participating life insurance - nbbn.ca · participating life insurance products from the canada...

Participating life insuranceWealth achiever • estate achiever

advisor guide

2

stab

ility

, acc

ount

abili

ty &

str

engt

h

participating life insurance | the canada life assurance company

participate in the strength of canada Life’s participating life insurance productspurchasing life insurance is a very important

decision that benefits your clients and their

beneficiaries well into the future. this guide

will help you understand how participating life

insurance works and provides technical details

on the Wealth achiever and estate achiever

participating life insurance products from

the canada life assurance company.

Both products are built on the strength of

canada life’s participating account. the features

and benefits of each product can be tailored to

help meet your clients’ needs for protection today

and into the future.

What’s newfebruary 2010

■ child’s term life insurance rider

enhancements . . . . . . . . page 14

– effective for coverage dated

feb. 8, 2010 or later

– minimum issue limit of

$10,000

– convertible to a maximum of

$250,000

– can convert to term or

permanent life insurance

coverage

– can be added to canada life

participating policies dated

January 2007 or later

3

learn how Wealth Achiever and Estate Achiever can provide your clients with:■ policy cash value that grows on a tax-advantaged basis■ cash value they can access during their lifetime■ dividends that can be used to pay some or all of

the out-of-pocket basic premiums or to buy more life insurance

■ riders and benefits that can be added to the basic policy to tailor coverage

■ a death benefit payout not subject to income tax

Participating life insuranceparticipating life insurance offered by canada life

combines permanent life insurance with a tax-advantaged

investment component. it provides insurance protection for

the insured’s lifetime as long as premiums are paid when

due and includes basic guaranteed death benefits and

basic guaranteed cash values. Benefits and riders can also

be added to the basic policy.

participating life insurance is particularly attractive to clients who:■ have low to moderate risk tolerance■ aren’t interested in the day-to-day management of the

investment component of their life insurance policy■ are attracted to the historical long-term stability of the

rate of return on participating account assets

■ are looking for guarantees

participating life insurance is flexible permanent life insurance with:■ guaranteed basic premiums ■ guaranteed basic death benefit■ guaranteed basic cash values■ policyowner dividends that can be used to purchase

additional life insurance or reduce out-of-pocket premiums (policyowner dividends aren’t guaranteed)

■ tax-advantaged investment component (particularly valuable as fixed-income component of their asset portfolio)

■ choice of riders and benefits that can be added to the

basic policy

■ premium flexibility

understanding participating life insurance from canada lifeWhen a client purchases participating life insurance, the

premiums paid go into an account called the participating

account with funds from other canada life participating life

insurance policies. premiums and other basic values for

these policies are calculated using long-term assumptions

for death claims, investment returns, expenses (including

taxes) and other relevant factors. the guaranteed premium,

guaranteed cash surrender values and guaranteed death

benefit are based on these assumptions and are in place

for the life of the policy.

earnings are generated in the participating account when

the actual experience for these factors is collectively more

favourable than the assumptions used when establishing

the guaranteed values. canada life may distribute a portion

of the earnings as declared by the Board of directors in

accordance with the policyowner dividend policy.

the amount available for distribution in any year will

vary upwards or downwards depending on the actual

and expected experience. the amount available is also

influenced by considerations such as:

■ the need to retain earnings as surplus to, among other

things:

– ensure financial strength and stability

– finance new business growth

– provide for transitions during periods of major change

– smooth fluctuations in experience■ practical considerations and limits

■ legal requirements and prevailing industry practices

the insurance companies act (ica) of canada contains

a number of provisions that govern how the participating

account is to be managed within a company with

shareholders.

participating life insurance | the canada life assurance company 3

4 participating life insurance | the canada life assurance company4

strength in canada lifeperformance and strength go hand-in-hand over the long

term. these factors are especially important when choosing

a participating life insurance policy because the net cost of

a participating life insurance policy depends on the

long-term performance of the participating account.

canada life has received very strong ratings on our

claims-paying ability and financial strength from the major

rating agencies.**

for more information on the management, performance

and strength of the canada life participating account,

see Participating life insurance financial facts

(form number 46-4758).

offering choice in participating productscanada life offers two participating life insurance

products: Wealth Achiever and Estate Achiever. Both

contain participating life insurance key features, but

emphasize these features differently to suit your clients’

financial needs and goals.

Wealth AchieverWealth Achiever provides higher short-term cash values

than Estate Achiever while still providing lifetime insurance

protection. it provides a choice of level basic premiums

payable for a maximum of 20 years, or to age 100. the

choice of premium-paying period impacts values such as

death benefit, dividend amounts and cash values.

Wealth Achiever may be suitable for individuals who:

■ are interested in accessing the cash value in

the early years

■ require premium flexibility to meet changing cash flows

from their business

■ are near retirement and want cash values they can

access in their lifetime**as rated by A.M. Best Company, Dominion Bond Rating Service, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s Ratings Services at the time of publication.

dividendsthe opportunity to earn policyowner dividends is unique

to participating life insurance policies. participating

policyowners share in the experience of the pool of

participating life insurance policies through the payment

of policyowner dividends.

dividends aren’t guaranteed and will fluctuate from

illustrated dividends, depending on future dividend scales.

the dividend scale, including dividends paid under it, is

affected by a number of variables such as investment

returns, mortality experience, expenses (including taxes)

and other relevant factors.

dividends credited to a policy have a cash value associated

with them. this cash value, once credited to the policy, is

vested and can’t be reduced or used in any way without a

client’s authorization, other than to pay premiums.

all premiums due or past due on the first policy anniversary

must be paid before the first-year dividend is credited.

policyowner dividends are determined according to canada

life’s dividend policy for participating policyowners, and are

declared by the Board of directors.*

policyowner dividends can provide clients with considerable

flexibility now and in the future.

policy cash valuethe cash value in a participating life insurance policy is

comprised of guaranteed basic cash values, as stated

in the policy, plus any cash value arising from dividends

(dividends aren’t guaranteed). all, or part, of the total cash

value, less any indebtedness, is paid to the policyowner if

he or she surrenders all or part of the policy.

*A copy of the Canada Life participating policyowner dividend policy is available on request. Please contact your regional marketing centre for more information.


Estate AchieverEstate Achiever provides higher long-term growth in total

cash values and death benefit than Wealth Achiever. it

provides a choice of basic level premiums payable for

a maximum of 20 years, or to age 100. the choice of

premium-paying period impacts values such as death

benefit, dividend amounts and cash values.

Estate Achiever may be suitable for individuals who are

interested in:

■ long-term cash value growth on a tax-advantaged basis

■ estate planning and enhancing estate values

■ accessing long-term cash value for retirement income

choice of premium-paying periodspay to age 100level basic premiums payable to a maximum of age 100.

max 20 level basic premiums payable for a guaranteed maximum

duration of 20 years.

policies may be eligible for premium offset prior to the

end of the premium-paying period depending on dividends

declared, whether policy loans have been taken and

other factors. refer to the premium offset section for

more details. the choice of premium-paying period impacts

values such as death benefit and cash values.

product detailsWealth Achiever and Estate AchieverWealth Achiever and Estate Achiever are participating

life insurance products with two guaranteed premium-

paying periods.

