FREEDOM FUNDS AND MARKETWATCH POLICIES INFORMATION FOLDER MAY London Life Insurance Company. This document is not an insurance contract.

Transcription

1 FREEDOM FUNDS AND MARKETWATCH POLICIES INFORMATION FOLDER MAY 2017 London Life Insurance Company. This document is not an insurance contract.

2 This information folder is not an insurance contract. The information in this folder is subject to change from time to time. If there is a difference between this information folder and your contract, your contract will apply. In this information folder, you and your mean the policyholder of a London Life investment policy. We, us, our and London Life mean London Life Insurance Company. About London Life London Life Insurance Company was incorporated in 1874 by an Act of the Legislature of Ontario to carry on the business of life and accident insurance. London Life was continued as a federal company in 1884 by an Act of the Parliament of Canada. London Life carries on business under the Insurance Companies Act (Canada). The terms and conditions of the policies issued by London Life and the distribution of the policies are governed by the insurance acts of the provinces and territories in Canada where London Life carries on business. London Life is a subsidiary of The Great-West Life Assurance Company. Great-West Life and London Life are members of the Power Financial Corporation group of companies. London Life s administrative offices are located at: 255 Dufferin Avenue London, Ontario N6A 4K Robert-Bourassa Blvd, Suite 540 Montreal, Quebec H3A 1T9 London Life s head office is located at: 255 Dufferin Avenue London, Ontario N6A 4K1 Certification This information folder contains brief and plain disclosure of all material facts relating to the Freedom Fund and Marketwatch investment fund options available in the London Life investment policy issued by London Life Insurance Company. February 10, 2017 Stefan Kristjanson President and Chief Operating Officer, Canada Douglas A. Berberich Vice-President and Associate General Counsel, Canada

3 Key facts about the London Life Marketwatch and Freedom Funds policy This summary provides a brief description of the basic things you should know before you apply for this individual variable insurance contract. This summary is not your contract. A full description of all the features and how they work is contained in this information folder and your contract. You should review these documents and discuss any questions you have with your financial security advisor. What am I getting? You are getting an insurance contract between you and London Life Insurance Company. It gives you a choice of investment funds and provides certain guarantees. You can: Pick a registered or non-registered contract Choose one or more investment funds Name a person to receive the death benefit Withdraw money from your contract Receive regular payments now or later The choices you make may affect your taxes; see the section Income tax considerations. They could also affect the guarantees, see the section Examples of how redeeming units affects the basic amount and reduces the guaranteed value. Ask your financial security advisor to help you make these choices. The value of your contract can go up or down subject to the guarantees. What guarantees are available? Death benefit guarantee applies and you may get a maturity guarantee. These help protect your fund investments. For full details about the guarantees, please see the Guaranteed benefits section. You pay fees for this protection. The fees are included in the management expense ratio which is described in the Fees and expenses section. Any withdrawals you make will reduce the guarantees. For full details please see the Guaranteed benefits section. Maturity guarantee This protects the value of your investment at a specific date in the future. This date is explained in the When your policy matures section. On this date, you will receive the greater of: The market value of the funds, or 75 per cent of the money you put in the funds Death benefit guarantee This protects the value of your investment if the insured person dies. It is paid to someone you name. The death benefit applies if the insured person dies before the maturity date. It pays the greater of: The market value of the funds, or 100 per cent of the money you put in the funds if the insured person is age 79 or younger when the policy is issued 75 per cent of the money you put in the funds if the insured person is age 80 or older when the policy is issued What investments are available? You can invest in the investment funds described in the Fund Facts section. Other than any maturity and death benefit guarantees, London Life does not guarantee the performance of the investment funds. Carefully consider your tolerance for risk when you select a fund. How much will this cost? The investment funds you select affect your costs. The investment funds are available on a back-end load basis and in limited circumstances as no-load units. For full details, see the section Sales charge options and the Fund Facts for each investment fund. Fees and expenses are deducted from the investment funds. They are shown as management expense ratios or MERs on the Fund Facts for each fund. If you make certain transactions or other requests, you may be charged separately for them and this includes a short-term trading fee. For full details, see the section Fees and expenses and the Fund Facts for each investment fund. 1

