Participating insurance and dividends

Each year, we assess the Sun Life dividend scale as part of our commitment to Clients and our Par governance. As always, our focus is on delivering long-term performance and stability to our participating policyholders.

We’re pleased to announce we’ll be maintaining the Sun Life dividend scale, including the dividend scale interest rate of 6.25%, starting April 1, 2024.

The Board of Directors of Sun Life Assurance Company of Canada made this decision based on the recommendation of Sun Life’s appointed actuary and in accordance with​ Sun Life’s Dividend Policy.

We’re also maintaining the experience portions of a Client's specific dividend scale, including mortality, policy surrender, expenses and taxes, as well as the special dividend announced last year for pre-2004 policies.

Our decision to maintain the Sun Life dividend scale interest rate reflects our long-term investment strategy for the Sun Life Par Account. This management approach alongside our large, well-established participating account contributes to strong and stable returns for policyholders. 

The 2024/2025 Sun Life dividend scale isn’t an indicator of future performance. We recommend advisors continue to show illustrations using the current -0.5% and -1% dividend scale interest rates to show Clients future dividends are not guaranteed.

The dividend scale interest rate isn’t the return that a Client can expect from their policy. The rate reflects the investment experience of the Par account and is only a part of a Client’s dividend.

Learn how Sun Life’s participating life insurance products can help Clients achieve their goals.

For further information about participating insurance and dividends, Clients can visit the participating life insurance page.

Thank you for helping Canadians achieve lifetime financial security and live healthier lives.

Contact:

To learn more about the Sun Life dividend scale or Sun Par solutions, speak to a Par expert. 

Sun Life Financial dividends on deposit rates

Historical

Sun Life is increasing its dividend scale interest rate to 6.25% (from 6.00%) on April 1, 2023. This is a result of rising interest rates, and strong real estate and equity performance. 

Each year, we assess the Sun Life dividend scale as part of our commitment to Clients and our Par governance. As always, our focus is on delivering long-term performance and stability to our participating policyholders.

For 2023, we’re declaring a new special dividend for policies issued before 2004 because of past exceptional investment experience. We’ll review and pay this special dividend annually, like other dividend factors.

We’re also updating dividends for other experience, such as mortality, policy surrender, expenses, policy loans and taxes.

The 2023/2024 Sun Life dividend scale isn’t necessarily an indicator of future performance. We recommend you continue to show Clients their new business illustrations using the current -1% and current -2% dividend scale interest rates.

Client impact

Most Clients will receive an increase in their dividends. Policies issued before 2004 have the largest increases. In general, Sun Par Accumulator II products have a larger increase than Sun Par Protector II products.

Because of the dividend increase, we’re adjusting the maximum amount of Plus premium for new Sun Par Accumulator II policies. This will help to keep these policies tax exempt. The new maximum Plus premiums will be reflected in Sun Life Illustrations on January 30, 2023.

How we're letting Clients know

Clients will receive a message on their annual statement. More information about participating insurance and dividends is available for Clients on sunlife.ca.

Support for advisors

We’ll update Sun Life Illustrations for new business on the web on January 30, 2023. The updated desktop version will be made available on March 20, 2023. Use the web version of Sun Life Illustrations version 5.8.0 to ensure your illustrations reflect the new dividend scale and the adjusted maximum Plus premium.

In-force illustrations

In-force illustrations reflecting the new dividend scale interest rate will be available starting on April 1, 2023. To see the projected impact to Clients’ policies sold:

  • before 2010: you can run an in-force illustration to see the projected impact to Clients’ policies. Learn how in this step-by-step guide. 
  • in 2010 or later: request an in-force illustration through Request Centre by logging into the Advisor site.

In closing

The Board of Directors of Sun Life Assurance Company of Canada made this decision based on the recommendation of Sun Life’s Appointed Actuary. The recommendation is also in accordance with Sun Life’s Dividend Policy and Par Account Management Policy.

Thank you for helping Canadians achieve lifetime financial security and live healthier lives.

Want to know more?

The Q&A below can help answer many of your questions. Learn how Sun Life’s participating life insurance products can help Clients achieve their goals.

Contact:

To learn more about the Sun Life dividend scale or Sun Par solutions, reach out to your Regional Sales Director or an Insurance Sales Representative.

How will these changes affect Clients’ in-force policies?