Issue agesthe issue age is based on the life insured’s age at his or

her nearest birthday.

pay to age 100■ Single life 0 - 85■ Joint first-to-die and joint last-to-die

– equivalent single ages (esa): 18 - 85

– each individual insured must be within the single

life issue ages.

max 20■ Single life 0 - 80■ Joint first-to-die and joint last-to-die

– equivalent single ages (esa): 18 - 80

– each individual insured must be within the single life issue ages.

Back-datinga policy may be back-dated up to 11 months from the

date of underwriting approval. all back-dated premiums

must be paid with interest. no other transactions can be

back-dated prior to the date the policy takes effect. the

incontestability and suicide exclusion periods will be in

effect from the later of the issue date of the policy and the

date the policy takes effect (note: if there is a later contract

amendment increasing coverage, the incontestability

and suicide provisions will restart, but for the increased

coverage only). any time a policy lapses and afterwards is

reinstated, the exclusion periods will recommence, from

the re-instatement date.

substandard livessubstandard lives may be accepted and the substandard

extra premium may be eligible for commissions –

see canada life’s commission schedule for details.

the guaranteed insurability rider and business growth

protection rider aren’t available for substandard lives.

5


issue limits the minimum face amount is $25,000 for a single-life

coverage and $50,000 for joint first-to-die and joint

last-to-die coverage.

there is no preset maximum face amount; however, a

special quote is required if inforce coverage at canada life

on the prospective life insured exceeds $10 million.

for amounts over $10 million, please contact your regional

marketing centre for a special quote.

premium bands Premium band Coverage

Band 1: $25,000 to $99,999

Band 2: $100,000 to $249,999

Band 3: $250,000 to $999,999

Band 4: $1,000,000+

policy fee for pay to age 100 and max 20 there is an annual fee of $35. this fee, however, isn’t

charged separately, but is instead incorporated within

the yearly premium.

features

coverage options available■ single life

■ Joint first-to-die

■ Joint last-to-die, premiums payable by the policyowner

to first death

■ Joint last-to-die, premiums payable by the policyowner

to last death

single lifethe life of one individual is insured under the policy with

the death benefit payable on the death of the life insured.

Joint first-to-diethe lives of two individuals are insured under the policy.

the death benefit is payable when the first insured dies.

a joint first-to-die policy can be a cost-effective way to

provide income replacement, mortgage insurance, or

business insurance to fund a buy-sell agreement.

survivor benefitthe survivor benefit provides an option for the surviving

life insured on a joint first-to-die coverage to take out a

new participating life insurance policy without evidence

of insurability. Where the surviving life insured isn’t the

policyowner, and the policyowner doesn't exercise the

option, the survivor is entitled to exercise it and be the

owner of the new policy. the option must be exercised

within 60 days of the date of death of the first-to-die and

before the survivor has reached the insurance age 71.

under the survivor benefit, a second benefit may be

payable in accordance with the automatic temporary

coverage provision. if the survivor dies within 60 days of

the death of the first-to-die and hasn’t already exercised

the optional permanent coverage, and if the survivor

qualifies based on the criteria in the policy contract, an

amount equal to the face amount of the policy will be paid

as a second benefit. the amount of this second benefit

will be increased by any life insurance in effect under the

enhanced coverage option (eco) if this dividend option was

in effect at the first death.

7participating life insurance | the canada life assurance company 7

Joint last-to-diethe lives of two individuals are insured under the policy.

the total death benefit is payable only when the second

insured dies and therefore, generally costs considerably

less than two single-life policies.

there are two types of joint last-to-die policies available:

1. Premiums to first death

Basic premiums are payable by the premium payer to

the death of the first of the insureds. the additional

deposit option (ado) rider terminates when the death

of the first of the insureds occurs. additional payments

may be required after the death of the first of the

insureds to pay for eco shortfall amounts.

premiums to first death aren’t allowed if one of the life

insureds is declined. canada life reserves the right to

exclude premiums to first death from policies where

one or both of the joint applicants have been deemed a

substandard risk.

2. Premiums to last death

premiums are payable to the death of the last of the

insureds or esa 100, if earlier.

a joint last-to die policy shouldn’t be purchased if the

life insurance funds are required on the first death.

a joint last-to-die policy may be used to:

■ provide funds for the payment of taxes owing on the

death of the last-to-die of the lives insured

■ preserve a couple’s estate for their heirs or provide a

gift for a couple’s favourite charity

dividend optionscanada life offers participating policyowners a choice of

five dividend options. these options give policyowners

increased flexibility. if a dividend option isn’t indicated on

the application, dividends will be used to purchase paid-

up additions. dividend options can be changed upon the

policyowner’s written request, subject to limitations. a

change in dividend option may result in taxable income to

the policyowner. only one dividend option can be elected at

any given time.

paid-up additionsthe paid-up addition (pua) dividend option purchases

additional paid-up life insurance with each dividend that is

credited to the policy.

the key advantages of paid-up additions are:

■ coverage increases annually without evidence of insurability. this is generally a good way to offset the effect of inflation so the value of the policyowner’s coverage isn’t eroded over time.

■ dividends are used to pay for the additional paid-up life insurance coverage on a pre-tax basis. that is, dividends that are immediately applied to pay life insurance premiums within the same policy don’t attract income tax.

■ paid-up additions are eligible for their own dividends.

■ once paid-up additions are purchased, their value at purchase is guaranteed. the associated death benefit and cash value can only be reduced if the policyowner requests a partial surrender (e.g. premium offset or withdrawal) or, if the premium for the basic death benefit is unpaid, dividends may be used as specified in the policy to help keep the policy from lapsing (i.e.

automatic premium loan).

paid-up addition premiums will vary by:

■ smoking status■ substandard rating■ sex

■ attained age

the paid-up additions graph demonstrates how paid-up

life insurance coverage grows over time to supplement the

basic death benefit (i.e. face amount).

paid-up additions dividend option*

for the same premium, the paid-up additions dividend option provides higher early cash value and lower initial death benefit than the enhanced coverage option. it provides higher death benefit growth over the long term.

time

paid-up additionsTotal death benefit

Basic insurance

*These graphs are for illustrative purposes only. Actual proportions for PUA and ECO will vary by such factors as age, risk class, amount of life insurance, out-of-pocket premium payments and declared dividends. This example is not complete without the Canada Life illustration including the cover page, reduced example and product features pages having the same date.


enhanced coverage option dividends are used to buy additional life insurance that is

a combination of paid-up additions and one-year term life

insurance. the enhanced coverage option (eco) offers five

key advantages:

■ premiums for the one-year term coverage are paid

by dividends using pre-tax dollars. dividends that are

immediately applied to pay life insurance premiums

within the same policy don't attract income tax.