4 What can I do after I purchase this contract? If you wish, you can do any of the following: Exchanges You may exchange from one fund to another. See the section How to exchange investment fund units. Withdrawals You can withdraw money from your contract. If you decide to, this will affect your guarantees. You may also need to pay a fee or taxes. See the section How to redeem investment fund units. Premiums You may make lump-sum payments. See the section How to allocate premiums to investment fund units. Regular payments At a certain time, unless you select another option, we will start making payments to you. See the section When your policy matures. Certain restrictions and other conditions may apply. Review the contract for your rights and obligations and discuss any questions with your financial security advisor. What information will I receive about my contract? We will tell you at least once a year the value of your investment and any transactions you have made during the year. You may request more detailed financial statements of the funds. These are updated at certain times during the year. For full details, see the section Administration of the investments funds. Can I change my mind? Yes, you can: Cancel the contract Cancel any additional lump-sum premiums you make, or Cancel the initial pre-authorized monthly premium To do any of these, you must tell us in writing within two business days of the earlier of: The day you receive the confirmation of your transaction, or Five business days after we mail the confirmation to you The amount returned will be the lesser of the amount you invested or the value of the applicable units you acquired on the day we process your request. The amount returned will include a refund or any sales charge or other fees you paid. The transaction may generate a taxable result and you are responsible for any income tax reporting and payment that may be required as result of any transaction. If you change your mind about a specific additional premium or exchange, the right to cancel only applies to that transaction. For full details, see the introductory page to the Fund Facts section. Where can I get more information? You may call us at or send us an . To send an go to our website and then to the Contact us section. Information about our company and the products and services we provide is on our website at London Life Website. For information about handling issues you are unable to resolve with us, contact the OmbudService for Life and Health Insurance at or on the Internet at OmbudService for Life and Health Insurance Website. Additionally, if you are a resident of Quebec contact the Information Centre of the Autorité des marchés financiers (AMF) at or at Autorité des marchés financiers Information Centre Website. For information about additional protection available for all life insurance policyowners, contact Assuris, a company established by the Canadian life insurance industry. See Assuris Protecting your life insurance Website for details. For information about how to contact the insurance regulator in your province visit the Canadian Council of Insurance Regulators website at Canadian Council of Insurance Regulators Website. 2

5 Table of contents Key facts about the London Life Marketwatch and Freedom Funds policy... 1 What am I getting?... 1 What guarantees are available?... 1 Maturity guarantee... 1 Death benefit guarantee... 1 What investments are available?... 1 How much will this cost?... 1 What can I do after I purchase this contract?... 2 Exchanges... 2 Withdrawals... 2 Premiums... 2 Regular payments... 2 What information will I receive about my contract?. 2 Can I change my mind?... 2 Where can I get more information?... 2 How London Life investment policies work... 5 Introduction... 5 Non-registered policies... 5 RRSPs, LIRAs, LRSPs and RLSPs... 6 RRIFs, PRIFs, LRIF, LIFs and RLIFs... 6 Beneficiaries... 8 How our investment funds work... 8 Profile funds... 8 Lifecycle profile funds... 9 Sales charge options... 9 Back-end load units... 9 No-load units... 9 How we value investment fund units... 9 Fundamental changes to the investment funds Allocating premiums, redeeming and exchanging investment fund units How to allocate premiums to investment fund units How to redeem investment fund units How to exchange investment fund units Short-term trading When the redemption of your units may be delayed When your policy matures Maturity date What happens to your policy on the maturity date. 13 Guaranteed benefits Basic amount Maturity guarantee Death benefit guarantee Examples of how redeeming units affects the basic amount and reduces the guaranteed value.. 14 If the market value is greater than the basic amount If the market value is less than the basic amount When the guaranteed benefits end Fees and expenses Fees and expenses paid by the investment fund Management expense ratio (MER) Investment management fees Operating expenses Fund-of-fund Annual investment management fees Fees and expenses paid directly by you Early redemption fees for back-end load units Charge for changing the amount or frequency of your scheduled periodic income payments Charge for duplicate RRSP receipts or tax slips 20 Policy research fee Short-term trading fee Returned cheque fee Courier fee Income tax considerations Tax status of the investment funds Non-registered plans RRSPs RRIFs Administration of the investment funds Keeping you informed Requests for Fund Facts, financial statements and other documents Material contracts Material transactions Assuris protection Investment policy Performance of investment funds and underlying funds Investment managers Investment manager review process Fund risks Commodity risk Credit risk Derivative risk... 25

6 Equity risk Fixed-income investment risk Foreign currency risk Foreign investment risk Interest rate risk Large redemption risk Real estate risk Securities lending, repurchase and reverse repurchase transaction risk Smaller company risk Sovereign risk Specialization risk Underlying fund risk Fund Facts What if I change my mind? For more information Asset allocation funds Conservative Profile (PSG) Profile (PSG) Balanced Profile (PSG) Advanced Profile (PSG) Aggressive Profile (PSG) Lifecycle profile funds Income Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Profile (PSG) Cash and cash equivalent funds Money Market (Portico) Fixed income funds Fixed Income Profile (PSG) Core Bond (Portico) Core Plus Bond (Portico) Mortgage (Portico) Government Bond (Portico) Balanced funds Income (Portico) Income (Mackenzie) Diversified (London Capital) Balanced Growth (GWLIM) North American Balanced (London Capital) Equity/Bond (GWLIM) Canadian Balanced (Mackenzie) Growth & Income (Mackenzie) Balanced (Beutel Goodman) Global Income (Sentry) Global Monthly Income (London Capital) Canadian equity funds Canadian Equity Profile (PSG) Equity Profile (PSG) Canadian Low Volatility (London Capital) Canadian Equity (London Capital) Canadian Equity (GWLIM) SRI Canadian Equity (GWLIM) Growth Equity (Laketon) Canadian Equity Growth (Mackenzie) Canadian Equity Growth (CC&L) Equity (Mackenzie) Canadian Equity (Beutel Goodman) Dividend (GWLIM) Dividend (Mackenzie) Mid Cap Canada (GWLIM) Growth Equity (AGF) Canadian specialty and alternative funds Real Estate (GWLRA) Canadian Resource (Mackenzie) Precious Metals (Mackenzie) North American funds Smaller Company (Mackenzie) Science and Technology (GWLIM) Foreign equity funds Global Equity Profile (PSG) Global Low Volatility (ILIM) Foreign Equity (Mackenzie) Global Equity (Putnam) Global Growth (Mackenzie) U.S. Equity (London Capital) U.S. Growth (Putnam) American Growth (AGF) U.S. Mid Cap (GWLIM) International Equity (JPMorgan) International Growth (Mackenzie) Foreign specialty and alternative funds European Equity (Setanta) Far East Equity (CLI) Glossary of terms