Most Clients will receive increased dividends in 2023/2024 due to the increase in the dividend scale interest rate.  Some male smoker Clients could receive decreased dividends due to mortality. The change in dividends may affect how much a Client needs to pay, and their policy's cash value and death benefit growth.

Why add a special dividend for products issued before 2004?

Declaring a special dividend for Sun Par policies issued before 2004 allows for the fair and timely pass through of past exceptional investment experience to Clients. It also allows the Sun Par dividend scale interest rate to remain stable and aligned with the investment outlook of the Par account.

All Sun Par policies continue to share the same dividend scale interest rate and participate proportionately in the Sun Life Par Account investment earnings. Sun Par policies issued before 2004 require the special dividend to effectively pass through past exceptional investment experience, partly due to its dividend mechanics and the maturity of the block. Policies issued more recently will also retain benefits from positive experience.

What can cause the special dividend to change?

We’ll use this new special dividend to manage exceptional experience. We designed this special dividend as an annual dividend. We’ll review it annually. Future positive or negative exceptional experience can cause a change to this special dividend.

Is this special dividend replacing the current Special Maturity Dividend (SMD)?

No, this special dividend is independent from the Special Maturity Dividend (SMD) currently available on some pre-1996 policies. SMD rates are not changing with this dividend recommendation.

Why does Sun Par Accumulator II have a larger average dividend increase than Sun Par Protector II?

Other experience, mostly policy loans, is more favourable for Sun Par Accumulator II than for Sun Par Protector II. On average, Sun Par Accumulator II dividends are increasing by 8% and Sun Par Protector II dividends are increasing by 3%.

Why is the Plus premium maximum changing?

Due to the increase in the dividend scale interest rate, future projected dividends are increasing. The increase to dividends reduces the available tax-exempt room. Plus premium payments are used to purchase paid up additional insurance, which also uses tax exempt room.

Are enhancement maximums changing?

No, the enhancement maximums are not changing.

How material are the changes to the other factors of the dividend scale e.g., mortality, policy surrenders, expenses and taxes?

For most Clients, the dividend changes from mortality, policy surrender, expense and tax experience are immaterial. For some male smoker policies, the negative impact from mortality is more material and could decrease dividends.

When can I request an in-force illustration?

In-force illustrations reflecting the new dividend scale interest rate will be available starting April 1, 2023.

  • For policies sold before 2010, you’ll be able to run your own illustration.  It’s easy to run. Learn how in this step-by-step guide.
  • For policies sold in 2010 or later, you’ll be able to request an in-force illustration through Request centre.

How does the current economic volatility impact the future outlook for Sun Par?

We manage investment volatility by smoothing investment returns for Sun Par. We manage the Par block so it continues to provide excellent value for Clients.

How does the dividend scale interest rate compare to other historical returns?

The performance of the Sun Life Par Account affects the non-guaranteed values in participating life insurance policies. Sun Life’s long-term strategy and the accounting rules that govern participating policies contribute to providing a stable par account return. See Sun Life Participating Account (810-3599) for details.

What is Sun Life's philosophy on managing the asset mix of the Participating account?

Sun Life takes a long-term view to managing the participating account. The ultimate goal is to provide stable returns for our policyholders.

We have a high quality and well diversified asset portfolio that adheres to a research-based process. More than 200 experienced professionals and support staff conduct this research. We make sure to diversify our investments in various industries, companies, asset classes and financial instruments.

We employ a consistent and disciplined approach to identify, measure, monitor and manage risk.

We’re able to invest in a wide variety of holdings including bonds, mortgages and equities. This is because the participating account has a long-term investment philosophy and a focus on stable cash flows. The portfolio's longer-term investments, such as its private fixed income and real estate components are a good match for the Sun Life Participating Account's long-term objectives.

What dividend scale should I be illustrating for Clients?

Managing Client expectations with respect to policy performance is important. They must understand what we guarantee and what we don’t guarantee. In addition, Clients need to understand how changes to the dividend scale impact the non-guaranteed elements. The “Statement of Variability” of the basic illustration provides Clients with an overview of how a change in dividend scale may impact the policy in the future. We encourage you to review this with all Clients so they understand the impact a change in the dividend scale interest rate can have on their policy.

Give Clients a current dividend scale illustration and a full alternate dividend scale illustration. This can help them see the impact a change in dividend scale will have on their policy values. The Sun Life illustration software automatically illustrates the current dividend scale and the current -1% dividend scale. It also provides the option to show Clients a current -2% dividend scale scenario.

