Protection Solutions Your guide to Perspecta Universal Life Insurance with Standard Life Making Retirement Better Grow. Protect. Live. Transfer.
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Thanks to the various resources available to keep them well informed, more and more people are actively participating in their own financial planning. They see the opportunities out there and want to take advantage of them to ensure their financial security. Taking the time to review their options, and the benefits they provide, is important. In addition to protecting their assets, your clients want to build their finances so they ll have something to fall back on in case of an emergency. Whether they have a family to protect or own a business, universal life insurance can help your clients with their specific situation. Standard Life 1
Offer your clients the coverage that best suits their needs Perspecta universal life insurance is more than just insurance; it provides a complete portfolio with financial security all in one policy. It can be used for traditional protection purposes, or when used to its fullest potential, for investment purposes as well. With the possibility of a compassionate benefit and disability benefit payout, as well as the addition of critical illness insurance riders, Perspecta also offers protection against health risks. All this, while still providing a source of tax-sheltered income that can supplement income already obtained through registered retirement plans. How Perspecta can be used from an investment perspective Types of coverages See page 4 See page 7 Life Profiles Preferred Rates Program See page 8 2 Standard Life
Resources See page 26 Death benefit options See page 11 Client bonuses All about the Shelter Optimizer See page 12 All about the Account Optimizer See page 15 Investment options See page 15 See page 16 In case of discrepancy between this document and the policy, the policy prevails. Standard Life 3
From an investment perspective With the right approach, the goal of maximizing the value of investment accounts during the insured s lifetime can be reached. In such a situation, the YRT-100 COI is a good choice. Here are some typical client scenarios: Leveraging Buy sell agreement Jonathan and Mary Ann, aged 50 and 48 respectively, plan to retire in 12 years when Mary Ann is 60 years old. They have paid off their mortgage and have extra cash to invest. They both contribute the maximum permitted to their RRSPs and have no more unused contribution room. They are looking for a way to increase their retirement income on a tax-sheltered basis. Solution: They buy a Perspecta universal life insurance policy into which they will deposit an amount equal to their monthly mortgage payment of $1,200 plus an additional $500 each month. Along with their insurance representative, they have decided on the following: Perspecta Universal Life policy Using YRT-100 COI Account Optimizer with quick deposit feature The policy will be assigned as collateral with the bank At retirement, Jonathan and Mary Ann will have access to additional retirement funds through a series of loans received from their bank. Upon death, the cash value of their policy will be used to pay back the loans with the balance payable to their heirs on a tax-free basis. Philip, age 57, is the main shareholder in a family business that manufactures metal structures. His children, Mark, 37, and Joanne, 35, have received an inheritance from their grandfather. They plan to invest the money to provide sufficient funds to pay the taxes due on Philip s shares upon his death. Philip has established an estate freeze in order to pass on the future growth of his business to his children and freeze his tax bill at $500,000. Solution: Mark and Joanne use their inheritance to buy a Perspecta universal life insurance policy on their father s life: YRT-100 COI Use inheritance to make single deposit into policy with Account Optimizer Use Shelter Optimizer to provide the proper combination of fund value and death benefit Upon his death, Philip s children can use the death benefit to pay the capital gains tax on their father s shares. 4 Standard Life
From an investment perspective Key person insurance Mortgage protection Simon, Robert and Kathy are the managers of an IT firm. Without them, most projects could not be completed and contracts would probably not be signed. Keeping the same 3 managers until their retirement would be ideal for the firm to continue running smoothly. Nonetheless, money should be available in case one of them leaves the firm or should die unexpectedly. Solution: In an effort to encourage the three managers to remain on board with the firm throughout their careers, a plan has been put together. A Perspecta universal life insurance coverage is purchased on the life of each manager with the firm as the beneficiary. For each coverage, the following options apply: YRT-100 COI Increasing death benefit Account Optimizer with quick deposit Upon their retirement, the cash value for each coverage could be used to provide additional retirement income for Simon, Robert and Kathy. Sophie and Anthony, both in their mid-thirties, want to protect their financial security by insuring their mortgage. Solution: They buy a Perspecta universal life insurance policy, including: Joint First To Die coverage YRT-100 COI Level death benefit If one of them dies, the surviving spouse can pay off the mortgage. If the mortgage is paid before either of them dies and they no longer need life insurance, or need less coverage, they can surrender the policy, in full or in part. The amount received can be used in any way they want. If they become disabled before the mortgage is paid off, they could receive the cash value as a tax-free disability benefit. For more information on the various options available with universal life insurance, please refer to our marketing material on Advisor Source at www.advisors.standardlife.ca in the Perspecta Universal Life Insurance Sales Concepts section. You can also ask your sales office about our Business Markets Program. Standard Life 5