■ a portion of the dividend is used to purchase paid-up

additions each year whenever dividends exceed the

eco one-year term cost. over time, the amount of term

life insurance may be completely replaced by paid-up

life insurance at which time the death benefit will begin

to increase.

■ Within limits at time of issue, the policyowner can

choose the amount of eco used to strike a balance

between affordability and future growth in cash value

and death benefit.

■ the eco one-year term life insurance can be converted

at the policyowner’s request to any permanent life

insurance policy, which is issued at the time of

conversion, prior to the policy anniversary nearest to

the life insured’s 65th birthday (or nearest to the joint

attained age for joint coverages), subject to certain

restrictions.

■ if the dividend scale is increased in the future,

the eco term may be replaced at a faster rate by

paid-up additions and vice versa if the dividend scale

is reduced.

eco term premiums will vary by:

■ smoking status■ substandard rating■ sex■ issue age and attained age

■ eco guarantee selected

enhanced coverage dividend option*

eco provides higher initial coverage for the same out-of-pocket premiums as the paid-up additions option.

enhanced coverage option guaranteesthe enhanced coverage option (eco) is available with a

10-year or lifetime guarantee of the enhancement amount.

the eco guarantee (for lifetime or 10 years) states that:

■ canada life will not ask for extra out-of-pocket

payments to cover any premium shortfall if, during

the guarantee period, current dividends are unable to

completely cover the entire cost of the eco one-year

term life insurance cost.

■ the enhancement amount will not be reduced during

the guarantee period.

certain options available to the policyowner, if elected,

cause the eco guarantee to cease or be forfeited. for

example, if dividends are used to support premium offset

or if they’re withdrawn from the policy, the eco guarantee

ceases. a policy loan doesn’t affect the eco guarantee.

if dividends are insufficient to pay for the eco term

coverage and the guarantee period has expired, additional

out-of-pocket premium payments may be required to pay for

any shortfall, or the policyowner may choose to have his or

her eco coverage reduced.

time

Basic insurance

eco

paid-up additionsone-year term life insurance

Total death benefit

8

9participating life insurance | the canada life assurance company 9

premium reductiondividends are used to reduce the out-of-pocket premiums

for the current policy year. a billing notice is sent for any

remaining amount that the dividend doesn’t cover. if the

annual dividend credited exceeds the premium, the excess

may be applied to one of the following dividend options

of the policyowners choice -- paid-up additions, cash

accumulation or cash payment. dividends paid in cash,

left to accumulate or applied to pay premiums for non-life

insurance riders may be subject to taxation.

cash accumulationdividends can be left to accumulate with interest. the

interest rate is adjusted from time to time. interest is

credited on each policy anniversary. the accumulated

amount is added to the death benefit. all or a portion of

the annual dividend may be taxable in later policy years.

dividends paid reduce the policy’s adjusted cost basis

(acB) and are subject to tax when the acB is zero. any

interest earned on dividends on deposit is subject to tax.

clients may withdraw some or the entire accumulated

amount at any time

cash paymentdividends are paid to the policyowner each year. policy

cash values equal the contractually guaranteed cash

values with this option, and the death benefit remains

level. cash dividends reduce the policy acB and are subject

to tax once the policy’s acB is zero.

premium offsetafter out-of-pocket premiums have been paid for a number

of years, premiums may be able to be paid by current

dividends and/or withdrawal from any cash accumulations

or surrender of any paid-up additions.

since premium offset is dependent on dividends that are

credited to and retained in the policy over time (but aren’t

guaranteed), increases and decreases in the amount of

dividends credited over the life of the policy will affect the

availability of premium offset. such increases or decreases

may affect the length of time that the premium may be

paid in whole or in part by dividends. the rate of growth

in both the death benefit and cash value is reduced when

premiums are paid by using premium offset rather than by

out-of-pocket payments.

premium offset is dependent on dividends which aren’t

guaranteed. thus, the premium offset date shown on

illustrations isn’t guaranteed. it’s possible that a policy will

never be eligible for premium offset or that it will become

eligible and subsequently cease to be eligible. eligibility

for premium offset will be determined based on current

administrative rules at the time of application for premium

offset.

there are a number of events affecting the date that

premium offset will be available, such as:

■ increases or decreases in the dividend scale

■ Withdrawal of cash accumulations

■ surrender of any paid-up additions

■ changing a dividend option

■ adding a rider or supplementary benefit

■ changes to eco term rates or pua purchase rates

■ taking a policy loan or increasing an existing policy loan

■ increases or decreases in the policy loan rate

■ increases or decreases in the interest rate on

accumulated dividends

policies with the enhanced coverage option (eco) will be

affected to a greater extent by these changes than policies

with other types of dividend options.

other features

cash valuesa policy’s total cash value is comprised of two components:

1. guaranteed basic cash values, which are specified in

your client’s contract.

■ for Wealth Achiever, the guaranteed cash value is

available starting in year one.

■ for Estate Achiever, the guaranteed cash value is

available by the seventh policy year.

2. cash value arising from dividends which aren’t

guaranteed. these cash values accumulate in policies

with paid-up additions, eco and cash accumulation

dividend options.


accessing cash valuesPolicy loans

policy loans are available from canada life secured by

the cash value of the policy according to the terms of the

contract. interest on the policy loan will accrue from the

day the loan is taken at a rate set by canada life. if the

accrued interest at the end of a policy year isn't paid at

that time, canada life will add it to the amount of the loan.

the amount of the loan and the accrued interest are the

amounts owed on the policy.

policy loans aren’t taxable if the amount being borrowed is

less than the policy adjusted cost basis (acB) at that time.

policy loans reduce the policy acB. When the policy acB is

zero, any additional policy loans are taxable. repayments

of policy loans that were previously taxed are eligible for tax

deduction.

policyowners may borrow all or a part of the total loan

value. the total loan value at any time is the amount which

equals:

■ the loan value set out in the table of guaranteed values,

increased by any cash accumulations, plus 90 per

cent of the cash value of any existing paid-up additions

credited to the policy

less:

■ any amounts already owed on the policy, plus interest

which will have accrued (assuming no repayment of all

or part of the amounts owed on the policy)

this is all determined as at the next policy anniversary or, if

sooner, the next premium due date.

the policy will lapse if at any time, the accumulated loan

amount including any accrued interest exceeds the policy

cash value.