7 How London Life investment policies work Introduction The London Life investment policy is an individual variable insurance contract based on the life of the insured person, also known as the annuitant, whom you name on the application form. There are three types of policies available: Non-registered Registered retirement savings plans (RRSPs) Registered retirement income funds (RRIFs) 1 Locked-in RRSPs (LRSP), locked-in retirement accounts (LIRA) and restricted locked-in savings plans (RLSP) are three specific types of RRSPs. You can generally only open LRSPs, LIRAs and RLSPs with money transferred directly from pension plans, where federal or provincial pension laws allow. Pension laws place certain restrictions on them. Since otherwise all RRSPs work the same way, whether or not they are LRSPs, LIRAs or RLSPs, we ll simply refer to them as RRSPs throughout the rest of this information folder. Prescribed retirement income fund (PRIF), life income fund (LIF), locked-in retirement income fund (LRIF) and restricted life income fund (RLIF) are four specific types of RRIFs. Unless we say otherwise, when we refer to features of a RRIF, they also apply to a PRIF, LIF, LRIF and RLIF. Each type of policy allows you, as the policyholder, to allocate premiums to a guaranteed interest option or investment fund option. This information folder describes the investment funds available and the maturity and death benefit guarantees that come with them. For more information about guaranteed interest options, please contact your financial security advisor. If your policy is a non-registered or RRSP policy, it is a deferred annuity, which means annuity payments may commence following the maturity date. If your policy is a RRIF policy, it is a payout annuity and you will receive annuity payments in accordance with the terms of the policy. If you choose to make a redemption from either type of annuity, this will reduce the amount available for annuity payments. Also, the performance of the various investment selections will 1 Only available where funds are coming from a Freedom Fund RSP, LIRA, LRSP or RLSP. affect the amount available for annuity payments. For more information, see When your policy matures. Non-registered and RRSP policies allow you, as the policyholder, to invest in a daily interest option, a guaranteed interest option and an investment fund option. Currently, we have two investment fund options available Freedom Funds and Marketwatch that provide access to our family of 65 investment funds. A RRIF policy allows you, as the policyholder, to allocate your premiums to a guaranteed interest option or an investment fund option that provides access to any of our 65 investment funds. This document is divided into two parts. The first part contains general information that applies to all investment policies. The second part provides specific information about the investment funds. A glossary of terms is located at the back of this information folder and provides an explanation of some of the terms used in the information folder. Non-registered policies A non-registered policy can be owned by a single individual or jointly by several individuals. The annuitant can be the policyholder or someone else. Currently, under a non-registered investment policy, we have two investment fund options Freedom Funds and Marketwatch. Freedom Funds are available through a growth plan and a systematic redemption plan. Marketwatch is only available through a growth plan. Redemptions made from Freedom Funds may be subject to early redemption fees. For more information, see Early redemption fees for back-end load units. Redemptions made from the Marketwatch Growth Plan are not subject to early redemption fees. You can schedule periodic income payments under the Freedom Fund systematic redemption plan. In a calendar year, you may receive up to 20 per cent of all allocated premiums in scheduled payments without incurring an early redemption fee. Amounts received in excess of 20 per cent may be subject to an early redemption fee. Unscheduled redemptions may be subject to early redemptions fees. For information concerning these fees, see Early redemption fees for backend load units. For information about fees to change the amount or frequency of your payments, see Charge for changing the amount or frequency of your scheduled periodic income payments. For information about tax implications, see Income tax considerations. 5

