this po i n ss y prohibited from doing so. The assignment must be inwritingan~ived r e ffice.Thereafter,writtenconsentof.any assignee must beprovided i a eq s ch e this policy in any way. We are not responsible for thevalidity 0 1 nt. An absolute assignment will be considered a transfer of'ownershipunder the r provision.

Broker's AuthorityNo broker has the authority to change this policy.

Common DisasterIf we cannot determine whether a Life Insured or a Beneficiary died first in a common disaster, wewill assume that the Beneficiary died first. The Death Benefit will be payable to the remainingBeneficiaries or to you or your estate if no Beneficiary is living.

IncontestabilityWe may contest the contract if any statement or answer on the application misrepresents or failsto disclose any fact material to the insurance. A contested policy will be void from the Date ofIssue.

We will not contest the contract for any misrepresentation, or failure to disclose a fact material tothe insurance, after two years from the policy's Date of Issue, the date of reinstatement or anypolicy change requiring evidence of insurability, as long as the misrepresentation or failure todisclose a material fact:

1. is not deliberately fraudulent; and2. does not involve any Life Insured's smoker declaration on the. application for life insurance

or reinstatement or change; and3. does not involve any Life Insured's statement of age or sex on the application for life

insurance or reinstatement or change.

SuicideIf any Life Insured under this policy dies from suicide or intentional self-inflicted injury, whethersane or insane, within two years of the Date of Issue or any dat~ of rein~tateme~pOliCY changerequiring evidence of insurability, our only obligation will be to refund~o e u estate thepremiums paid, withou~ interest, less any amounts already paid by ~~~ . s nableexpenses we may have mcurred. - ~.~ ' '. . -. .

Misstatement of Age or Sex ~Q<\'\.; ..' :~:'.. .During the first two years after the insuranc as bee ap ~lilr r:r and"approvecffot any LifeInsured, if his or her date of b~r sex has n sta: ed on the application for life insuranceor any benefit or reinstatement or , we Cljustthe Amount of Insurance and benefitsapplicable to that Life Insure~ ~ ~Amount of Insurance and benefits will be those thatthe Minimum Premium r . t~ year for that Life Insured would have bought based.on the cor~rectage a . _

After the , we will adjust the Amount of Insurance applicable to that Life Insured tothe initial 0 of Insurance, multiplied by the ratio of the Guaranteed Cost of Insurance ratefor the corre age and sex to the Guaranteed Cost of Insurance rate applied at issue. If anyexpiry date or date to which Monthly Deductions are required is based on the incorrect age orsex, we will change the date(s) to agree with the correct age or sex.

Misstatement of Nicotine US&

If any Life Insured's nicotine use has been misstated on the application for life insurance or on anyother benefit or reinstatement or change, we will void this policy. No Death Benefit will be paid.No refund of premiums will be made.

Payment of Death BenefitThe amount payable on any Life Insured's death will be paid as a lump sum to the Beneficiarywhen we receive satisfactory proof of the following:

1. the Life Insured's death; and2. the Life Insured's date of birth; and3. that the Life Insured died while this policy was in force.

We will deduct any amounts owed to us, including unpaid Monthly Deductions and anyoutstanding loans and interest. We must be provided with a satisfactory discharge from allliability under the policy from the Beneficiary. The Beneficiary may elect other options ofreceiving payment~ Details are available upon request.

LapseThis policy will lapse 30 days after the Account Value is insufficient to pay the MonthlyDeductions.

Grace PeriodWe allow a grace period of 30 days after the Account Value is insufficient to~nthlyDeductions. During that time the policy stays in force. If a premium is t "d b e end of thegrace period sothli\t the policy_ha;S;1positive.;Account Value, the po~a, ate. If the LifeInsured dies during the grace period, we will deduct any unpaicJ¥61 ~uctions and otheramounts due from the Death Benefit payable. ~ \., __

Coverage Continuation Guarantee- 0\..'"condltlons are met:

1. the policy is in force; ~2. all Minimum P e een paid; and3. al sts i~~ associated benefits and any extras have been paid; and4. tear ~;~ oans; and5. no Wi s have been made. . -

ReinstatementsThe policy may be reinstated at any time within three years after the date of lapse if we receive thefollowing:

1. evidence of insurability, for all Lives Insured, satisfactory to us; and2. sufficient premium to cover all past due Monthly Deductions plus interest at a rate we

determine; and3. receipt of the greater of the Minimum Premium and the Monthly Deductions due in the

next three months; and4. any amounts borrowed on this policy plus interest, (otherwise the loan will be re-

established); and5. any additionaL Company requirements in effect on the date of application for

reinstatement.

Suicide, Incontestability and Misstatement of Nicotine Use provisions will recommence on thedate of the most recent reinstatement.

Death Benefit AmountIf the Life Insured's insurance age is zero (0) at the policy's Policy Date, then the Death Benefit inthe first policy year is limited to twenty-five percent (25%) of the Amount of Insurance appliedfor and approved by us.

Subject to the Guarantee on Death, benefits based on the value in an Index Linked or PerformanceLinked Account are not guaranteed since they fluctuate with the performance of the index orsegreg~ted fund to which the Account is linkid.

Death Benefit Options1. LEVEL Death Benefit Option - the. Death Benefit is the Amount of Insurance applied for and

approved by us, less the gross amount of any withdrawals and loans.

2. INCREASING Death Benefit Option - the Death Benefit is the total Amount of Insuranceapplied for and approved by us, plus the total Accouut Value, reduced b~ amount ofany withdrawals and loans. The portion of the total Account Value in th Linked andPerformance Linked Accounts is not guaranteed. The Account Val~U at .th theperformance of the corresponding index or the Royal 8c S~d . Segregated

Fund. \\.,~

Change in Death BenefitOptiQIl ~,,~,-:---The following changes in Death Benefit O~ti are Wle_ to ~e .Principal ~e Insured ~nly.Requests to change the Death Be~!:n t made m wnnng to ow' Head Office; Any·change in the Death Benefit Optio or the Amount of Insurance is effective on theMonthiversary after we appr~e e t.