Withdrawalspolicyowners may withdraw cash values arising from policy

dividends without affecting the basic policy guarantees. if

the dividend option is puas or eco, the cash withdrawal

is made available by surrendering puas related to that

cash value. the death benefit will reduce by the puas

surrendered. any eco guarantee will be forfeited by

the withdrawal. Withdrawals of guaranteed cash values

require an amendment to the policy, which will revise the

guaranteed values in the policy including a reduction in

basic death benefit. any withdrawal of cash values, other

than cash accumulation dividends on deposit, may be

subject to taxation.

non-forfeiture optionsif a policyowner decides to discontinue paying premiums,

the policyowner may elect one of the following

non-forfeiture options to maintain coverage:

1. Automatic premium loan

if all or part of a premium due remains unpaid at

the end of the grace period, a premium loan will

automatically be taken from the policy cash value to pay

the premium owing.

2. Reduced paid-up life insurance

a policyowner can elect to use the total cash value of

the policy as a single premium to purchase participating

paid-up life insurance. the amount which can be

purchased will depend on the amount of cash value

available less any indebtedness, the insured’s age, sex,

smoking status and risk class. election of this option

may result in the loss of the tax-exempt status of the

policy which would result in the policyowner having to

report taxable income each year.

10


3. Extended term life insurance

the extended term life insurance option (eti) allows you

to keep an amount of insurance under this policy inforce

for a period of time, without paying premiums which

would become due.

a policyowner may elect to purchase fully paid-up

term life insurance for a term, the length of which

will depend upon the amount of cash value available

less any indebtedness in the policy at the time this

option is exercised and the insured’s age, sex and

smoking status. the eti option isn’t available if any

insured was rated as shown on the policy details page.

election of this option may result in the loss of the tax-

exempt status of the policy, which would result in the

policyowner having to report income each year.

the amount of eti available will be equal to the face

amount of the policy plus puas, less any indebtedness

on the policy at the time of election.

4. Premium deferment

premium deferment allows the policyowner to maintain

the basic death benefit plus any coverage purchased by

the dividend option if a required basic premium isn’t

paid by the end of the 31-day grace period. Before the

grace period ends, the policyowner must request to

be placed on extended term life insurance. premium

deferment will automatically be applied when the

extended term life insurance is elected between the first

and fifth policy anniversaries, inclusive. any additional

benefits provided by riders aren’t included under the

extended term life insurance.

11

Before the next policy anniversary after the election of

this option (or before the extended term life insurance

period completes, if earlier), the policyowner must

restore the premium-paying status of the policy by

paying back the missed premium(s) with interest. the

policyowner may also restore any additional benefits

provided by riders at the same time premium payment

status is restored, but evidence of insurability may

be required. if the policy isn’t restored, it will remain

as extended term insurance and the policyowner

forfeits any ability to restore the premium-paying status

thereafter.

during the premium deferment period, charge-backs

will apply to both commissions and new business

credits. if the policy is restored, these charge-backs will

be reversed.

if the policy isn’t restored before the first policy

anniversary after election of this option, the policyowner

may lose the tax-exempt status of the policy.

12

additional deposit option (ado) the additional deposit option (ado) enhances policy values

by allowing additional premium payments that purchase

additional paid-up life insurance over and above the puas

purchased by policy dividends. the dividend option on the

policy must be pua or eco to add ado to a policy.

for new policy issues, the ado is available on both

standard and substandard policies dated may 26, 2008

and later. ado is not available when flat extra premiums

are involved. the ado may increase the amount of

underwriting required before a policy is issued.

there are two versions of the ado:

riders and benefits

Wealth Achiever and Estate Achiever – riders and benefits availability Rider Issue ages –

max 20 policiesIssue ages - pay to age 100 policies

Single life Joint first-to-die

Joint last-to-die, premiums to last death

Joint last-to-die, premiums to first death

Additional deposit option (ADO) • Scheduled • Singlepremium

0-800-80

0-850-85

✓ ✓ ✓ ✓

Disabilitywaiverofpremium 18-55 18-55 ✓ ✓ ✗ ✗

Deathand/ordisabilitywaiverofpremium

18-55 18-55 ✓ ✗ ✗ ✗

Deathanddisabilitywaiverofpremium

18-55 18-55Not

applicableNot

applicable✓ Notapplicable

Guaranteedinsurabilityrider ✗ 0-45 ✓ ✗ ✗ ✗

Businessgrowthprotection ✗

10-yearoption:18 - 65 15-yearoption:18 - 60

✓ ✗ ✗ ✗

Accidentaldeathbenefit 0-65 0-65 ✓ ✗ ✗ ✗

Simply Preferred term life insurance rider –term10

✗ 15-75 ✓ ✗ ✗ ✗

Simply Preferred term life insurance rider –term20

✗ 15-65 ✓ ✗ ✗ ✗

Child’sterm`lifeinsurance ✗15 days – 17years

✓ ✗ ✗ ✗


1. Scheduled involves a regular premium payment

(monthly or annual) to purchase additional paid-up

life insurance.

2. Single premium involves a one-time purchase of

additional paid-up life insurance. this version will have a

higher maximum premium than the scheduled version.

scheduled and single premium ado premiums aren’t

waived under any benefit.

after the policy is issued, the rider may only be added on a

policy anniversary. the scheduled ado rider will terminate

when:

13participating life insurance | the canada life assurance company

■ a written request to terminate premiums for this rider is

received■ premium offset is elected■ the life insured reaches age 100 or the esa for a joint

policy reaches 100

– for max 20, ado can continue past the 20th

policy year.■ Waiver of premium comes into effect■ a dividend option other than paid-up additions or

enhanced coverage option is elected■ the first death occurs on a joint last-to-die policy with

premiums payable to first death ■ reduced paid-up coverage or extended term life

insurance is elected by the policyholder■ the policy is terminated■ premium payments for this rider have not been paid

for more than two consecutive years (more than 24

consecutive monthly payments)

Issue ages - Scheduled ADO

pay to age 100: 0-85

max 20: 0-80

Issue ages – Single premium ADO

pay to age 100: 0-85

max 20: 0-80

Issue amounts:

Minimum ADO premium: single premium: $1000

scheduled: $1000 annual premium mode

scheduled: $90 monthly premium mode (the

premium mode for ado must match

the base policy)

there may be situations where the illustration will allow you

to select an amount that is below the posted minimum. for

only those cases you can go below the posted minimum.