Product overview Product overview Type of coverage Issue Age Minimum sum insured Maximum sum insured* Types of COI rates Death benefit options Single Life 15 days to age 80 $50,000 No maximum YRT 100 YRT 85/20 Level Increasing Level Hybrid Joint First to Die (up to 5 lives) Equivalent age 18 to 80 $50,000 No maximum YRT 100 Level Increasing Level Hybrid Joint Last to Die (paid up on first death) Equivalent age 18 to 80 $50,000 No maximum Level Increasing Joint Last to Die Age 18 to 80 $50,000 No maximum YRT 100 Level Increasing Level Hybrid Multiple Life (up to 5 coverages) 15 days to age 80 $50,000 No maximum YRT 100 YRT 85/20 Level Multiple increasing * There is no maximum sum insured. However, for a sum insured greater than $5 million, please contact your Standard Life Regional Centre. 6 Standard Life
Types of coverage Types of coverage Single Life Joint First to Die Maximum of five lives. Joint Last to Die Two options are available and may be chosen concurrently: Joint Last to Die, Paid up on First Death Upon the first death, the cost of insurance and the fixed expense charges cease to be deducted. However, the cost of any riders and benefits will continue to be deducted. Joint Last to Die, Fund Payment at First Death A percentage of the investment account value (IAV) is made to the designated beneficiary upon the first death. Written instructions are required. Maximum benefit amount = IAV (12 X monthly deductions applicable after death) Perspecta multiple life policy Maximum of five coverages (excluding Perspecta Joint Last to Die - Paid up on First Death) Addition of new coverages at any time Unlimited number of riders and benefits Possibility of substituting new insureds for those originally chosen Possibility of removing coverages or splitting policies Three options for the allocation of the investment account value at death: A proportion of the IAV (based on each sum insured) is paid upon each death that terminates a Perspecta coverage. A percentage of the total IAV is paid upon each death (excluding the last) that terminates a Perspecta coverage. The total IAV is paid upon the death that results in the termination of the last Perspecta coverage. Please see the policy for more details. Standard Life 7
Cost of insurance (COI) options Life Profiles Preferred Rates Program Cost of insurance (COI) options Yearly Renewable Term 100 (YRT-100) COI The rate changes each year Cost of insurance ceases when the insured reaches age 100 Available with the level, increasing, hybrid or multiple increasing death benefit options Available with all types of coverage except a Joint Last to Die, Paid up on First Death policy Yearly Renewable Term 85/20 (YRT-85/20) COI The rate changes each year Cost of insured ceases when the insured reaches age 85 or at the 20 th policy anniversary, whichever is later Available with an increasing or multiple increasing death benefit Available on single life policies All cost of insurance rates are guaranteed for the: Duration of the policy Initial sum insured Initial death benefit option chosen Subject to certain fees, the YRT-100 or YRT-85/20 cost of insurance can be changed to a level cost of insurance before the insured reaches age 85. If a level death benefit option was chosen, the death benefit must be changed to increasing before the COI can be changed to level COI. In all cases, changing to level COI is based on the insured s insurance age at the time the change is made. Rate Banding Band 1*: Sum insured of $50,000 to $99,999 Band 2: Sum insured of $100,000 to $999,999 Band 3: Sum insured of $1 million or more Level COI The cost of insurance remains constant until the insured reaches age 100 Available with an increasing or hybrid death benefit * Sums insured between $25,000 and $49,999 fall under Band 1 and are only available for voluntary increases after the policy has been issued. Life Profiles Preferred Rates Program COI based on: Age Gender Lifestyle Medical history Profile 3 People with healthy lifestyles who have not smoked in the last 12 months. 8 Standard Life Sums insured of $100,000 and more 3 categories of non-smoker rates 2 categories of smoker rates Sums insured between $50,000 and $99,999 (standard rates) Non-smokers are classified as profile 3 Smokers are classified as profile 5 Profile 1 People with healthy lifestyles who have excellent personal, family and medical histories. Profile 2 People with healthy lifestyles who have very good personal, family and medical histories. Profile 4 People with healthy lifestyles who do not smoke cigarettes or use nicotine products (e.g., nicotine patch or gum) but who use any one of the following: cigars, pipes or chewing tobacco on occasional basis. Profile 5 People with healthy lifestyles who smoke cigarettes or use nicotine products and may use cigars but do not qualify for profile 4. For more information, please refer to Your Guide to Underwriting With Standard Life.