We allowW:';;1"7!i1..~-asing-Death Benefit option to the Level Death Benefir Option atauy-time. is ;"'~ evidence of insurability. No fee will be charged.

We allow a ge from Level Death Benefit Option to Increasing Death Benefit Option at anytime provided:

1. the Principal Life Insured is less than insurance age 76; and2. we receive evidence of insurability satisfactory to us; and3. we receive payment of a change fee.

We treat the Account Value as an increase in the Amount of Insurance. The Guaranteed Cost ofInsurance for the increase will be based on the Principal Life Insured's attained insurance age.

Changes in Amount of Insurance1. REDUCITON: Must be for a minimum of $25,000. The remaining Amount of Insurance

may not be reduced below $25,000 for insurance ages 0-19, and $50,000 for insurance ages20 and over. The Amount of Insurance on any Additional Lives Insured cannot exceed theAmount of Insurance on the Principal Life Insured and therefore may have to be reduced.

2. INCREASE: Must be for a minimum of $25,000. It will be subject to evidence of insurabilitysatisfactory to us. The Amount of Insurance may only be increased if the Life Insured is lessthan insurance age 76.

We may refuse any request that jeopardizes the policy's tax exempt status.. , ;. , . .- _ .. 4 . _.. - 4_: .-

Amount of Insurance at Risk'On each Monthiversary we will determine the Amount of Insurance at Risk for the Principal LifeInsured. The Amount of Insurance at Risk depends on the Death Benefit Option you selected.

The Amount of Insurance at Risk on the Principal Life Insured cannot be less than $10,000. If theAmount of Ins~rance at Ri'sk falls.,.bel~w $19,000,. we automat~call~ incr~~se~.h~ . "ount of .Insurance at RIsk to $10,000. This WIllcause the Death BenefIt to mc::reaseb same dollaramount as the increase in ~e Amount. ~f Ins~~~~~ _a~Risk •. _ ~ ,

Premium '.' 't"(I l>' "Regular and unscheduled premiums. c,an be paid ,-cti'e-u~le \vlneto Royal& SunAllianccFinancial. We will accept premiums annuall or 0 !Authorized Cheque (P.A.C.).1lte first premium is due on the Policy Date. remiu e effective on the date they arereceived at our Head Office. Th~~lc, h .--led remium at the'time of issue is shown as theInitial Planned Annual Premium 0 t~~iCY e 11spage.

Net Premium ~Q -The Net P.S"'1i:."l eo,' aunt of each premium minus the Premium AdministrationCharge. ~_(,)!Premium inistration Charge:We deduct a charge of three percent (3%) from the gross amount of each premium. This chargeis guaranteed not to increase.

Flat Administration ChargeWe deduct a flat charge of nine dollars ($9.00) every month from the policy's Account Value.This charge is guaranteed not to increase.

Additional Flat Administration ChargeThis charge only applies if there are Additional Lives Insured under this policy. We deduct anadditional flat charge of three dollars ($3.00) every month from the policy's Account Value. Thischarge is guaranteed not to increase.

Guaranteed Cost of InsuranceThe monthly Guaranteed Cost of Insurance is one-twelfth the rate shown in the Table ofGuaranteed Cost of Insurance charges at the end of this policy. There is a table of GuaranteedCost of Insurance charges for each Life Insured under this policy.

Change in Cost of Insurance1. NON-SMOKER DISCOUNT: We provide a discount for non-smokers between the insurance

ages of 16 and 19. We calculate the Guaranteed Cost of Insurance using the non-smokerrates. Prior to the Policy Anniversary after the Principal Life Insured's 20th birthday, werequire proof of non-smoker status to maintain the non-smoker rates. We require adeclaration, signed by the Principal Life Insured, stating that he or she may be classified as anon-smoker according to our non-smoker definition applicable at the time of your request.

If we do not receive a signed non-smoker declaration we will adjust the current non-smokerrates to smoker rates based on the Principal Life Insured's attained insurance age.

2. YEARLY RENEWABLE GUARANTEED COST OF INSURANCE: If the Guaranteed Cost ofInsurance rate for the Princ.ipal Life Insured is Yearly Renewable Term, you tirequest it bechanged to the level rate applicable to his or her attained insurance age iI(t!e" ble of.Guaranteed Cost of Insurance Charges. The Amount of Insuran~~~~c al LifeInsured must have been inf9rce for three fun years. The.Pr~~ .Li ured must_be lessthan attained insurance age.76. We must receive yourn~ s at our Head Office. .

3. SMOKER COST OF INSURANCE: If ~~ is classified as a smoker youmay request that the Guaran~~d Cost 0 sur changed to a non-smoker rate bywriting to our Head Office. w;~equ . ence of insurability satisfactory to us inaddition to proof that the P . if: Insured meets our non-smoker definition applicable atthe time of this request.

Ifweap9~~request il~~·

Critical III BenefitThis benefit is only available with the Increasing Death Benefit Option. When we receive proof ofa critical illness on the Principal Life Insured (as described in the Covered Critical Illnessprovision) at our Head Office, we will pay you a lump sum Critical Illness Benefit equal to theamount of your Account Value. Upon payment of this benefit, your Account Value will be set tozero (0). A maximum of one lump sum Critical Illness Benefit is payable under this provision,although you may again build your Account Value in the policy following payment of this benefit.

e effective on the next Monthiversary. We may refuse any·cy's tax exempt status.

Covered Critical Illnesses1. STROKE: Cerebral vascular accident producing neurological impairment and resulting in

paralysis or other measurable objective neurological deficit persisting for at least thirty (30)days following the occurrence of a stroke. lllnesses not covered: Transient Ischemic Attacks(TIA).

2. HEART ArrACK: The death of a portion of the heart muscle resulting from a blockage ofone or more coronary arteries. To be eligible for this benefit the diagnosis must be based onall of the following:

a) chest pain; andb) associated new electrocardiographic (ECG) changes indicative of a Myocardial

Infarction; andc) elevation of cardiac (heart) enzymes.

3. KIDNEY FAILURE: Permanent and irreversible failure of both kidneys from any cause whichnecessitates treatment by regular dialysis or kidney transplantation.