8 Features of these policies are summarized in the following table: Product feature Maximum issue age Minimum initial premium Minimum automatic monthly premium Minimum lump sum premium Minimum systematic redemptions Minimum partial redemptions Redemptions subject to possible early redemption fee Minimum fund balance Marketwatch growth plan Freedom Fund growth plan $300 lump sum or $25 plus $25 automatic monthly premium Freedom Fund systematic redemption plan $10,000 $25 $25 N/A $25 $100 $100 N/A N/A $25 $500 No Yes Yes $300 or $25 plus ongoing automatic monthly premium Scheduled: $25 monthly $100 quarterly or semiannually $200 annually Maximum 20% of premiums per year Unscheduled: $500 $300 Current as of the date of the information folder subject to change RRSPs, LIRAs, LRSPs and RLSPs An RRSP is an investment policy registered under the Income Tax Act (Canada). Only one person, who must also be the annuitant, can own an RRSP. The contributions you make to your RRSP are tax deductible and there is a maximum amount you can contribute each year under the Income Tax Act (Canada). You can also transfer money directly from an RRSP at another financial institution or from a pension plan, if federal or provincial pension laws allow you to. There are no limits on the amount of transfers from RRSPs. There are limits under the Income Tax Act (Canada) for transfers from defined benefit pension plans. Currently, under a registered policy, we have two investment fund options Freedom Funds and Marketwatch. Both options are available as a growth plan. Redemptions made from the Freedom Funds investment option may be subject to early redemption fees. Redemptions made from the Marketwatch investment option are not subject to early redemption fees. For more information, see Early redemption fees for back-end load units. For information about tax implications, see Income tax considerations. Features of these policies are summarized in the following table: Product feature Marketwatch growth plan Maximum issue age Minimum initial premium Minimum automatic monthly premium Minimum lump sum premium Minimum partial redemptions Redemptions subject to possible early redemption fee Minimum fund balance Freedom Fund growth plan $300 lump sum or $25 plus $25 automatic monthly premium $25 $25 $25 $100 $25 $500 No Yes $300 or $25 plus ongoing automatic monthly premium Current as of the date of the information folder subject to change RRIFs, PRIFs, LRIF, LIFs and RLIFs A RRIF is a plan that gives you regular income 6

9 payments and is registered under the Income Tax Act (Canada). You can generally only open a RRIF with money transferred directly from an RRSP or another RRIF. You can only open PRIFs, LRIFs and LIFs with money transferred directly from a pension plan, from a LRSP, LIRA or RLSP, or from another PRIF, LRIF, LIF or RLIF, where federal or provincial pension laws allow you to. We currently offer RRIFs and LIFs across Canada, LRIFs in Manitoba and PRIFs in Saskatchewan and Manitoba. RLIFs are only available where the money is administered under federal pension legislation. Under the Income Tax Act (Canada), you must receive a minimum amount each year as income from these policies. For LRIFs and LIFs, there is also a maximum amount you may receive each year. Only one person, who must also be the annuitant, can own a RRIF, PRIF, LRIF, LIF or RLIF. As the required minimum amount under the Income Tax Act (Canada) cannot be determined until the first day of each year, we reserve the right not to make the first payment in each calendar year before the twentieth day of the first month. The payment date selected cannot be later than the twenty-eighth day of a month. Redemptions made from your policy may be subject to early redemption fees. For more information, see Early redemption fees for back-end load units. You can schedule periodic income payments under your Freedom Fund RRIF. In a calendar year, you may receive up to 20 per cent of all allocated premiums in scheduled payments without incurring an early redemption fee. Amounts received in excess of 20 per cent may be subject to an early redemption fee. Unscheduled redemptions may be subject to early redemptions fees. For information concerning these fees, see Early redemption fees for back-end load units. For information about fees to change the amount or frequency of your payments, see Charge for changing the amount or frequency of your scheduled periodic income payments. For information about tax implications, see Income tax considerations. Features of these policies are summarized in the following table: Product feature currently LIFs issued under Ontario, Alberta, Federal PBSA, British Columbia, Manitoba, Nova Scotia and Quebec pension legislation Maximum issue age for LIFs issued under New Brunswick pension legislation Maximum issue age for LIFs administered under Newfoundland and Labrador pension legislation Freedom Fund RRIF/PRIF/LRIF/LIF /RLIF Minimum initial premium $10,000 Minimum lump-sum premium $1,000 Minimum automatic redemptions Scheduled: Higher of legislative minimum or $50 monthly $100 quarterly or semi-annually $200 annually Maximum: 20% of premiums per year Minimum partial redemptions Unscheduled: $500 (May be subject to early redemption fee) Minimum fund balance $300 Minimum exchange between funds $500 Current as of the date of the information folder subject to change Product feature Maximum issue age for RRIFs, PRIFs, LRIFs, RLIFs and Freedom Fund RRIF/PRIF/LRIF/LIF /RLIF 90 7