Maximum ADO premium:

this is the lower of either the preset maximum allowed by the tax exempt test or the amount for which the insured is underwritten (single or scheduled premium).

preset ado maximum premiums are designed to help

keep the policy exempt from accrual taxation based on

current canadian tax legislation. in some situations,

such as stopping and restarting ado premiums, dividend

withdrawals or dividend scale increases, a partial surrender

(or reduction in ado amount) may be necessary to help

maintain the tax exempt status and this could generate

taxable income.

the preset maximum scheduled ado premiums in Zoom

assume starting payments immediately and continuing

to age 100. the maximum for the single premium ado

assumes an immediate payment.

issue maximums will vary by:

■ smoking status■ substandard rating■ sex■ Issue age■ Basic policy ■ premium-paying period (max 20 or pay to age 100)■ rider version (single premium or scheduled with annual

or monthly)■ Basic death benefit ■ policy duration when the coverage is added to an

inforce policy

ado administrative feethe ado administrative fee is guaranteed not to increase

once the coverage is added. it is currently eight per cent

to cover compensation, premium tax and issue and

administration expenses. the administrative fee amount

may differ for ado coverage added at a later date.

for annual payments the cash value at the point where the

pua is purchased is 92 per cent of the premium paid.

for more details on ado, see the appendix section within

this guide.

start and stop of additional deposit option premiumsduring the deposit period illustrated, deposits can stop

and start again without underwriting up to and including

missing two consecutive annual payments or 24 monthly

(auto-pay) deposits. for example, a policyowner could pay

the scheduled year one ado premium, then miss years

two and three, and then resume payment of the scheduled

ado at the start of year four without providing new

evidence of insurability. if the policyowner does not resume

payment of scheduled deposits after having missed two

consecutive annual payments or 24 monthly deposits, the

rider will terminate. Note: If the deposits stop and restart, no FYC override will be paid on the restarted deposits, unless underwriting is involved. It is a continuation of an existing sale not a new sale for restarts within three years of the policy issue date, unless basic coverage is increased.

for more details on start and stop of ado premiums, see

the appendix section within this guide.

Simply Preferred term life insurance term 10 and 20 ridersThe Simply Preferred term life insurance riders provide

additional life insurance with a 10 and 20-year premium

renewal period. the term life insurance may be converted

to a permanent life insurance policy and is automatically

renewable at the end of each 10 or 20-year term period

until the policy anniversary nearest the insured’s 85th

birthday. these riders are available for all policies issued

after may 1999. the rider is available on single-life

coverages only.

Simply Preferred term life insurance riders allow for lower

premium rates for clients who demonstrate good health.

each rate class is based on specific measurable criteria.

preferred underwriting is available for face amounts of

$250,000 or more. for amounts less than $250,000 our

competitive gold or silver classes apply.

minimum issue amounts for Simply Preferred term life

insurance riders are $50,000.

Simply Preferred term life insurance term 10 to term 20 conversions

all or part of a term 10 rider may be converted to a term

20 policy, without evidence of insurability. the conversion

may be requested after the rider’s first anniversary and

prior to the earlier of rider’s fifth anniversary or the

anniversary nearest to the insured person’s 65th birthday,

whichever comes first. the new premiums are offered on

the insureds attained age, calculated on an age-nearest

basis and the first renewal occurs 20 years from the date

of conversion, regardless of how many years the term 10

coverage was inforce prior to the change.

a conversion is not available if the insured person is totally

disabled and the premiums on the term 10 rider are being

waived.

in a partial conversion, part of the term 10 rider can be

retained as a term 10 rider, provided all product minimums

are met for the remaining term 10 rider and the new term

20 policy.

For more information on our Simply Preferred term life insurance riders, refer to Canada Life’s Simply Preferred term life insurance advisor guide (558 CAN).

child’s term life insurance riderthe child’s term life insurance rider provides increasing

term life insurance coverage on all children in a family. on

each rider anniversary date, the coverage amount for the

child’s life insurance rider automatically increases by four

per cent of the original amount. the coverage ceases, with

respect to any particular child, on the rider anniversary

following that child’s 25th birthday, or the basic life insured

turns 65, whichever is earlier. however, the policyowner

can extend the coverage beyond the basic life insured’s

65th birthday, if any insured children are still under 25 at

that time. the policyowner must request this extension

within 60 days of the insured parent turning 65.

at the death of the basic life insured, the then existing

coverage on each child is automatically converted to paid-

up term life insurance, convertible to age 25.

the term “children” includes natural, adopted and

stepchildren of the basic life insured. after the rider is in

place, any additional children who are born to or legally

adopted by the life insured prior to his or her 60th birthday

are automatically included under the contract regardless

of health, at 15 days of age. the initial coverage in these

cases, for each added child, is the amount inforce on each

of the children already covered, at the time the additional

child is added.

the current child’s life insurance rider can be added to

policies issued after Jan. 1, 2007. the rider isn’t available

on max 20 policies.

Issue ages

Basic life insured: up to and including age 59

children insured under rider: 15 days up to and including

17 years of age (on an age nearest basis)

Issue limits

minimum: $10,000

maximum: $25,000

Substandard:

■ if the primary insured is rated over 200 per cent

(pre-astra rating), the rider is not available.

■ if any child born to or adopted by the primary life

insured at the time the rider is underwritten, is rated

over 200 per cent (pre-astra rating), they will be

excluded from the rider. additional children born to

or adopted by the life insured within the limitations

described above are automatically included under

the contract.

participating life insurance | the canada life assurance company14


Premiums

the annual premium is level and isn’t dependent on the

number of insured children. the premium-paying period is

the greater of 25 years or to the basic life insured’s age 65

as long as the coverage is in effect. the premium period

may be extended to additional years of coverage to protect

all children who haven’t yet reached age 25.

Conversion

the coverage on each child may be converted to a term

or permanent policy, either when the child turns 25, or

within 31 days of the insured child’s marriage, if the child

marries between their 21st and 25th birthday. the amount

of coverage converted may not be more than $250,000 of

new life insurance.

if the policyowner does not exercise the conversion option

by the insured child’s 25th birthday, the insured child will

be entitled to exercise it in place of the policyowner and

will be the owner of the new plan.

death and/or disability waiver of premium Basic premium payments (and some rider and benefit

premium payments) will be waived if the individual with the

waiver of premium coverage (waiver life insured) dies or

becomes completely disabled for six consecutive months

and continues to be disabled. for waiver of premium on

disability, the disability must occur before the waiver life

insured’s 60th birthday. for waiver of premium on death,

death must occur before the waiver life insured’s 65th

birthday. the policy benefits will continue as if the premium

had been paid by the premium payer.

Definition of disability

total disability is defined as a bodily injury or disease

resulting in the following:

a) during the first two years, the waiver life insured

is prevented from engaging in his or her regular

occupation for payment or profit

b) thereafter, the waiver life insured is prevented from

engaging in any occupation for which he or she is or can

become qualified by training, education or experience

there are several types of waiver of premium

riders available:

1. disability waiver of premium for the owner/insured of

single-life and joint first-to-die policies

2. death and/or disability waiver of premium for the payer

of single-life policies

3. disability and death waiver of premium for either or

both lives of joint last-to-die policies

Where the life insured is under age 16, the waiver of

premium terminates on the day before the anniversary

nearest the child’s 25th birthday or the waiver life insured’s

(payer’s) 60th birthday, whichever occurs first.

Where the owner-applicant (payer) is other than the basic

life insured, evidence of insurability will be required.