. .4. TRANSPLANT OF A VITAL ORGAN: The actual undergoing as a recipient of a transplant

of a heart, liver, pancreas, bone marrow, lung or kidney and limited to these¥ities.

5. LIFE lliREATENING CANCER: Those types of cancer shown by~&aMf neoplasticcells characterized by the ·uncontrolled growth and-spread o~ _ enced by apathological s.tudy. No benefit is payable if any symPt~o .a os 0 any cancer is madewithin ninety (90) days following the POE~u . pplicable, the date of anyreinstatement or change requiring eviden of m ra' esses not covered:

a) Stage A prostate canc~. or - - . .b) Duke's A colon-recta n~rc) Pre-malignant lesio .d) Benign tumour 0 .

e) Carcino . SI ;

f)~~n t as not spread beyond the deepest layer of the skin; org) t ano to a depth of 0.75 mm orIess; orh) phocytic leukemia; ori) osi's sarcoma; orj) Stages 1 and 2 Hodgkin's Disease; ork) Any tumour in the presence of the human immunodeficiency virus (HIV).

6. CORONARY ARTERY BYPASS SURGERY: The undergoing of heart surgery recommendedby a registered cardiologist licensed and practicing in Canada, to correct the narrowing orblockage of one or more coronary arteries with bypass grafts. The following techniques areexcluded under this provision:

a) Any non-surgical techniques such as balloon angioplasty, laser embolectomy; orb) Any other non-bypass techniques.

Critical Illness ExclusionsNo benefit is payable if the Life Insured suffers from or had any symptoms of any of the CoveredCritical illnesses prior to the Date of Issue or the date of any reinstatement or change requiringevidence of insurability. Any Critical illnesses not specifically mentioned or which do not meetthe stated criteria are not covered.

Investment Account OptionsYou may direct us to invest Net Premiums in any combination of the available InvestmentAccount Options. You may change the allocation of Net Premiums at any time by submitting awritten request for such change to us at our Head Office.

Three Guaranteed Interest Account Options:• Daily• Five-Year• Ten-Year

Three Index Linked Account Options:• TSE 100• S&P 500 . _ . 1(_• Scotia Capital Markets Mid-Term Bond C\w~eve;q~~~onnance Linked Account 0P~OIlS:. _.. ;\>~\.~ ...• Balanced 00'l "'... . - .• Income . ..• Internati?nal Equity . . .. -• U.S. Equity \ (>• European Equity , \ V- ..

Daily In e countWe will clare the rate of interest credited in the Daily Interest Account from time to time. Itwill not be less than the Daily Interest Account minimum interest rate, which equals:

where Y is the average rate of interest on One-Month Government of Canada Treasury Billsfor the most recent month for which all data is published in the Bank of Canada review.

Guaranteed Five-Year Interest AccountWe will declare the rate of interest credited in the Guaranteed Five-Year Interest Account fromtime to time. It will not be less than the Guaranteed Five-Year Interest Account minimuminterest rate, which equals the greater of:

2.75%, and(90% x Y) - 1.7%

where Y is the average rate of interest on Government of Canada Bonds with terms tomaturity of Three-to Five Years, for the most recent month for which all data is published inthe Bank of Canada Review.

We will assign each Net Premium allocated to the Guaranteed Five-Year Interest Account theinterest rate we declare at the date of deposit, guaranteed for a period of five years.

Five years following the date of deposit of each Net Premium, we will assign the interest ratewe then declare to the accumulated value, guaranteed for another period of five years.

Guaranteed Ten-Year Interest Account.. . -. .

We will declare the rate of interest credited in the Guaranteed Ten-Year Interest Account fromtime to time. It will not be less than the Guaranteed Ten-Year Interest Account minimuminterest rate, which equals the greater of:

3.5%, and(90% x Y) -1.7%

where Y is the average rate of inte~est on Government of Canada Bonds~rms to .maturity of Five to Ten Years, for the most recent month for which N~a is lished in theBank of Canada Review. M- -< •{,)IIWe will assign each Net Premium invested· e Ten ..~~ed Interest Account the _interest rate we declare at the date of dep sit, u ie\!<J.-aperiod of ten years.-

we then declare to the accumu te lue, guaranteed for another period of ten years.

Index Linked Acco~n ~.oThe Acco~al a n inked Account fluctuates with the performance of thecorrespo in i1~ a th otential for losses or negative earnings in these Accounts, theyshould not ~ci)hen the premiums paid are at or near the Minimum Annual Premium. Eventhough all iums have been paid, this policy could lapse due to adverse market conditions.

Account Options• TSE 100 (Toronto Stock Exchange 100)• S&P 500 (Standard & Poors 500)• Scotia Capital Markets Mid-Term Bond

Earning FactorWe declare the Earning Factor for any Index Linked Account from time to time. This EarningFactor will be measured on a weekly basis.

The Earning Factor for the Index Linked Account is:a) The change in the Index (including dividends for TSE 100, and S&P 500) since the last

Earning Factor for the Index Account was declared,divided by:

b) The value of the Index on the last date the Earning Factor for the Index Account wasdeclared,

mmus:c) a margin that depends on the Index.

The margins are 2.9%, 3.25% and 2.5% for the TSE 100, S&P 500 and Scotia Capital MarketsMid-Term Bond respectively. The Earning Factor for the Index Linked Account may be eitherpositive or negative, depending on the performance of the Index to which it is linked. There is nominimum guarantee on any Index Linked Account.

We reserve the right to change, without notice,-1)le date the Earning Factors for the Index LinkedAccounts are declared and their frequency.

All transactions involving the Index Linked Accounts will be processed on the Earning FactorDeclaration Date on or following the date of the transaction.

Guarantee on DeathIf rhe Life Insured dies, we guarantee rhe contribution to rhe Dearh Benefit ere.Index LinkedAccount Value will be the greater of ~'\i_

• _the Index Linked Account Valu~ under-the.Policy; and ~~ ,• seventy-.~ve pe~cent (75%) of the <?rosspremium~~a.d ~~ l~inked Account,

proportIonately reduced for any wlthdra als and ~. m that Account.