10 Beneficiaries You may designate one or more beneficiaries to receive any death benefit payable under the policy. You may revoke or change the designation prior to the policy maturity date, subject to applicable law. If the designation is irrevocable, you cannot revoke or change it or exercise certain other specific rights without the written consent of the irrevocable beneficiary. If the policy is a LIRA, LRSP, RLSP, PRIF, LIF, RLIF or LRIF, your spouse, civil union spouse or commonlaw partner can take precedence over the beneficiary designation, depending on applicable pension legislation. How our investment funds work Each of our investment funds is a segregated fund, which is a pool of investments that is kept separate, or segregated, from the general assets of London Life. Each investment fund is divided into an unlimited number of notional units of equal value. For more information about unit value, see How we value investment fund units. When you allocate money to the investment funds, units are allocated to your policy, but you do not actually own, buy or sell any part of the investment funds or any units. Instead, we hold the assets of the investment funds. This also means that you don t have any voting rights associated with the investment funds. We calculate the value and the benefits to which you are entitled based on the value of the units allocated to your policy on a particular date. Neither your policy nor your units give you an ownership interest in London Life or voting rights in connection with London Life. When you select an investment fund that invests in units of a mutual fund, you will not be a unitholder of the mutual fund. If we make a material change to an investment fund s fundamental investment objectives, we ll tell you in writing 60 days before we make the change. For more information, see Fundamental changes to the investment funds. If we stop offering an investment fund, we ll tell you in writing in advance and we ll give you 60 days to tell us what to do with your units that are affected. If we receive your request to transfer to another investment fund at our administration office in London, Ontario or Montreal, Quebec before 4 p.m. Eastern Time on a valuation day, we ll process the request on that day. If we receive your request after that time, we ll process it on the valuation day after we receive your request. If we don t hear from you at least five days before the valuation day the investment fund is discontinued, we ll exchange the units of the investment fund that is discontinued for units of the Money Market Fund (Portico), or another investment fund we select according to our administrative rules in effect at the time. We may change the investment strategies of an investment fund without notice to you. It s important to diversify your investments, which means investing in investment funds that have a variety of assets and investment styles. Through your policy, you can currently choose from 65 different investment funds. This broad choice provides a good opportunity for you to diversify your investments. In addition, currently, 19 of our investment funds are assetallocation funds that are specially designed to increase diversification. We refer to our asset-allocation funds as Profile funds or Lifecycle Profile funds. The performance of the various investment selections will affect the amount available for annuity payments. For more information, see When your policy matures. Profile funds Each profile fund invests in a variety of other funds. They offer you an easy way to diversify your investments by investing in a single investment fund. A profile fund may offer you diversification among: Types of assets, such as shares, bonds, mortgages and real estate The entities that issue the assets, such as shares in large, small or resource-based companies, and bonds issued by governments or companies Assets in different countries Investment advisors with different investment styles We may review the composition of the profile funds from time to time. When required, we may change: The funds the profile fund holds. The percentages of each fund the profile fund intends to hold. The number of funds the profile fund may hold. 8

11 Lifecycle profile funds A lifecycle profile fund offers you an easy way to diversify your investments by investing in a single fund that matches your investment time horizon. Like our profile funds, the lifecycle profile funds have been modeled on Investment Voyager profiles, our assetallocation process. A lifecycle profile fund is managed towards a specific target date. Actively managed, each fund s target mix is regularly rebalanced to provide an optimal risk and return for the selected investment time horizon. Each lifecycle profile fund gradually increases its allocation of fixed-income fund units, while reducing its allocation of equity fund units to provide the potential for more stable growth closer to the target date. When the lifecycle profile fund s asset allocation becomes similar to the income profile fund, the lifecycle profile fund will be closed and the assets transferred to the income profile fund or a similar fund. For information about tax implications, see Income tax considerations. Two profile funds equity profile and fixed-income profile allow you to modify the target mix of a lifecycle profile fund to match your personal tolerances for risk and return by increasing either the equity or fixed-income component of the portfolio. The investment management fee may be reviewed periodically and reduced as the fixed-income fund allocation increases. The composition of the lifecycle profile funds may be reviewed quarterly and the target fund mix updated. When the review occurs, we may change: The funds the lifecycle profile fund holds. The percentages of each fund the lifecycle profile fund holds. The number of funds the lifecycle profile fund may hold. Sales charge options Back-end load units The investment funds are available on a back-end load basis. With back-end load units, you don t pay any fees when you allocate a premium to an investment fund or exchange units. However, if you redeem units within six years of allocating a premium to an investment fund, you will have to pay an early redemption fee, any applicable short-term trading fee, withholding taxes and other charges. For more information, see Early redemption fees for back-end load units. No-load units If you invest $100,000 or more with us, a no-load Freedom Fund option may be available. You, your financial security advisor and we must agree to the noload option at the time of purchase. No-load units are available in non-registered and RRSPs policies. We may waive the minimum requirement under certain circumstances. Under this option you don t pay any fees when you allocate a premium to an investment fund or exchange units. You will not pay an early redemption fee when you redeem units but you will have to pay any applicable short-term trading fee, withholding taxes and other charges. How we value investment fund units Generally, we value our units at the close of business on each day the Toronto Stock Exchange is open for business. We have the right to change how often we value our units. We refer to any day that we value units as a valuation day. We ll tell you in writing 60 days before we change the frequency that we value the units. For more information, see Fundamental changes to the investment funds. When we value units, we calculate the unit value by dividing the total market value of that class of the fund by the number of units in that class of the fund. The market value of a class of a fund is the total market value of the assets in that class of the fund, less investment management fees and other expenses attributed to that class. For more information, see Fees and expenses. When we calculate the market value of an asset held in an investment fund, we use the closing price of that asset. If a closing price is not available, we ll determine the fair market value of the asset. The value of investment fund units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. We have the right to subdivide or consolidate the units of an investment fund. If we subdivide the units of an investment fund, there will be a decrease in the unit value. If we consolidate the units of an investment fund, there will be an increase in the unit value. If we subdivide or consolidate the units of an investment fund, the market value of the investment fund and the market value of your policy will not change. We ll tell you in writing 60 days in advance if we subdivide or consolidate the units of an investment fund. We have the right to add funds, restrict the allocation of premiums or exchanges to any fund, discontinue an existing investment fund, or change the investment 9