Issue age

18 - 55

Purchase limit

the maximum amount available is $50,000 of premium

including any amount applied for and inforce from other

companies.

guaranteed insurability riderthe guaranteed insurability rider (gir) allows the life

insured to purchase additional life insurance on specified

option dates without providing new medical evidence

of insurability. the additional life insurance may be any

permanent individual life insurance policy issued by

canada life at that time, with canada life’s consent.

premiums are based on the attained age, using the same

class of risk as the basic policy. this rider may be

included at the time of issue or added subsequently to

standard policies. it automatically ceases if the base

policy is terminated.

Issue age

0 - 45

Benefits and riders

■ if the base policy includes a waiver of premium rider,

then this rider may be added to the new policy without

medical evidence when a gir option is exercised.

however, if the insured is disabled due to a condition

that existed before exercising the gir option, the

premium for the new policy isn’t waived for by that

disability rider.

■ if the base policy is on the life of a minor and includes a

waiver of premium rider, canada life’s current practice

is the waiver of premium rider is automatically added to

the new policy when a gir option is exercised.

■ if the base policy does not include a premium waiver,

then when a gir option is exercised, a waiver of

premium rider may be added to the new policy with

satisfactory evidence of insurability.

15

1616 participating life insurance | the canada life assurance company

■ if the policy contains an accidental death benefit (adB)

rider on the life insured at the date of option, then a

similar rider may be included with the new insurance

plan or coverage. the amount of the new rider may not

exceed the new insurance amount applied for at the

date of option and must be within the maximum and

minimum amounts we would then allow for the new

plan or type of coverage.

■ if the base policy includes any other rider, it may be

added to the new policy with satisfactory evidence of

insurability.

Option amounts

When a gir option is exercised, the new policy face

amount must be within the following limits:

■ minimum: $25,000

■ maximum is the lesser of:

• two times the face amount (including term riders)

• $300,000■ the total life insurance amount of all gir optioned

new policies may not exceed the cumulative maximum

amount allowed under the gir option, as illustrated in

the table below

Issue limits

Original policy Cumulative maximum of issue age all options is the lesser of:

0-36 $1,200,000orfourtimesselectedoptionamount

37-39 $900,000orthreetimesselectedoptionamount

40-44 $600,000ortwotimesselectedoptionamount

45 $300,000oronetimesselectedoptionamount

Option dates

option dates are the policy anniversaries nearest the

insured’s following birthdays: 25, 28, 31, 34, 37, 40, 45 or

50. alternative option dates occur on the 91st day after:

■ marriage

■ Birth or adoption of a child

the alternative option dates negate the next available

option date. if a regular option date falls within the 90-day

period before the alternative option date, it’s cancelled. if

an option date doesn’t fall within the 90-day period and

the insured purchases additional life insurance on the

alternative option date, the next available option date is

cancelled. requests for other special option dates are

considered.

a written application must be received at canada life’s

head office within 60 days before or 31 days after the

option date. provided the insured is still living, coverage

takes effect upon the later of:

■ the option date

■ receipt by head office of the first premium no later than

31 days after the option date

Business growth protection (Bgp) rider (10 or 15-year option period)the business growth protection (Bgp) rider gives business

owners the option to purchase additional life insurance

coverage on the life insured at their attained age, without

providing additional medical evidence of insurability.

designed to make it easier for business owners to increase

their insurance when their share of the business grows in

value, this rider is available to businesses and to business

owners, whether shareholders, partners or sole proprietors,

for a business insurance need. the business must be

headquartered in canada, and have been operating at

least three consecutive years. operations in the u.s. will

be considered on a case-by-case basis.

the rider is available for:

■ single-life policies – only one Bgp rider is allowed per

business per policy. if the applicant has more than one

business, then a separate policy and Bgp rider must

be issued

■ Joint policies – available on a single-life basis


each rider can cover only one life and the life insured’s

interest in only one business

the rider is not available for substandard risks. the risk

must be standard before astra programs are applied.

Issue age

10-year option: 18 - 65

15-year option: 18 - 60

Issue requirements

the rider can be added at issue or after issue, subject to

medical evidence of insurability and financial underwriting

approval. at the time of underwriting, a rider option period

of 10 years or 15 years must be chosen.

in to the application, the business must provide:

■ financial statements for the company’s last three fiscal

years. these financial statements must be prepared

using generally accepted accounting principles (gaap)

by an accountant whose qualifications are acceptable to

canada life.

■ documentation acceptable to canada life establishing

the applicant’s current ownership interest in the

company

the valuation of the business and the life insured’s share

of it for the purposes of the rider will be as determined by

canada life using one of the following methods:

■ asset-based valuation – this method is used for

businesses with low earnings, where value is based

on the underlying assets. for example, a real estate

holding company or construction company.

■ earnings-based valuation – if the business has a stable

track record and predictable prospects, then this

method uses capitalized earnings or cash flow. if the

business has fluctuating earnings or cash flow, then this

method uses discounted earnings or cash flow.

canada life may accept alternative methods of valuation.

Cost

rates vary by the chosen option period (10 years or 15

years), age, sex, and smoker status. the premium for the

rider is not banded. the cost is a level rate per thousand of

the option amount.

the Bgp rider is priced on the basis that the premium

remains level even as options are exercised.

17

Option amount limits

issue minimum: $100,000

issue maximum: $2.5 million

financial underwriting by canada life will determine the

value of the business for an option date, based on the

financial statements provided from the last three fiscal

years (and other information as is deemed necessary).

Cumulative maximum amount

the cumulative maximum amount of new insurance

coverage that can be purchased under rider is the lesser

of:

■ $10 million

■ four times the rider’s option amount limit

■ the life insured’s ownership share of any increase in

the business value measured from the rider date

increases in the option amount, and therefore in the

cumulative maximum, are not permitted. decreases

in coverage are permitted, subject to the minimum

amounts of $100,000 and canada life’s then current

administrative rules.

Exercising an option

the option dates are on each rider coverage anniversary

from years one through 10, or years one through 15,

depending on the chosen option period. a letter of

notification is mailed 60 days in advance to remind the

policyowner of the option date. the option expires 31 days

after its option date.

options may be exercised to:

■ Buy a stand-alone term 10 policy: preferred rates are

not available on the new coverage

■ Buy a stand-alone term 20 policy: preferred rates are

not available on the new coverage

■ Buy a permanent life insurance policy (subject to

administrative rules at that time):

• if universal life insurance is elected for the new

coverage

– additional coverage can either be a stand-alone

policy or added as coverage on an exisiting policy.

• if participating life insurance is elected for new

coverage

– there are no dividend option restrictions on that new

insurance

– the additional deposit option (ado) is available,

subject to medical evidence for the ado amount.

an option may only be exercised if a the financial

underwriting review concludes that the value of the

insured’s share of the business has increased since the

rider date.

typically, the policyowner would apply for and be the

policyowner of the new insurance. if the policyowner

doesn’t wish to apply for new insurance, the rider

provisions allow the life insured to apply with the written

consent of the policyowner. in this situation, the life insured

would be the owner of any new insurance issued. this

may result in tax implications and the policyowner and life

insured should seek advice from their tax advisor.

the additional coverage which can be purchased at

a single option date cannot be less than the policy

minimums for the new insurance at that time. it also

cannot exceed any of the following:

■ the maximum option amount

■ the life insured’s ownership share of any increase in

the business value measured from the rider date,

minus all amounts of new insurance previously

purchased under the rider

■ the cumulative maximum amount, minus all amounts of

new insurance previously purchased under the rider.