If rhe Life Insured dies, we will determine th'Q Q: cc;'unt Value on the Earning Facto;Declaration Date on or fOllowin~e date O~Irisured's deathr

Description and Risks. -e .-The TSE 100 Index is lis stocks. It represents the largest and most actively tradedstocks in ~da. E s a capitalization-weighted index, meaning individual stocks areweighted ccorAtJ tota e of equity market capitalization. This Index Linked Accountis subject t fJ6'wt et risk and interest rate risk.

The S&P 50 Index is comprised of 500 stocks. It is intended to represent a broad cross-sectionof the U.S. economy. This Index Linked Account is subject to stock market risk, foreign currencyrisk, interest rate risk and smaller company risk.

The Scotia Capital Market Indices (formerly called the Scotia Mcleod Indices) are the mostwidely used benchmark of Canadian bond performances. The Scotia Capital Markets Mid-TermBond Index is comprised of bonds maturing in 5 to 10 years. This Index Linked Account issubject to interest rate risk.

Performance Linked Account OptionsThe Account Value of any Performance Linked Account fluctuates with the performance of thecorresponding Royal & SunAlliance Financial Segregated Fund. Due to the potential for losses ornegative earnings in these Accounts, they should not be used when the premiums paid are at ornear the Minimum Annual Premium. Even though all premiums have been paid, this policy couldlapse due to adverse market conditions.

Account OptionsYou have the option to invest in an Account that will be linked to the performance of any of thefollowing Royal & SunAlliance Financial Segregated Funds:

• Equity• Balanced• Income• International Equity• U.S. Equity• European Equity• Pacific Rim Equity

You are not allowed to invest directly into these segregated funds within this policy.

Earning FactorWe declare the Earning Factor for any Performance Linked Account from time to time. ThisEarning Factor will be measured on a daily basis. The Earning Factor for the Performance LinkedAccount will be: - -

a) the change in the Royal & SunAlliance Financial Segregated Fun<4 to w~the-account is. .linked, since the last Earning Factor Declaration Date, r-~

divIded by: - .~ - .. ,f\. \.f.,. -b) the value ~f the Royal & SunAlliance Financial Segregatjf-" <4~hic~ t,he account is

. linked, on the last Declaration Date ~ \r.:;)=:argin of0.60% perannum. r 0\..)-..

The Earning Factor for the perf05rn inkUunt may be either positive or negative,depending on the performanc~_ ated Fund to which it is linked. There is no minimumguarantee on any pe~ro ount.

We reses~ ~ c n , . out notice, the date the Earning Factors for the PerformanceLinked A rOJ· ed an their frequency.

All transactl involving the Performance Linked Accounts will be processed at the EarningFactor Declaration Date on or following the date of the transaction.

Guarantee on Death-If the Life Insured dies, we guarantee the contribution to the Death Benefit from a PerformanceLinked Account Value will be the greater of

• the Performance Linked Account Value, under the Policy; and• seventy-five percent (75%) of the Gross Premiums paid to the Performance Linked

Account, proportionately reduced for any withdrawals and deductions from that Account.

If the Life Insured dies, we will determine the Performance Linked Account Value on the EarningFactor Declaration Date on or following the date of the Life Insured's death.

Description and RisksThe objectives, strategies and risks of the Royal & SunAlliance Financial Segregated Funds, towhich the Performance Linked Accounts are linked, are as follows:

The Equity Fund's objective is to achieve above-average growth while emphasizing preservation ofcapital. It invests primarily in a diversified portfolio of equity investments, mainly equitysecurities of Canadian corporations. The Equity Fund is subject to stock market risk, smallercompanies risk, foreign currency risk and income trust risk.

The Balanced Fund's objective is for long-term capital growth, with emphasis on preservation ofcapital. It invests pr!marily in Canadian equity and fixed-income securities. The Fund may alsohold income trust and mortgage-backed and other asset-backed securities for investment purposes.The Balanced Fund is subject to interest rate risk, stock market risk, smaller companies risk andforeign currency risk.

The Income Fund's objective is to provide above~average fixed income returns by investing infixed income assets of good quality. It invests in a portfolio of Canadian fixed-incomeinstruments including corporate and government securities. The Income Fun~dmalso holdm~rtgage-backe~ and other asset-backed securities for investment purposes. - . u.nd is subjectto mterest rate nsk. .... . t'\. \.!he International E~uity Fund's .objecti~e·is to prOvidel~n~- r"cata;~.' fr~m i~vestment.m non-North Amencan compames and to excee the Mo ~~~ Index over the .medium to longer term. The IntemationalE ity ~, t m convertible stocks, .warrants, traded options and other derivativ r6du~ temational Equity Fund is subjectto stock market risk, foreign cu~e in -est te risk and derivative risk.

The U.S. Equity Fund's Objec~" uce superior long-term capital growth throughinvestment primarilY~' e 'n tr on the"U~S.stOCk-exchange and to outperform the S&P500 Index :verthe g term. The Fund invests in the stocks of large, medium andsmall ca omp , hi av bove-average growth potential and are priced attractively. TheU.S. Eq~~~" leer to stock market risk, foreign currency risk, intx:rest rare risk andsmaller ~~~Xk.

The European Equity Fund's objective is to pursue opportunities for capital appreciation throughthe selection and management of primarily equities and convertible bonds. The investmentstrategy is based on an assessment of equity markets and individual securities throughout Europe,including the UK, with consideration given to the overall currency exposure. The EuropeanEquity Fund is subject to stock market risk, foreign currency risk, sovereign risk, smallercompanies risk and derivatives risk.

The Pacific Rim Equity Performance Fund's objective is to pursue opportunities for capitalappreciation through the selection and management of primarily equities and convertible bonds,The investment strategy is based on an assessment of equity markets and individual securitiesthroughout the Far East, including Japan, with consideration given to the overall currencyexposure. The Pacific Rim Equity Fund is subject to stock market risk, foreign currency risk,sovereign risk, smaller companies risk and derivatives risk.