12 objectives, policies and strategies of an investment fund. We ll tell you in writing 60 days before we discontinue an investment fund or make a material change to the fundamental investment objectives of an investment fund. For more information, see Fundamental changes to the investment funds. All the investment funds currently available are described in detail later in this information folder. For more information about a specific fund, see the applicable investment fund page. Fundamental changes to the investment funds If we make any of the following changes to an investment fund, we will notify you in writing 60 days before the change occurs. The notice will be sent by regular mail to the most recent address we have for you in our records. Increase the investment management fee Material change to the fundamental investment objectives Decrease the frequency with which the investment fund is valued You will have the right to exchange the value of your units from the affected investment fund to a similar investment fund that is not subject to the fundamental change without charge provided you advise us at least five days prior to the change happening. We ll advise you of similar investment funds that are available to you at that time. If we do not offer a similar investment fund, you may have the right to redeem the investment fund without incurring an early redemption fee or similar fee provided you advise us at least five days prior to the change happening. We ll advise you if this applies to you. A similar investment fund is a fund within the same investment fund category that has a comparable investment objectives and the same or lower investment management fee. During the transition period between the announcement and the effective date of the fundamental change, you will not be permitted to allocate premiums to or exchange into the affected investment fund unless you agree to waive your rights under the fundamental change provision for that particular fundamental change. When an investment fund invests in an underlying mutual fund, an increase in the investment management fee of the underlying mutual fund that also results in an increase in the investment management fee of the investment fund would be treated as a fundamental change. Allocating premiums, redeeming and exchanging investment fund units You can make a request to allocate your premium to an investment fund or to redeem or exchange units at any time. However, we only process allocations, redemptions or exchanges on valuation days. If we receive your request to allocate your premium to an investment fund or to redeem or exchange units at our administrative office in London, Ontario or Montreal, Quebec before 4 p.m. Eastern Time or before the Toronto Stock Exchange closes, whichever is earlier, on a valuation day, we ll process the request on that day using that day s unit value. If we receive your request after that time, we ll process it on the next valuation day using the next day s unit value. For more information, see How we value investment fund units. When you ask us to allocate your premium to an investment fund or to redeem or exchange units, your instructions must be complete and in a manner acceptable to us, otherwise we will not be able to complete the transaction for you. You can invest in up to 18 investment funds over the life of your policy. We have the right to refuse to accept any request to allocate a premium to your policy or exchange to investment fund units. We also have the right to change any minimum amounts that are given in this information folder without notice. If you choose to make a redemption, this will reduce the amount available for annuity payments. For more information, see When your policy matures. How to allocate premiums to investment fund units You can allocate a premium to an investment fund available under the policy. You can also set up an automatic monthly transfer of money from your bank account to the investment funds. For information about minimum monthly premium amounts for the various policies, see How London Life investment policies work. 10