Maintaining a healthy lifestyle can save your clients money thanks to our Life Profiles Preferred Rates Program. Standard Life 9
Premium payment Monthly charges Premium payment The client decides the amount of each deposit and the frequency of the payments. He can pay them: Annually Semi-annually Quarterly Monthly The first year minimum premium (necessary to keep the policy in force) varies according to: The cost of insurance selected The policyholder s province of residence In subsequent years, no minimum premium is required and the policy remains in force as long as the investment account value is greater than the monthly deductions. Monthly charges On each policy anniversary, a yearly maximum premium is calculated. This premium determines the maximum amount that can be deposited into the policy s investment accounts in a given year in order to maximize the amount invested without losing the policy s tax-exempt status. Any amounts exceeding the annual maximum premium will be automatically transferred to the policy s transit account. This is a daily interest account where all interest earned is taxable. The funds in the transit account are available to the policyholder at any time and are not included in any death benefits paid to the beneficiaries. 10 Standard Life Total Monthly charges include: The cost of insurance* Provincial tax on premiums $8 per month* per policy $2 per month* for each Perspecta coverage Costs of riders and benefits Flat extra charges * These amounts will no longer be deducted once the Perspecta coverages are paid up. Monthly charges can be deducted by one of two methods: Proportionate (Method 1) The amount is deducted proportionately according to the value of each investment account. In the case of the Term Investment Accounts (TIAs), charges are withdrawn from the Account closest to maturity. Market value adjustments are not applicable to monthly deductions from the TIAs. Selected (Method 2) The policyholder selects the account from which the charges will be deducted; he/she may choose any account other than a term investment account with a term of more than one year. If there is not enough money in the selected account at the time the COI charges come due, Method 1 will be employed by default for that month. The owner may switch from one method to the other at any policy anniversary. Flat Extra Charges Determined by the Underwriting Department, these charges may apply temporarily or permanently for an insured whose health is impaired or who engages in activities that increase risk. Table of provincial premium tax rates Province Percentage Newfoundland & Labrador 4% Northwest Territories 3% Nunavut 3% Nova Scotia 3% Prince Edward Island 3.5% Quebec 2.35% Saskatchewan 3% All other provinces 2% Note: Provincial Premium Tax rates are determined by legislation and are subject to change.