·Investment Account ChoiceYou may select up to three of the available Investment Accounts. A minimum monthly premium,which we set from time to time, is required for each Account selected.

We credit Net Premiums to the selected Investment Accounts based on the initial allocation shownin the application. You may change the allocation at any time by writing to our Head Office.

The Index Linked and Performance Linked Account Values fluctuate with the performance of thecorresponding index or Royal & SunAUiance Financial Segregated Fund. The earnings on theseAccounts can be negative and therefore these Accounts are not recommended when premiumspaid are at or near the Minimum Annual Premium shown on the Policy Details page.

Addition and Deletion of Investment Account OptionsWe reserve the right to delete any of the Investment Account Options at any time. We guaranteeto always have at least one Guaranteed Interest Account Option with a minimum guarantee of3.5%.

You will be given the choice as to how to redistribute any amounts that are in 5: eletedInvestment Account, if applicable to you, into the remaining Investmellt Acc~t.~ tions. If youhave not notified us in writing of your selection, we will transfer th~C~~ f the deletedInvestment Account to the Daily Interest Account. I( .•• (,}tI

The value ~ th'e deleted Investment Accounte~~~a transfer to an IndexLinked or Performance Linked Account, will e dete . ~~liie date on or following theeffective date of deletion or transfer.

Effective Date of Investment c ts

our Head Office. u r . d to the Index Linked or Performance Linked Account will bedetermin5!0 . ctive date described above. We reserve the right to delay theprocess in . on for up to 7 days.

Transfer ~ ng Investment Account OptionsYou may transfer amounts among any of the Investment Account Options. You will be allowedto make two free transfers per policy year. Each additional transfer will incur a $25.00 fee. Anytransfers are subject to the minimum requirements in effect at that time. Transfers will beeffective on or following the date we receive your written request at our Head Office.

Transfers from the Guaranteed Interest Accounts are subject to a fee equal to the greater of$25.00 and the Market Value Adjustment.

Market Value Adjustment (MVA)This applies if funds are withdrawn or transferred from the Guaranteed Interest Account when:

1. the Guaranteed Interest Account is still within the guarantee period; and2. the rate currently being earned on the Guaranteed Interest Account is less than the rate

currently available for new premiums for the same Guaranteed Interest Account at thetime of withdrawal.

This adjustment is the amount in the Guaranteed Interest Account being transferred orwithdrawn, multiplied by the difference of the interest rates described above, multiplied by thenumber of cQmplete months remaining in the guarantee period, divided by 12. The minimum is$25.00. See formula below.

MVA =TW x (CI-FI) x Ml12where

TW=CI=FI =

amount being transferred or withdrawncurrent interest rate for the same terminitial interest rate for the term (the rate currently applicable to the premium paidinto the account)number of complete months remaining in the guaranteed period.

Monthly DeductionsOn each Monthiversary we deduct from the Account Value:

1. the Guaranteed Cost of Insurance for the Principal Life Insured multiplied by the Amountof Insurance at Risk; and

2. the flat administration charge; and3. the Guaranteed Cost of Insurance for any Additional Lives Insured multiplied by their

Amount of Insurance at Risk; and4. any additional flat administration charge; and'5. the cost of any additional benefits and/or riders.

These deductions are made from each Account in the proportion that the Account's Value is tothe total Account value of the policy.

Survival Past Age 100On the Policy Anniversary following the Life Insured's hundredth (100m) b~as measuredfrom the date of birth stated on the policy application, we will waive al~1thly.~uctions inrespect of that Life Insured from that date forward. it( •.{)tiAccount Value Bonus ' ~ ~We credit a bonus of 1.5% of the policy's ~; u ~ ~liCY Anniversary where the·Account Value is at least twenty (20) times .. m ual Premium. The MaximumTransfer Account Value or Loan~count Va is n t mcluded in the policy's Account Value forpurposes of the above calculation. eThe bonus is apporti~ne ~ unt to which the bonus applies. The bonus does notconstitu~gums 0 J..~ntribute to the Guuanree on Death.

Preferre" us.If the polic . ~ at the end of the twentieth (20"') policy year, we will deposit a one timelump sum called the "Preferred Client Bonus" to the policy's Account Value. At that time, wewill include the Preferred Client Bonus in the policy's Account Value and Death Benefit.

The Preferred Client Bonus equals ten percent (10%) of the Guaranteed Cost of Insurance for thePrincipal Life Insured paid from the Policy Date until the twentieth (20ch) Policy Anniversary,accumulated with interest at the rate we declare on the Guaranteed Five-Year Interest Account.

The Preferred Client Bonus accumulates in a separate Guaranteed Five-Year Interest Accountunder the policy. This Account does not become part of the policy's Account Value until thetwentieth (20th

) policy year. No Monthly Deduction is applied against this Account.

Guaranteed Interest Account ValueThe Account Value for each of the Daily Interest, Guaranteed Five-Year and Ten-Year InterestAccounts at the beginning of any policy month includes:

a) any Net Premiums paid, and/or transfers from other Investment Accounts to that Accountduring the previous policy month, unless they have been included previously in calculatingthe Account Value;

mInUSb) any withdrawals made or transfers of funds from the Account during the previous policy

month;mInUSc) the Monthly Deduction for the previous month.

- - .. . - . . ': ~.~

The Account Value for each of the Daily Interest, Five-Year and Ten-Year Guaranteed InterestAccounts at the beginning of each day is adjusted to include the interest credited on that Accountfor the previous day; .

Index Linked Account Value .• - - -- ..•.The Account Value for each of the TSE 100, S.&P 500·and Scotia Capital Mark~id-Term BondIndex Accounts at the beginning of any policy month include: r·~

a) any Net Premiums paid, and/or transfers from other Inves~Q.,'-'to that Accountduring the previous policy month, unles~ they have been6fc-n e~iously in calculatingthe Account Value; . ~ \., . .

~in:y withdrawals made or ttaIlSfers oC ~unt during the previous policy .

mm:,onth; \ p V ..c) the Monthly DedUCti~, \e¥'iOUS month.