13 When you apply a premium to an investment fund, we allocate units to your policy. We determine the number of units to allocate to your policy by dividing the amount of the premium you have allocated to the investment fund, by the appropriate unit value of the investment fund. For more information, see How we value investment fund units. How to redeem investment fund units Upon request and subject to our administrative rules you can redeem investment fund units on any valuation day. The value of your guarantees will be proportionally reduced when you redeem units. For more information, see Examples of how redeeming units affects the basic amount and reduces the guaranteed value. When you request money from your policy, we will redeem the number of units required to fulfill your redemption request less any applicable taxes, fees or charges. You can request to redeem investment fund units on any valuation day. You must keep a minimum dollar amount in units. Currently, if you have less than $300 in units, we may require that you redeem them. When you redeem investment fund units, the value of those units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. You will have to pay an early redemption fee when you redeem back-end load units. Back-end load units older than six years may be redeemed without an early redemption fee. For more information, see Early redemption fees for back-end load units. We will charge a short-term trading fee on a redemption when the units to be redeemed have not been held in the investment fund for the applicable period of time. For more information, see Short-term trading. Under unusual circumstances, we may have to delay the redemption of units. For more information, see When the redemption of your units may be delayed. There may be income tax consequences if you redeem units. For more information, see Income tax considerations. Redemption requests involving transfers to or from registered plans may be delayed until all administrative procedures involved with registered plans are complete. How to exchange investment fund units Upon request and subject to our administrative rules, you can exchange units of one investment fund in your policy for units of our other investment funds. When you exchange units, you re redeeming units of one or more investment funds and allocating their value to units of other investment funds. We will charge a short-term trading fee on an exchange when the units to be exchanged have not been held in the investment fund for the applicable period of time. For more information, see Short-term trading. Under unusual circumstances, we may have to delay the exchange of units. For more information, see When the redemption of your units may be delayed. When you exchange investment fund units, the value of those units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. The value of your guarantee is not affected when you exchange units. There are no early redemption fees when you exchange units. There may be income tax consequences if you exchange units within a non-registered policy. For more information, see Income tax considerations. Short-term trading Using investment funds to time the market or trading on a frequent basis is not consistent with a long-term investment approach based on financial planning principles. In order to limit such activities we will charge a short-term trading fee as outlined below. The short-term trading fee is retained in the investment fund as compensation for the costs associated with the exchange or redemption request. We may take such additional actions as we consider appropriate to prevent further similar activity by you. These actions may include the delivery of a warning, placing you on a watch list to monitor activity, declining to accept allocations to and exchange and redemption requests from the investment funds, delay trades by one valuation day and suspend trading under the policy. We reserve the right to change our administrative practices or introduce new ones when we determine it is appropriate. We will charge a fee of up to two per cent of the amount exchanged or redeemed if you allocate premiums to an investment fund for less than 90 consecutive days. The fee is subject to change. This right is not affected 11

14 by the fact that we may have waived it at any time previously. We reserve the right to increase the period of time a premium must remain in an investment fund from 90 consecutive days to up to 365 consecutive days. We will give you written notice of our intent to increase the time period at least 60 days in advance. Our notice to you will specify the affected investment fund(s) and the new period of time. We will send the notice to your most recent address on our records for this policy. When the redemption of your units may be delayed Under unusual circumstances, we may have to delay your redemption of units or postpone the date of a transfer or payment. This may happen if: Normal trading is suspended on a stock exchange where the investment fund has a significant percentage of its assets, or We believe it s not practical to dispose of investments held in an investment fund or that it would be unfair to other unitholders During such a delay, we ll administer the redemption of units according to the applicable rules and laws and in a manner that we consider fair. We may have to wait until there are enough assets in the investment fund that can be easily converted to cash. If there are more requests to redeem units than we can accommodate, we ll redeem as many units as we think is appropriate and allocate the proceeds proportionally among the investors who asked to redeem units. We ll redeem any remaining units as soon as we can. When your policy matures Maturity date Most policies end or mature at a certain time. The maturity date varies depending on the type of policy you have. For a non-registered policy, the maturity date is the date on which the annuitant attains age 100, and is not later than the twenty-eighth day of the month. If the twenty-eighth is not a valuation day then the maturity date will be the valuation day prior to the twentyeighth of that month. For an RRSP, the automatic maturity date is Dec. 28 of the year the annuitant attains age 71. You may also select an earlier maturity date between Sept. 1 and Dec. 28 of the year the annuitant attains age 71. The maturity date for a LIF depends on the jurisdiction that governs your LIF. Some jurisdictions require that your LIF be converted to a life annuity. If your LIF is required to be annuitized, the maturity date will be Dec. 28 of the year stipulated in the regulations governing the LIF. For RRIFs, PRIFs, LRIFs, LIFs and RLIFs that are not required to be annuitized under applicable pension legislation, there is no maturity date for a policy issued to non-quebec residents. A LIF policy is not required to be annuitized under Quebec pension legislation and when issued to a Quebec resident there is no maturity date. For a RRIF policy issued to a Quebec resident, the maturity date is the date on which the annuitant attains age 100, and is not later than the twenty-eighth day of the month. Currently Newfoundland and Labrador pension legislation requires a LIF to mature in the year you attain age 80 and annuity payments to commence. Currently LIFs administered under New Brunswick pension legislation are not required to annuitize, however units of the investment funds must be fully redeemed and the policy closed by Dec. 28 of the year the annuitant attains 90. Over time, regulators may change the rules that govern LIFs. We will change the terms of your LIF in accordance with any change in the regulations. 12