Death benefit options Death benefit options Sum Insured Investment Account Value Sum Insured Investment Account Value Sum of all deposits Level Hybrid The greater of: the sum insured MINUS any disability benefits paid out AND the investment account value (IAV) Available with YRT-100 COI. The sum insured MINUS any disability benefits paid out PLUS the greater of: IAV AND the sum of all deposits to IA, without interest, LESS any withdrawals and associated charges Available with YRT 100 or Level COI. The excess of the sum of all deposits in the investment account value is based on a YRT 100 COI. Investment Account Value Investment Account Value Sum Insured insured 1 Sum Insured Increasing Sum Insured insured 1 Multiple increasing The sum insured MINUS any disability benefits paid out PLUS the IAV Available with all types of COI. The sum insured PLUS the portion of the investment account value of the portion selected by the policyholder Available under Multiple Life policies only with all types of COI. Note: Clients can change the death benefit option chosen at any time. The Hybrid death benefit option is the sole option that is offered only at the time the policy is issued. Standard Life may request evidence of insurability at the time the change is made. Standard Life 11
Change of sum insured Client bonuses Change of sum insured Minimum increase: $25,000 Minimum decrease: $10,000 No decreases permitted in the first two years If the option is chosen at issue, all increases, with the exception of automatic Shelter Optimizer increases, are subject to underwriting requirements as well as the COI rates in effect at the time of the request. For automatic increases with the Shelter Optimizer, the rates are those in effect at the time the coverage is issued. Client bonuses Loyalty bonus Unconditionally guaranteed as long as the policy remains in force 0.7% of the investment account value at the end of the policy year LESS any outstanding loan balance Enhanced bonus Two levels A percentage of the investment account value It is paid at the end of the policy year if the following conditions are met: The premium qualifying for a Tier 1 enhanced bonus of 0.3% is equal to: From the policy issue date to the relevant anniversary, the sum of all deposits made to the investment accounts (less any withdrawals, loans and surrender charges) must be greater than the sum of the Enhanced Bonus Qualification Premium (EBQP) (Tier 1) of all coverages for each year, plus any flat and/or multiple extra charges. EBQP: 1.6 X first year minimum premium* (for each Perspecta coverage, excluding riders, benefits and flat extra charges) PLUS the cost of additional riders and benefits and flat extra charges The premium qualifying for a Tier 2 enhanced bonus of 0.2% (or 0.5% if certain conditions are met, see following page for details) is equal to: From the policy issue date to the relevant anniversary, the sum of all deposits made to the investment accounts (less any withdrawals, loans and surrender charges) must be greater than the sum of the Enhanced Bonus Qualification Premium (EBQP) (Tier 2) of all coverages for each year, plus any flat and/or multiple extra charges. EBQP: 2.35 X first year minimum premium* (for each Perspecta coverage, excluding riders, benefits and flat extra charges) PLUS the cost of additional riders and benefits and flat extra charges. * The calculations are based on Level cost of insurance. 12 Standard Life
Client bonuses Summary of bonuses If the conditions mentioned in the previous page are met and all Perspecta coverages are based on the YRT cost of insurance rate, the Enhanced Bonuses will be determined in accordance with the following scale: Bonus Type Bonus Rate Tier 1 0.30% Tier 2 0.50% If all the conditions mentioned in the previous page are met and at least one Perspecta coverage uses the Level cost of insurance rate, or COI is switched from YRT to Level, the Enhanced Bonuses will be determined in accordance with the following scale: Bonus Type Bonus Rate Tier 1 0.30% Tier 2 0.20% The bonus rate for Tier 1 is added to the bonus rate for Tier 2 if the second condition is met. If the conditions applicable to the respective Tier of the enhanced bonuses are met on or after the 10 th policy anniversary, the bonus will be paid for the duration of the policy. The initial Enhanced Bonus Qualification Premiums for Tiers 1 and 2 are shown on the Annual Statement. The Enhanced Bonus Qualification will change if the sum insured is increased, if a new coverage is added or if monthly deductions for riders and benefits change. Standard Life 13