The Account Value ~c TSE 100, S&P 500 and Scotia Capital Market Mid-Term BondIndex Ac9u ts ~~ e g each day is adjusted to include any positive or negativeearnings . ~f}StP Account for the previous day. .

The Index L ed Account Values fluctuate with the performance of the Index to which they arelinked and are not guaranteed. The Index Linked Account Value on any date is based on theEarning Factor in effect on that date.

Performance Linked Account ValueThe Account Value for each of the Accounts linked to the performance of the Royal &SunAlliance Financial Equity, Balanced, Income, International Equity, U.S. Equity, EuropeanEquity and Pacific Rim Equity Segregated Funds at the beginning of any policy month includes:

a) any Net Premiums paid and/or transfers from other Investment Accounts to that Accountduring the previous policy month, unless they have been included previously in calculatingthe Account Value;

minusb) any withdrawals made or transfers of funds from the Account during the previous policy

month;mInUSc) the Monthly Deduction for the previous month.

The Account Value for each of the Accounts linked to the performance of the Royal &SunAlliance Financial Equity, Balanced, Income, International Equity, U.S. Equity, EuropeanEquity and Pacific Rim Equity Segregated Funds at the beginning of each day is adjusted toinclude any positive or negative earnings credited to that Account for the previous day.

The Performance Linked Account Values will fluctuate with the performance of the Royal &.SunAlliance Financial Segregated Fund to which they are linked and are not guaranteed. ThePerformance Linked Account Value on any date is based on the Earning Factor in effect on thatdate.

Taxation ProvisionThe Income Tax Act (Canada) provides that s~me life insurance policies are exempt from accrualtax treatment as defined in the Income Tax Act (Canada). We make adjustments to the policy toensure that it remains exempt from accrual taxation under the provisions of the Income Tax Act(Canada).

At the end of any policy year, if the policy does not qualify as being exempt from accrual taxtreatment, we will. &

1. automatically increase the.Amount oUnsurancQ in accordance with t e r yisions of theIncome Tax Act (Canada) without further evidence of insurab' . e' case will notexceed 8% of the Death Benefit on the previous an:ni~er - . nteed Cost ofInsutance for this increased amount of insurance D:.. 'es~ e Principat=LifeInsured's attained insurance age; an~· . ·eo

:.

2. transfer a portion of the policy's Acc nt Va e t ..aximum Transfer Account, ifnecessary. No M.arke.t.Value Adjus. nt~ S er Charge or transfer fee will be appliedto any sgch transfer. t:>' .

Automatic ~rans~~~ ~<;- -:. .. ~~sfer Account .

. anYexce~' a erAccount.

If the policy is pt from accrual tax treatment at the end of any policy year and the MaximumTransfer Ac nt is greater than zero (0), we automatically transfer the maximum amount, whilemaintaining tax exempt status, from the Maximum Transfer Account to the Investment Accountsaccording to the proportional allocation of premiums. Transfers from the Maximum TransferAccount do not incur any Market Value Adjustment or transfer fee.

At the end of each policy year, we may transfer an amount from the Account Value to theMaximum Transfer Account to ensure the policy maintains tax exempt status (see TaxationProvision).

If at any time other than the Policy Anniversary, the policy's Account Value becomes zero andthere is value in the Maximum Transfer Account, we automatically transfer an amount, up to theAnnual Maximum Premium, to the policy's Account Value.

You cannot elect to transfer funds between any of the policy's Investment Accounts andMaximum Transfer Account.

Cash Surrender ValueYou may surrender this policy for its Cash Surrender Value, which will be calculated on theMonthiversary on or following the date we receive your written request at our Head Office.

The policy's Cash Surrender Value equals:a) the policy's Account Value at the time we process the request for surrender;minusb) any Surrender Charge;mmusc) any Market Value Adjustment;minusd) the amount of any outstanding loans plus accrued interest.

The policy terminates when we process your request to surrender. -

We may defer paying the Cash Surrender Valudor up to six months after ~~Your requestto surrender at o~r Head Offic~. . ..Itf ..~ .. _. .Withdrawals ~'C \,You may withdraw part of the Cash Surrend u· . b'tou must request a minimum-of $500.00 (or the total Cash Surrender Val , if lesn .00) for each withdrawal. Anywithdrawal must be made from t~MaximU Tran~Rccount first. At least $500.00 of CashSurrender Value, net of any loans ~olic, st remain after every withdrawal. We chargea fee equal to the greater of $~O ~~ Market Value Adjustment on all withdrawals.

Withdrawals are tre~~ part of the policy has been surrendered and may incur aSurrende~~\.~' .

Surrende~~The Surrender Charge is a multiple of the Minimum Annual Premium applicable to the PrincipalLife Insured, including any ratings for substandard mortality.

Years since Issue 1 2 3 4 5 6 7 8 9 10 11+Multiple 1.0 2.0 3.0 4.0 4.0 4.0 4.0 3.0 2.0 1.0 0.0

The Surrender Charge multiple is calculated from the Date of Issue and applied to each Amountof Insurance on the Principal Life Insured at issue and added after the Date of Issue. Reductionsin the Amount of Insurance, or partial withdrawals, are treated as though the most recently addedAmount of Insurance is reduced first.

Cash LoanYou may borrow up to 85% of the Cash Surrender Value associated with the Guaranteed InterestAccounts, using this policy as sole security. A loan cannot be made against that portion of theCash Surrender Value represented by the value held in Index Linked or Performance LinkedAccounts. The values held in the Maximum Transfer Account cannot be loaned against. Youmust request a minimum of $500.00 and a minimum of $500.00 in Cash Surrender Value mustremain after the loan is taken. We set the minimum loan amount from time to time.

You will be required to sign a loan agreement. The amount paid to you is subject to a fee equal tothe greater of $25~00 and the-Market Value Adjusttnent. We may defer a loan, except to pay apremium due to us, for up to six months after we receive your loan request. _This loan bearsinterest from the date it is paid to you. -

Cash Loan InterestInterest will accrue at 2%. Interest on the loan accrues each day and is compounded annually.