15 What happens to your policy on the maturity date On the maturity date of your policy, we will redeem your units. If your policy was a non-registered policy, you may have to pay tax as a result. For RRSP policies (except RRSPs for which you first allocated a premium to the investment funds when the annuitant is age 60 or older), non-registered policies and RRIFs issued to residents of Quebec, if you do not indicate a preference for another type of annuity offered by us, following the maturity date we will commence life annuity payments with a guaranteed period of 10 years. The annuity payments are conditional on the annuitant being alive, and will be in equal annual or more frequent periodic amounts. We may require evidence that the annuitant is living when the payment becomes due. If the annuitant dies prior to the expiry of the guarantee period, any remaining unpaid guaranteed annuity payments due after the death of the annuitant will be paid to the beneficiary, if living or if the beneficiary is not living or no beneficiary designation has been made, to your estate. You may have to pay tax on the annuity payments. Payments are not commutable during the annuitant s lifetime. Premiums will not be accepted under the policy after the annuity payments commence. If you first allocated premiums to investment funds in an RRSP when the annuitant is age 60 or older and you do not indicate a preference for another type of annuity then offered by us, we ll commence payments on a RRIF basis. If on the issue date of the policy, the policyholder is not a resident of Quebec, the amount of the annuity payments will be determined using the annuity rate in effect when the annuity payments commence. If on the issue date of the RRSP, RRIF or nonregistered policy, the policyholder is a resident of Quebec, the amount of the annuity payments will be determined by the greater of the annuity rate in effect when the annuity payments commence and the rate established in the policy. Guaranteed benefits Policies have two types of guaranteed benefits: the maturity guarantee and the death benefit guarantee. Before the maturity date or the death of the annuitant, the value of investment fund units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. These guaranteed benefits apply if you first held investment funds in your policy after Nov. 20, If you held investment funds in your policy before Nov. 20, 2001, please refer to your contract for more information about your guaranteed benefits. Basic amount The basic amount is used to calculate the value of the guaranteed benefits. In general, the basic amount is: The total of all amounts allocated to units Minus a proportional reduction for any units redeemed To calculate the proportional reduction for any units redeemed we use the following formula: A x B C = reduction in the basic amount when: A is the basic amount before the redemption B is the value of the units redeemed C is the value of the investment funds before the redemption If early redemption fees, short-term trading fees or other charges apply, they are included as part of the amount of units redeemed. For more information, see Fees and expenses paid directly by you. The basic amount is not affected by the exchanges between investment funds. Maturity guarantee On the maturity date, we ll pay you the greater of: The market value of all your units less any early redemption fees (see Early redemption fees for backend load units); or The maturity value of your policy based on the basic amount The maturity value of your policy is guaranteed to be not less than 75 per cent of the basic amount, for the following types of policies: Non-registered if you first allocated a premium to an investment fund 10 years or more before the maturity date 13

16 RRSP if you first allocated a premium to an investment fund prior to the annuitant attaining age 60 RRIF issued to a Quebec resident LIF which is administered under Newfoundland and Labrador pension legislation If you first allocated a premium to an investment fund in an RRSP when the annuitant was age 60 or older, there is no maturity guarantee unless the value of the units of the investment fund are paid out on a RRIF basis following the maturity date of the RRSP. The automatic maturity date of the RRSP is Dec. 28 in the year you attain age 71. If the value of the units of an investment fund is paid out on a RRIF basis, the maturity guarantee applies on Dec. 28 of the year you attain age 80. For such a RRIF, the maturity benefit is guaranteed to be not less than 75 per cent of: The total of all premiums allocated to the investment funds in the RRSP Minus a proportional reduction for any units redeemed from the RRSP/RRIF We calculate this proportional reduction the same way we calculate the proportional reduction for the basic amount. There is no maturity guarantee for any RRIF, PRIF, LRIF, LIF or RLIF that does not have a maturity date. Death benefit guarantee We make a one-time, lump-sum payment of the death benefit if the last annuitant dies before your policy matures. We make this payment to the beneficiary of the policy. If there is no beneficiary, we make the payment to you (as the policyholder) or to your estate. This payment will be made upon receipt by us of satisfactory proof of death. The amount of the death benefit will be calculated as of the day we receive notification of the death of the annuitant if received at our administrative office in London, Ontario or Montreal, Quebec before 4 p.m. Eastern Time on a valuation day. If received after that time, we ll calculate the death benefit as of the next valuation day. The death benefit is the greater of: The market value of all units allocated to investment funds; or The death benefit guarantee The death benefit guarantee depends on the age of the annuitant when the policy was issued. If the annuitant was: Under age 80, it s 100 per cent of the basic amount Age 80 and over, it s 75 per cent of the basic amount We do not deduct early redemption fees from the death benefit. If you have a RRIF and your spouse or common-law partner is the beneficiary, instead of receiving a onetime, lump-sum payment, you may choose to have your spouse or common-law partner become the policyholder and annuitant of the policy and continue to receive the regular income payments. In this case, we will pay the death benefit on the death of the final annuitant. The death benefit guarantee no longer applies upon termination of your policy. This can occur: Once your policy matures; or When you transfer the value of your units to another policy Examples of how redeeming units affects the basic amount and reduces the guaranteed value Let s assume you are under age 80 and you allocated the following premiums to the investment fund: Date July 1, 2015 Investment Fund Canadian Equity (London Capital) Amount you allocated to the investment fund $10,000 July 1, Canadian Equity $10, (London Capital) After the second premium allocation, your policy will have the following values: Basic amount $20,000 Maturity guarantee $20,000 x 75% = $15,000 Death benefit $20,000 x 100% = $20,000 guarantee Let s also assume that on July 1, 2017, you redeem units of the Canadian Equity (London Capital) fund for $4,