Other riders and benefits

■ if the base policy for the Bgp rider includes a waiver of

premium rider, then at the policyowner’s request that

benefit can also be added to the new policy, without

medical evidence of insurability, provided the insured

person is not disabled at the time of opting. if the new

policy is Millennium universal life insurance, then the

premium waiver amount is the minimum premium or

target premium for the opted coverage, whichever is

bigger.

■ if the base policy contains an accidental death benefit

(adB) rider on the life insured at the date of option,

then at the policyowner’s request a similar rider may be

included with the new insurance, without evidence of

insurability, unless prohibited by the terms of the rider

or by our then current administrative rules. the amount

of the new rider may not exceed the new insurance

amount applied for at the option date and must be

within the maximum and minimum amounts we would

then allow for the new insurance policy or coverage.

■ if the base policy includes other riders, then they can

be added to the new policy with medical evidence of

insurability.

Termination

the rider will terminate automatically on the earliest of the

following dates:

■ date of the life insured’s death;

■ rider expiry date (the 10th or 15th anniversary of the

rider, as applicable);

■ date the cumulative maximum amount has been

reached;

■ date the remaining cumulative maximum amount is less

than any available product minimums; and

■ date the base policy to which this rider is attached is

fully converted, terminates, or lapses.

accidental death benefit the accidental death benefit (adB) provides additional

coverage if the death of the insured is caused by an

accident prior to the policy anniversary nearest the

insured’s age 70 and within 365 days following the

accident. the beneficiary will receive a death benefit

in addition to the original basic life insurance amount.

premiums for this benefit are required until the policy

anniversary nearest the insured’s age 70.

Issue age

0 - 65

Issue limits

the maximum amount available is the lesser of:

■ the basic death benefit plus any term rider

■ $400,000 of accidental death benefit applied for and

inforce with all insurance companies

18 participating life insurance | the canada life assurance company

participating life insurance | the canada life assurance company 19

appendixhow does ado affect the life insurance policy?that depends on the dividend option selected:Paid-up addition (PUA): additional premiums will increase the paid-up additional death benefit and related cash value. this can help provide an earlier premium offset date or help build funds for concepts that involve accessing your cash values.

Enhanced coverage option (ECO): additional premiums will buy paid-up additions and reduce the term portion of eco coverage faster. this will reduce term costs and can result in an earlier cross-over where the term is totally replaced by paid-up additions. the death benefit will then

begin to increase.

paying ado annually versus monthlypua is purchased when ado premiums are received. for

monthly payments, an eight per cent monthly premium

mode charge applies (same as for the base coverage).

in addition, an eight per cent ado administrative fee

is subtracted prior to purchasing the pua. the paid-up

additions are purchased throughout the year (each month),

however they receive the same annual dividend as paid-up

additions purchased at the beginning of the policy year.

annual ado payments made at the beginning of the year

buy pua using the beginning of the policy year purchase

rates. monthly ado payments buy pua as the money

is received using purchase rates that are interpolated

between the last and next policy anniversary. this means

the purchase rates increase over the course of the year.

for monthly ado payments, Zoom uses the purchase rates

at the next policy anniversary. this may result in actual

pua amounts which are equal or higher than those on the

sales illustration. paying monthly rather than annually will

generally result in slightly lower values.

underwriting requirements for ado:

When scheduled ado is added at issue:■ the annual premium (regardless of premium mode)

is used, less the eight per cent ado administration

fee, divided by the single premium purchase rate to

calculate the first year face amount. this face amount is

then multiplied by three and added to the base policy.

When single premium ado is added:■ use the same calculation as scheduled ado, except the

face amount is not increased (not multiplied by three).

after issue:

if it is determined that there is an additional amount to

be underwritten, it is added to the basic amount, and age

and amount requirements are determined based on that

amount (using canada life’s age and amount table).

■ the amount of single premium ado must be added to

the basic amount to determine the underwriting risk if

enhanced coverage option (eco) is not selected.

■ for scheduled ado with annual premiums, an amount

equal to three times the amount of coverage purchased

in the first year less the amount of enhanced coverage

(if selected) must be added to the initial risk. if this

amount is negative, there is no adjustment amount, so

the initial risk would be added to the eco amount to

determine the amount to be underwritten.


stop and start of additional deposit option premiums:■ stopping and restarting premium payments without

underwriting is governed by the start and stop section

below

■ the ongoing scheduled ado policy year maximum

premium is governed by a review of the last three policy

years as outlined in that section below. if the start and

stop premium payment rules aren’t met, the policy year

maximum will be reset to zero.

ongoing scheduled ado policy year maximumif the highest amount paid during the preceding three

policy years is a partial payment, that amount becomes

the new maximum deposit amount without underwriting.

any portion of a scheduled deposit that is missed in a

particular year is forfeited and cannot be recovered in a

subsequent year without underwriting. this is true even

if the regular scheduled additional deposit is reduced by

the tax test in a particular year. Within a policy year the

policyholder can top up the ado premium to the maximum

for that policy year without underwriting.

Example:

$5000 scheduled ado

Monthly

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

90 90 90 90 90 90 90 90 90 90 90 90 90

Months

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

$0

Months

$0

$

90 90 90 90 90 90 90 90 90 90 90

Note: The $90 monthly payment can be made at the beginning of year four without underwriting.

Note: As 25 consecutive monthly payments were missed, additional ADO payments will require underwriting.

Examples:

stop and start of ado

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

$1000 $0 $0 $1000

Months

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Months

Note: The $1000 annual payment can be made at the beginning of year four without underwriting.

Note: As three consecutive annual payments have been missed, additional ADO payments will require underwriting.

Annual

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0$0

$00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

$1000 $0 $0 $0

90$0 90$

0

0

0

$90$0

0

Note: Maximum ADO amount in the 5th policy year is $4000, the maximum paid in the previous three policy years.

$5000 $3000 $2500 $4000 $4000

Year 1 Year 2 Year 3 Year 4 Year 5

21

frequently asked questionsCan the policyowner elect scheduled monthly or annual ADO and be underwritten today and then commence payments at the start of year three? scheduled payments must start when the coverage is

approved. ado is not intended to be a form of guaranteed

insurability option at issue.

If the policyowner makes the first monthly payment and then doesn’t make any payments for the next 25 months can they restart payments without underwriting? at least one payment must be made within the last 25

months to avoid underwriting.