Interest is due on - C~a) each policy anniversary; or ~ .\"b) the date of death; or ~J( I

c) the date of surrender; or - - -_ . ~}"d) date of a loan increase or repayment;- 0 ~".-

e) any other due date we specify. ~~,..

if the sum of the loan principal, a ueeres Surrender Charge exceeds the policy'sAccount Value.

The amount of the 10 . a "Loan Account", which is not credited with interest. The

mcludmg 1 to oan ccount.

Loan Rep entYou can repay all or part of a loan plus accrued interest before the Principal Life Insured's deathor before you surrender the policy. We deduct any unpaid loan plus accrued interest when thepolicy proceeds are paid.

Living Benefit LoanThis feature provides for an advance of a portion of the Death Benefit when we receivesatisfactory proof that a Life Insured is suffering from a terminal illness and has a life expectancyof less than one year.

We loan an amount up to 50% of the Amount of Insurance, less any outstanding loans, up to amaximum of $100,000. The Death Benefit is reduced by the amount of this loan.

The payment of this loan is subject to the Incontestability, Suicide and Misstatement of Age or Sexand Misstatement of Nicotine Use clauses. The Living Benefit Loan is not available within thefirst two years following the Date of Issue, reinstatement or any policy change requiring evidenceof insurability.

Living Benefit loan InterestInterest accrues at a rate applicable to the Daily Interest Account plus two percent (2%).

Paid-Up InsuranceAfter the policy has been in force for ten (10) years and if the Principal Life Insured has notreached insurance age 90, you may change the policy to Paid-Up Insurance for a reduced Amountof Insurance. Regardless of the Death Benefit Option chosen, the Paid-Up Insurance is level.

Premiums stop and cannot resume. We set the minimum amount allowed for Paid-Up Insurancefrom time to time. Any additional benefits terminate when a policy is changed to Paid-UpInsurance. Any covera'ge fot~Additiona.W.ives Insured on this policy are also terminated.

Substitution of Principal Life InsuredYou may request a substitution of the Principal Life Insured if the Owner is a corporation or anunincorporated partnership.

We require evidence of insurability satisfactory to us for the new Principal Life Insured. Whenthis option is exercised, we levy a fee, which is determined at that time. A replacement policy isissued subject to the New Insurance Details for Substituted Lives.

New Insurance Details for Substituted Lives1. AMOUNf OF INSURANCE - is the Amount ofInsurance-~pplied for and approved byus.

The Amount of Insurance on any Additional Life Insured already on this policy or beingadded callJ;lot be greater than the Amount of Insurance selected for the new Principal LifeInsured.

2. POLICY CQNTENTS - the new policy will contain any special clauses, ame~ents,endorsements andior conditions "that apply to this policy, the new Princi~i~sured and

3. ::~:::~=::::~~:e~eo~i~~~Insured uponrequest and subject to receipt of eVidenceB' urr\.~ a ~~ory to us. All additionalbenefits on the original Principal Life Ins red are~

4. MINIMUM PREMIUMS an~~~ cnONS - are based on the age, sex andsmoking status of thenew~~,\~ Insured at the date of the request.

5. OWNER - the O~ w policy is the same as the Owner of this policy.

6. T~~e\l}a:;; me the tax status after the substitution, which may result in arefund to \~aintain the tax exempt status of this policy. The Amount of Insurance islimited e amount allowed by the Income Tax Act (Canada).

At the time of substitution, at your request, the original Principal Life Insured can be continued asan Additional Life Insured under this policy, or the original Principal Life Insured may exercisethe Split Feature, as though he or she had been an Additional Life Insured under this policy. Thisoption must be exercised within 30 days of the new policy's Date of Issue.

Additional Lives InsuredUp to four Additional Lives may be insured under this policy. Any reference to Life Insured inthis policy shall also refer to any Additional Lives Insured, unless specifically indicated to be thePrincipal Life Insured.

The Amount of Insurance and the names of the Additional Lives Insured are shown in thePremiums and Additional Benefits section of the Policy Details page. The Amount of Insurancefor each Additional Life Insured cannot exceed the Amount of Insurance for the Principal LifeInsured.

Additional Life Common DisasterIn the event of the simultaneous deaths of the Principal Life Insured and any of the AdditionalLives Insured or the death of any of the Additional Lives Insured within thirty days of the death ofthe Principal Life Insured, we will pay the Amount of Insurance applicable to each death.

Addition or Deletion of Additional Life Insured ~\At any time you may add or delete an Additional Life Insured, or re m the Amountof Insurance on any Additional Life Insured. Any increase in ~: . surance:or additionof a new Additional Life Insured will require evidence of~~)Kis actory to us. 7

Wemayrefuseanyrequesrtharwouldjeopf)~ exemprstarus.

Death Benefit Options for A~' . I LIThe Death Benefit on the Ad~. a sured is the Amount of Insurance applied for and

.approvedbyus. Th~B1 e i vel

Change~~~~ . unt1. REDU l~st be for a minimum of $25,000. The remaining Amount of Insurance may

not be r ed below $25,000 for insurance ages 0-19; and $50,000 for insurance age 20 andover. We may charge a fee to cover expenses incurred.

2. INCREASE: must be for a minimum of $25,000. Increases are subject to evidence ofinsurability satisfactory to us. The Amount of Insurance may be increased only if the LifeInsured is less than insurance age 76, and cannot be increased to an amount greater than thaton the Principal Life Insured.

Amount of Insurance at RiskFor the Additional Life Insured, the Amount of Insurance at Risk is the Amount of Insuranceapplied for and approved by us.

Guaranteed Cost of InsuranceThe monthly Guaranteed Cost of Insurance is one-twelfth the rate shown in the Table ofGuaranteed Cost of Insurance Charges. There is a table of Guaranteed Cost of Insurance Chargesfor each Additional Life Insured at the end of this policy.

Changes in Cost of Insurance1. NON-SMOKER DISCOUNT: We provide a discount for non-smokers between the insurance

ages of 16 and 19. We calculate the Guaranteed Cost of Insurance using the non-smokerrates. Prior to the Policy Anniversary after the Additional Life Insured's 20th birthday, werequire proof of non-smoker status to maintain the non-smoker rates. We require adeclaration, signed by the Additional Life Insured, stating that he or she may be classified as anon-smoker according to our non-smoker definition at the time of your request.