Shelter Optimizer Shelter Optimizer This option, selected by the policyholder at issue, allows the sum insured under the Perspecta coverage to be adjusted to take full advantage of the tax-exempt room available to life insurance policies. The Shelter Optimizer is available with all Perspecta policies, excluding Paid up on First Death policies. For Multiple Life policies, the option must apply to all coverages. The cost of this coverage is based on YRT-100 COI. At issue, the policyholder must select one of the following options: 1. Increase only 2. Increase and decrease 3. No increase and No decrease In the absence of specific instructions, the No Increase and No Decrease option will be exercised. Increase only and increase and decrease options Under these options, if the policy fails the taxexempt test, or if the policyholder has deposited the yearly maximum premium shown on his/her most recent Perspecta statement, the sum insured of all Perspecta coverages then in force under the policy will automatically be increased by a percentage not exceeding 8% per year. A Perspecta coverage will no longer be subject to these automatic increases when: the total sum insured for that coverage equals four times the initial sum insured, the total sum insured for an insured reaches $20 million, or the insured reaches age 85, whichever comes first. However, for Multiple Life policies, the Shelter Optimizer option may continue to generate automatic increases for remaining Perspecta coverages. Following an increase due to the Shelter Optimizer option, there are three coverage decrease limits available. The owner may reduce the sum insured until it reaches: the value of the initial sum insured, an amount specified by the owner (which could be lower than the initial sum insured if the policy has been in force for at least 5 years) the minimum sum insured available for a Perspecta coverage. For a decrease in the sum insured, a written request must be sent to Standard Life. The amount of the decrease could be equal to or less than the amount indicated on the Perspecta statement. Any decrease larger than that indicated on the Perspecta statement will cause the policy to fail the tax-exempt test, making a withdrawal or transfer to the Transit Account necessary. Decreases will be made on the monthly deduction date following the receipt of the owner s instructions. 14 Standard Life
Shelter Optimizer Account Optimizer No Increase and No Decrease option If this option is chosen, no automatic adjustment will be made to the sum insured of the Perspecta coverages and the owner will not be advised of the possible decreases. After issue, the owner may select the Increase and Decrease or the Increase Only options, but all insureds under all Perspecta coverages will be subject to underwriting requirements. If the owner refuses an automatic increase in writing within 30 days after the policy anniversary, the Shelter Optimizer option will become No Increase and No Decrease. Account Optimizer When combined with the Shelter Optimizer, this solve-for in our Wealthcare Illustration System allows the client s investment accounts to be maximized while minimizing the sum insured under the policy thus reducing the cost of insurance. At the later of age 85 and duration 10, the sum insured may be $0, meaning the net cost of pure insurance is zero. This means that only the value of the investment accounts remains. There are two ways to make deposits: a single deposit using the transit account or by quick deposit. For single deposits, we suggest using the transit account for a period of 3 to 10 years. As a general rule, clients should use the transit account for a period of 3 to 5 years for insureds of 45 years or younger and 5 to 10 years for insureds of 45 years or older. For quick deposits, the investment account is optimized through a series of deposits made over a given period. The client is free to choose the amount of the deposit and the payment period. In the Wealthcare Illustration System, use the Account Optimizer with quick deposit option to determine the period and amount that best suits your client s situation. Standard Life 15
Investment options Investment options The policyholder may choose how deposits are to be allocated among the investment accounts. However, the minimum deposit allocated to any single investment account is 5% of each deposit. If the policyholder selects more than one term investment account, a minimum deposit of $50 per account is required. The maximum number of accounts per policy is 10. Our investment options meet the needs of all types of investors, including those who are more familiar with investment accounts as well as those who prefer to leave the management of their investment accounts to the professionals. We offer the following accounts: Active Management Fixed Income Standard Life Canadian Bond Account Standard Life Corporate High Yield Bond Account Standard Life International Bond Account Balanced Standard Life Monthly Income Account Standard Life Balanced Account Canadian Equity Standard Life Canadian Dividend Growth Account Standard Life Canadian Equity Account Standard Life Canadian Small Cap Account International Equity Standard Life Global Dividend Growth Account Standard Life International Equity Account Standard Life Global Equity Account Standard Life European Equity Account Predetermined Portfolio Accounts Standard Life Conservative Portfolio Account Standard Life Moderate Portfolio Account Standard Life Growth Portfolio Account Standard Life Aggressive Portfolio Account U.S. Equity Standard Life U.S. Equity Account Standard Life U.S. Mid Cap Account 16 Standard Life