Could the policyowner just make one monthly payment every 24 months to continue to be eligible for the stop and start feature?

yes, however at the end of three years the policy year

maximum deposit amount would drop to the highest policy

year payment total during the last three policy years. a

reduced yearly maximum would still have to meet the ado

minimums in effect at the time, otherwise the ado will

terminate. underwriting would be required to restore the

original maximum.

Can the maximum premium change after the start of the policy year? yes. the policyowner can choose to reduce the maximum.

the maximum will be reduced to zero if there are no

payments made over the last 25 months and the rider will

terminate.

If the policyowner pays the full maximum premium in year one, zero in year two, zero in year three and misses the first monthly or annual premium payment for year four, how long will he have to make the payment before further payments under the rider are forfeited?in this case, the rider would be terminated on the missed

payment at the start of year four. the policyowner would

have to make an ado payment at the beginning of the

fourth policy year. if this isn’t done then the rider would be

terminated and new underwriting would be required for a

new rider.

If a scheduled monthly ADO rider is added mid-policy year how does the maximum work for that policy year?the coverage is added as at the last policy anniversary.

the policyowner can deposit up to the maximum

underwritten for within the first policy year. for example,

if $100 per month was elected and the first payment is at

the end of month 6 the policyowner could make a single

premium payment up to $600 so the total paid for the

policy year would be $1,200.

If the policyowner switches the premium mode for the policy to annual after issue from paying $90 monthly what would the maximum annual premium deposit be without underwriting? it would be reduced to the equivalent annual amount (i.e.

$1,000 for the policy year, which excludes the monthly

premium mode charge).

Can the policyowner have single premium and scheduled monthly ADO in effect at the same time? the policyowner can only illustrate one or the other in a

sales illustration. after issue, it may be possible to make a

single premium deposit while monthly ado payments are

in effect, provided there is tax exempt room, the minimum

amount is met and the underwriting is approved.

If cash is withdrawn from the policy, reducing the face amount (not a policy loan), will that affect the ADO rider?the ado rider would have to be retested to determine

whether the maximum has to be reduced to keep the policy

from failing the tax test. taking a policy loan won’t affect

the ado maximum.


22

taxationin this guide, all tax references are to canadian tax law, applicable to residents of canada. at the time of issue, policies are exempt from accrual taxation under canadian federal income tax legislation. this tax-exempt status is subject to change. for example, certain elections made by policyowners under their policies might cause the loss of tax-exempt status and make them subject to accrual taxation.

if policies become subject to accrual taxation, they can’t

be returned to their former tax-exempt status. policyowners

will be required to report income under their policies

each year.

a partial or complete disposition of a policy may result in

the policyowner having to report income for tax purposes.

a partial or complete disposition of a policy includes, but is

not limited to:

■ a policy loan that isn’t immediately applied to pay a premium under the policy

■ the partial or full surrender of the paid-up life insurance benefit, if any

■ the partial or full surrender of the contract for its cash value, or some portion thereof

■ transfer of the policy ownership

if the dividend option is cash payment or cash

accumulation, the crediting of any dividends may require

an amount to be included in the policyowner’s income

for tax purposes. interest credited to any accumulated

dividends is taxable.

new business illustrationWhile an illustration is a valuable tool for understanding

how a policy will work given a certain set of assumptions, it

isn’t an estimate or projection of future policy performance.

actual experience will differ from the assumptions used in

the illustrations; therefore, the non-guaranteed values in

the policy will differ from those illustrated.

canada life’s participating life insurance illustrations

provide an alternate scenario to show the sensitivity of the

non-guaranteed values to changes in the dividend scale.

this sensitivity is shown by a percentage reduction in the

interest component of the dividend.Note: the interest rate is only one component of the dividend scale calculation. Changes to any of the other components, such as mortality, expenses and taxes, will also affect the non-guaranteed values in the illustration. Guaranteed values and features are marked as such. Values and features that depend on dividends will vary from those illustrated and aren’t guaranteed.

canada life requires an illustration with the application

and a signed illustration before a policy is issued.

annual statement and inforce illustrationprior to each policy anniversary, participating policyowners

will receive a detailed annual statement. the statement

contains a summary of the death benefit and the cash

value, as well as the current dividend amount and how it

was credited to the policy.

you should provide your clients with an inforce illustration.

the inforce illustration provides a current and an alternate

scenario to show the sensitivity of non-guaranteed values

to changes in the dividend scale. values are shown based

on the current dividend scale, as well as an alternate scale

with a reduction in the interest component.

Wealth Achiever and Estate Achiever contractsWhile every effort has been made to ensure the accuracy

of the information in this guide at the date of printing,

some errors and omissions may occur. this guide is

intended to provide a general overview for information and

education purposes only. in the event of a discrepancy, the

terms of the Wealth Achiever or Estate Achiever contract

will prevail.

please contact your mga, branch office or regional

marketing centre for a sample contract. sample contracts

are also available in the Zoom illustration software. in

advising any client on his or her particular policy, the terms

of the actual policy must be consulted.

Assuris canada life is a member of assuris. assuris is a

not-for-profit corporation, funded by the life insurance

industry, that protects canadian policyowners against

loss of benefits due to the financial failure of a member

company. details about the extent of assuris’ protection

are available at www.assuris.ca or in its brochure, which

can be obtained from assuris by e-mailing [email protected]

or by calling 1-866-878-1225.


23

stab

ility

, acc

ount

abili

ty &

str

engt

h


Whom do i call for help? if you would like more information on how the Wealth Achiever or

Estate Achiever participating life insurance products can help you achieve

your business goals, please contact your mga, branch office or regional

marketing centre.

don’t forget to register for RepNet, canada life’s online marketing and

sales support website, which can be found at http://repnet1.canadalife.com.

Why canada life? the canada life assurance company provides insurance and wealth

management products and services. founded in 1847, canada life is

canada’s first domestic life insurance company.

twenty years prior to confederation, canada life began serving the needs

of the people who inhabited the land that would become canada.

over 150 years later, through offices from coast to coast, canada’s first

domestic life insurance company continues to provide canadians and

their families with financial protection. canada life is a subsidiary of

the great-West life assurance company and a member of the

power financial corporation group of companies.

visit our website at http://repnet1.canadalife.com.

Canada Life and design and “Helping people achieve more” are trademarks of The Canada Life Assurance Company. 560 CAN-2/10

British columbia ......................... 1-800-663-0413

Prairie ........................................... 1-888-578-8083

ontario ..........................................1-877-594-1100

Eastern .........................................1-800-361-0860

helping people achieve moretm

canada life regional marketing centres

canada life marketing consultants are available to assist with

marketing materials, professional advice and onsite case

consultation to help with marketing and sales.

for more information about our products, visit canada life™

RepNet (http://repnet1.canadalife.com) or contact your mga,

branch office or a canada life regional marketing centre

nearest you:

participating life insurance - nbbn.ca · participating life insurance products from the canada...

Documents