If we do not receive a signed non-smoker declaration, we will adjust the current non-smokerrates to smoker rates based on the Additional Life Insured's attained insurance age.

2. YEARLY RENEWABLE GUARANTEED COST OF INSURANCE: If the Guaranteed Costof Insurance rate for any Additional Life Insured is Yearly Renewable Term,~u may requestit be changed t!J the level rate applicable to his or her attained insurance6 e Table ofGuaranteed Cost of Insurance Charges. The Amount of Insurance !lAd .' nal LifeInsured must have been in force for three full years. The Addi~= L e must be lessthan attain~d insur.ance ag~ 76. ~e must recei.veYour~ri r~~ ur ~e~d Offi~e.

On the PolIcy Anniversary 111UIlediatelytoy of any Additional Life .-Insured, the Guaranteed Cost of Insuran Char a atically will switch to level.

3. SMOKER COST OF INS c~an 'onal Life Insured is classified as a smokeryou may request that the Guar t Cost of Insurance be changed to a non-smoker rate bywriting to our Head Offi~ I quire evidence of insurability satisfactory to us inaddition to proof t dial Life Insured meets our non-smoker definition applicableatthes' eo . e e

If we appr c e, it will be effective on the next Monthiversary. We may refuse anyrequest tha w jeopardize the policy's tax exempt status.

Continuation Feature for Additional Life InsuredUpon the death of the Principal Life Insured, any Additional Life Insured under this policy mayrequest a new policy of the same plan of insurance without evidence of insurability and subject tothe New Insurance Details for Additional Lives.

A new policy will be issued when we receive:1. satisfactory proof that the policy was in force at the time of the Principal Life Insured's

death; and2. the Additional Life Insured's written request at our Head Office, within 30 days of the

death of the Principal Life Insured; and3. the written consent of the Owner, if living.

If the Additional Life Insured does not notify us of the intention to continue coverage under thisfeature, all coverage on the Additional Life Insured will cease 30 days after the death of thePrincipal Life Insured.

Split Feature for Additional life InsuredWith your consent, at any time while this policy is in force, any Additional Life Insured mayrequest a separate policy of the same plan of insurance, without evidence of insurability andsubject to the New Insurance Details for Additional Lives. We must receive your written requestat our Head Office. The new policy will be issued with a current Policy Date.

Insurance coverage under this policy for the Additional Life Insured requesting the new policy willcease on the new policy's Date of Issue.

New Insurance Details for Additional lives1. AMOUNT OF INSURANCE - an amount up to the Amount of Insurance currently on this

policy for the Additional Life Insured. It may not be less than the minimum available for thisplan at that time.

2. POLICY CONTENTS - the new policy will contain any special clauses, amendments,endorsements and/or conditions that apply to this policy or this plan of insurance that isapplicable to the Additional Life Insured.

3. ADDmONAL BENEFITS- are available upon request and subject to ree~' evidence ofinsurability satisfactory to us. fX.~ t.'\;

4. MINIMUM PREMIUMS and MONTIfL Y DEDUCfI ~:~ .:~ the age of theAdditional Life Insured used to determine ~~~miums and MonthlyDeductions as follows:

a. for Level Cost of InSUince from ue, u age at which the Additional LifeInsured exercising chi ea~as to this policy.

b. for YRT Cost of Insura ro issue, use the age at which the Additional Life Insuredrequested a new ~ e ising the continuation or split feature.

c. for YRT ~1 e from issue but switched to Level Cost of Insurance, use the~~ .,;. ,.. .onal Life Insured exercising this feature swit<:hedto Level Cost

The cla risk for the Additional Life Insured exercising this feature is determined as of thedate he or she was added to this policy.

Automatic Transfers - Maximum Transfer AccountSee "Automatic Transfers -Maximum Transfer Account" in Account Value Provisions section.

TransfersYou cannot elect to transfer funds from any Investment Option to the Maximum TransferAccount or vice versa.

Maximum Transfer Account ValueThe Maximum Transfer Account Value at the beginning of any policy month equals:

a) any transfers from the Account Value to the Maximum Transfer Account during theprevious policy month, unless they have been included previously in calculating theMaximum Transfer Account Value;

mmusb) any withdrawals made or transfer of funds from the Maximum Transfer ~count during

the previous policy month. r·~The Maximum Transfer Account Value at the beginning of eac~~_~~d to include anyinterest credited to the Maximum Transfer Account for th~re u~~~

Uponthe LifeInsured'sdeath, theMaxim~A(l n a ue is paid to the designatedB~neficiary. Upon Surrender of the policy, M~ ansfer Account Value is paid to you.

Rate of Interest ~OWe will declare the rate of inai ~aximum Transfer Account from time to rime. There is

::=~::teres~~ urnTransferAccoun~

The Maximu fer Account Value is not included in the policy's Account Value for purposesof this bon

WithdrawalsAny withdrawal must be made from the Maximum Transfer Account first. Withdrawals from theMaximum Transfer Account may incur a Market Value Adjustment. A fee, which we determinefrom time to time, will be charged for each withdrawal. This fee is currently set at twenty five($25.00) dollars.

Market Value Adjustment - Maximum Transfer AccountThe Market Value Adjustment applies to full surrenders and withdrawals of funds. The amountof adjustment is calculated as follows:

MVA = (j-i) x A x 1.50where:

J = the then current average rate of interest on Government of Canada Bonds with termsto maturity of One to Three Years, for the most recent month for which all data ispublished in the Bank of Canada Review;

1 = the rate of interest currently assigned on the Maximum Transfer Account; andA = the amount being surrendered or withdrawn from the Maximum Transfer Account.

A negative Market Value Adjustment will not apply. A Market Value Adjustment will not applyat the time of the Life Insured's death.

Policy LoansThe value held in the Maximum Transfer Account cannot be loaned against.

Maximum Transfer Account Taxation . r ~We will report any investment income allocable to the Maximum T~~~~alue to yOllannually. ~) ••Qtco~