Investment options Passive Management Indexed Accounts Money Market Index Account Canadian Bond Index Account III Canadian Equity Index Account III U.S. Equity Index Account II European Equity Index Account II EuroAsia Plus Equity Index Account II Science and Technology Equity Index Account Strategic Asset Allocation Accounts Conservative Asset Allocation Account Moderate Asset Allocation Account Growth Asset Allocation Account Aggressive Asset Allocation Account Term Investment Accounts Term Investment Account of 1 year Term Investment Account of 3 years Term Investment Account of 5 years Term Investment Account of 10 years Term Investment Account of 15 years Term Investment Account of 20 years Daily Interest Account As long as the account is available, we guarantee the interest rate will never be less than zero. For more information on the accounts available, please see the Marketing Materials section of Advisor Source at: www.advisors.standardlife.ca. Change to or Termination of an Investment Option If an index is no longer published, Standard Life will endeavor to replace it with another Investment Option, which we judge similar to the original investment. Standard Life also reserves the right to switch the investment from the Investment Option that has been terminated to the Investment Option that we judge comparable at that time. Standard Life also reserves the right to change or terminate an Investment Option for such other reasons as Standard Life may in its sole discretion deem reasonable. The minimum Term Investment Account interest rate for each term is guaranteed to equal the greater of 90% of the Government of Canada Bond rate for the same term, less 1.75%, and the percentage minimum for that term, as shown below: 0% for 1- and 3-Year Term Investment Accounts 1% for 5-Year Term Investment Account 2% for 10-, 15- and 20-Year Term Investment Accounts These guarantees apply to each Term Investment Account mentioned above, as long as the account is available. We also guarantee to offer, as long as the policy is in force, at least one Term Investment Account. Standard Life 17
Cash value Cash value The policyholder can access the cash value of his Perspecta policy through a cash withdrawal (full or partial). The cash value is equal to the total investment accounts, less surrender charges, outstanding policy loans and, in the case of term investment accounts, market value adjustments. Full surrender Partial surrender The policyholder may elect to surrender the entire policy at any time, in which case the cash value and, if applicable, the value of the transit account will be paid to the policyholder. A full surrender will terminate the policy. A partial surrender is the withdrawal of a portion of the cash value. The maximum allowed is the cash value less any outstanding policy loans and three times the monthly deductions. The minimum for a partial surrender is $500. Partial surrenders may be subject to income tax and, in the case of term investment accounts, to market value adjustments. Withdrawals are taken from the policy s investment funds according to the owner s instructions. In the absence of instructions all withdrawals are first taken from the transit account. Withdrawals from the TIAs are made from the fund segment closest to maturity. Any withdrawals will reduce the Investment Fund Value by the amount of that withdrawal. In the case of the Level Death Benefit option, withdrawals will reduce the sum insured while, in the case of the Hybrid Death Benefit option, withdrawals will reduce the return of premiums component. 18 Standard Life
Cash value Policy loans In addition, surrender charges corresponding to a percentage of the first year minimum premium, calculated using Level cost of insurance, apply for the nine years following the issuance of Perspecta coverage or an increase to the sum insured requested by the client. Full Surrender Charges are calculated as follows: Policy Year Surrender Charge (% First Year Minimum Premium 1 ) 1 125% 2 175% 3 225% 4 275% 5 275% 6 275% 7 200% 8 150% 9 75% 10 and over 0% 1 Calculated using Level COI. Only a portion of the surrender charge applies when the client is withdrawing only a portion of the investment accounts. The surrender charges for partial withdrawals are equal to: Full Surrender Charge Withdrawal Amount Investment Account Value Net of Policy Loans Policy loans Policy loans may be granted at any time after the first policy year The minimum loan amount is $500 After the third policy year, the maximum loan amount is 85% of the cash value Policy loans can be made in policy year two, but the maximum amount may vary Contact our head office for more information if needed. The annual interest rate charged on the loan = the interest rate of the daily interest account, PLUS 2%. The policy will remain in force as long as the loan balance (loan amounts plus accrued interest) is less than the cash value. Standard Life 19
20 Standard Life With the addition of a CI rider to their policy, your clients can have complete protection.
Riders and additional benefits Riders and additional benefits 10 year and 20 year renewable and convertible term insurance riders 10- or 20-year terms Automatic renewal Coverage to age 85 Change in premium every 10 years or 20 years (premium guaranteed at issue) Convertible to any permanent insurance plan before age 65 Protecta critical illness insurance riders (4 or 24 illnesses) Protecta 10 Protecta 65 Protecta 65 joint coverage Protecta 75 Protecta 100 Protecta Child (13 illnesses) Children s protection rider Sum insured between $2,000 and $20,000, level insurance Covers only one child Age at issue: 15 days to 17 years Coverage to age 25 or wedding date, whichever is first Convertible to any available insurance coverage 31 days before expiry date Children s enhanced protection rider Provides the same sum insured as children s protection rider, but includes guaranteed insurability. This permits the life insured to purchase additional insurance at specified option dates as long as the sum insured for the new coverage is no greater than 5 times that of the rider. Guaranteed Insurability Benefit (GIB) Available at the time of issue for insureds aged 40 or less Choice of sum insured between $10,000 and the lesser of $100,000 and twice the sum insured of the policy to which the GIB is attached Benefit may be exercised on any of the occasions specified in the policy Accidental Death Benefit Additional amount of insurance paid to the beneficiary if the insured dies as a result of an accident Minimum coverage of $10,000 Maximum coverage for insureds 15 days to 25 years of age is the lesser of $100,000 and the sum insured under the Perspecta policy Maximum coverage for insureds between age 25 and 65 is the lesser of $300,000 and the sum insured under the Perspecta policy Benefit ceases at age 70 Waiver of costs on disability Waiver of premiums during the disability of the policyholder or the insured before age 60, up to date of recovery or death of the policyholder or the insured Covers waiver of premiums related to future increases in sum insured under the Shelter Optimizer option. The benefit expires upon recovery or death of the person insured In addition, any voluntary increases in the sum insured may also be waived, provided a new waiver is issued for the voluntary increase. To obtain the new waiver, the insureds will be subject to the then current underwriting requirements, waiver costs and administrative rules. Standard Life 21
Riders and additional benefits Enhanced waiver on disability Waiver of an amount selected by the policyholder, subject to certain conditions, in the event the insured under this coverage becomes disabled (please refer to the policy) The waiver period is also selected by the policyholder, and is subject to certain conditions The minimum amount is $1,800 per year and the maximum is the lesser of: $18,000 and 200% of the First Year Minimum Premium (or $1,800 whichever is greater) Issue Age Period 1 18 to 50 10 Years 18 to 40 20 Years 18 to 44 To Age 50 18 to 54 To Age 60 The benefit expires upon recovery or death of the person insured 1 Corresponds to coverage period and maximum waiver period set by the company. In all cases, the minimum waiver period is 10 years. Death and disability waiver Available for policies where only children are covered Waiver of an amount selected by the policyholder in the event he/she dies or becomes disabled on the earlier of the following: before the insured reaches age 25 or before the policyholder reaches age 60 The amount selected by the policyholder at issue may not exceed $1,500 per month or $18,000 per year The amount to be waived may be changed (subject to underwriting requirements) after the issue date. This benefit is not available for policies containing more than one juvenile Perspecta coverage. Survivor s insurance benefit 65 or 70 Survivors of Joint First to Die policies have the option of purchasing any insurance plan, without evidence of insurability Sum insured under the new policy must be the same as under the original coverage Right may be exercised by survivors under 65 years of age or 70 years of age, depending on the benefit selected If there is more than one survivor, they can each elect to take out a Single Life Policy or a Joint First to Die policy among them. 22 Standard Life
Disability benefit payout Compassionate benefit Disability benefit payout For any Perspecta policy with only one coverage in force and with a cash value greater than zero, an insured aged 18 or older suffering from a severe physical or mental impairment may receive a disability benefit, subject to the conditions defined in the policy. The benefit consists of a portion of the cash surrender value and the amount paid out is based on the following conditions: a) One lump sum disability benefit payment will be permitted in any policy year. b) The minimum amount of each payment must be the lesser of $2,500 and the maximum amount allowed, as defined in c) below. c) The maximum amount allowed for each payment will be determined on the effective date of the claim. It equals the cash value minus the equivalent of one year s monthly deductions and any outstanding loan balance. d) Surrender charges do not apply. Currently, disability benefits are not subject to income tax. Please refer to the policy for a definition of disability and information about conditions and exclusions. Compassionate benefit If the insured suffers from a terminal illness, we can help in our own way by offering him an advance payment on the policy s death benefit. This non-contractual compassionate benefit is offered at no additional charge. The cash advance can be as high as 50% of the death benefit to a maximum of $100,000. In addition to helping the insured cover costs related to his condition, this benefit could allow a significant other, a family member, or someone close to the insured to take a leave of absence from work to be with him when he needs them most. Certain requirements must be met to be eligible for the benefit: If the insured suffers from a terminal illness with a life expectancy of 12 months or less, the policyholder can draw against his life insurance policy while the insured is still alive. The insured must provide a medical certificate, issued in writing by a physician regarding his or her state of health. Such certificate must meet Standard Life s criteria, and we reserve the right to require additional information. The policy must have been in force for at least two years. The settlement takes the form of a collateral policy loan. The interest on the loan is based on the rate then applicable for policy loans and remains fixed afterwards. Upon the death of the insured, the initial death benefit, less the policy loan and the accrued interest on the loan, is paid to the beneficiary. Since it is a non-contractual benefit, the cash advance received is tax-free. Standard Life 23
Taxation Taxation Standard Life tests the Perspecta policy regularly to ensure it retains its tax-exempt status. If the Perspecta policy fails the tax-exempt test, Standard Life will automatically restore the policy s tax-exempt status, according to the owner s instructions, by: 1. transferring the excess money to the Transit Account, OR 2. sending the excess money directly to the owner. Both cases constitute a partial withdrawal and, therefore, may be subject to taxation. In the absence of instructions from the owner, the excess amount will be transferred to the Transit Account. As tax-exempt room becomes available, the funds will be transferred back into the investment funds and allocated according to your instructions. All interest earned in the Transit Account is taxable and the appropriate tax receipts will be forwarded to the owner. Taxation on Surrender A portion of any withdrawal will be taxable when the value of the investment funds is greater than the policy s Adjusted Cost Base (ACB). For the purposes of this document, the ACB is the deposits made into the tax-sheltered accounts less the net cost of pure insurance, less the cost of any riders, benefits and extra premiums. To help you better understand tax matters related to our protection solutions, we have developed a publication called Taxing Issues, which can be found on Advisor Source at www.advisor.standardlife.ca. For more information on the taxation of universal life insurance, you can consult the documents listed below. The Tax Implications of Corporate-Owned Life Insurance PC 5675-04-2006 Savings Available Where Corporate Dollars are Used to Acquire Life Insurance PC 5676-04-2006 Life Insurance: Corporate vs. Personal Ownership PC 5707-04-2006 Corporate vs. Personal Ownership Checklist PC 5718A-05-2006 The Intergenerational Wealth Transfer of Life Insurance Policies (Cascading Policies) PC 5850A-05-2006 24 Standard Life
Resources Resources to help you better serve your clients We know you want to provide your clients with the best possible service and we want to do the same for you. You can count on us to give you the support and tools you need to advise your clients. Advisor Source Web site You will find all the marketing material you need, in PDF format, to sell Perspecta in Advisor Source at: www.advisors.standardlife.ca. You can also contact your sales office or general agent for hard copies. Sales Support For more information on Perspecta universal life insurance, please contact your sales office or your nearest Standard Life regional centre. Eastern Region eastern@standardlife.ca Central Region central@standardlife.ca Western Region western@standardlife.ca Standard Life 25
Retirement Investments Insurance Talk soon. www.standardlife.ca The Standard Life Assurance Company of Canada 2546S-10-2006