Is the growth rate within a participating policy the same as the dividend scale interest rate?

No. The dividend scale interest rate isn’t the return that a Client can expect from their policy. The dividend scale interest rate is just one component we use to determine policyholder dividends and an individual policy’s performance. The rate reflects the investment experience of the par account and is only part of a Client’s dividend. Many things can affect dividends, including the: 

  • design of the participating life insurance product,
  • pattern of guaranteed cash values,
  • number of premiums paid to the policy and
  • insured person’s age and risk characteristics.

Other factors that may impact dividends include mortality, expenses, taxes and policy surrenders.

A special message from Dean Chambers, Vice President, Insurance Management

I’m happy to announce that on April 1, 2022, we’re maintaining the Sun Life dividend scale interest rate at 6.00%.

We’re able to maintain this rate in this challenging low interest rate environment because of our investment philosophy and the strength and management of the Sun Life Participating Account. 

video thumbnail

Each year, we assess the Sun Life dividend scale as part of our Par governance and our commitment to Clients. As always, our focus is on delivering long-term performance and stability to our participating policyholders.

We’re also maintaining other experience portions of a Client's specific dividend scale, including mortality, policy surrender, expenses and taxes.

The Board of Directors of Sun Life Assurance Company of Canada made this decision based on the recommendation of Sun Life’s Appointed Actuary. The recommendation is also in accordance with Sun Life’s  Dividend Policy.

The dividend scale interest rate isn’t the return that a Client can expect from their policy. The rate reflects the investment experience of the par account and is only part of a Client’s dividend.

The 2022 Sun Life dividend scale isn’t necessarily an indicator of future performance. We recommend you continue to show Clients illustrations using the current -1% and -2% dividend scale interest rates.

To learn more about the Sun Life dividend scale or Sun Par solutions, reach out to your Regional Sales Director or an Insurance Sales Representative.

Thank you for helping Canadians achieve lifetime financial security and live healthier lives.

The Sun Life dividend scale is changing on April 1, 2021

Each year, we assess the Sun Life dividend scale as part of our par governance and our commitment to Clients. As a result, we are making a change. Our dividend scale interest rate has been 6.25% since 2017. We’re lowering it from 6.25% to 6.00% effective April 1, 2021. This decision is in response to continued low interest rates. Although the dividend scale for most policies is decreasing due to lower interest rates, improvements in mortality experience mean that some policies will experience a smaller decrease.

This proactive move is a step towards continued long-term stability for our participating policyholders. It helps ensure Clients continue to benefit from our investment strategy and the strength of our par account over the coming years.

The dividend scale interest rate isn’t the return that a Client can expect from their policy. The rate reflects the investment experience of the par account and is only part of a Client’s dividend. Other factors that may impact dividends include mortality, expenses, taxes and lapses. The dividend scale is sensitive to the performance of these factors.

The Board of Directors of Sun Life Assurance Company of Canada made this decision based on the recommendation of Sun Life’s Appointed Actuary. The recommendation is also in accordance with Sun Life’s Dividend Policy.

The 2021 Sun Life dividend scale isn’t necessarily an indicator of future performance. We recommend you continue to show Clients illustrations using the current -1% and -2% dividend scale interest rates.

In-force illustrations will be available starting on April 1, 2021. For participating policies sold prior to 2010, you can run an in-force illustration to see the projected impact to Clients’ policies. Learn how in this step-by-step guide. For participating policies sold in 2010 or later, you can request an in-force illustration by logging into the Advisor site and accessing the Request centre.

Thank you for helping Canadians achieve lifetime financial security and live healthier lives.

Want to know more?

The Q&A can help answer many of your questions and you can learn how Sun Life’s participating life insurance products can help Clients achieve their goals.

Contact the Sales Desk for any additional questions.

View the PDF announcement

Why are we changing the dividend scale for Sun Life participating policies in 2021?

The Sun Life dividend scale interest rate has remained the same for the past 4 years. The dividend scale interest rate change this year is due to lower investment returns and the continued low interest rate environment. We review the dividend scale each year and manage it for the long-term benefit of all participating policyholders. Other factors such as mortality, expenses and taxes have also been reviewed and updated.

What other variables impact the performance of individual participating policies?

There are a number of factors that contribute to the calculation of policyholder dividends. Mortality experience, expenses, taxes and lapses all contribute in addition to the dividend scale interest rate. The mortality and tax assumptions for the Sun Life dividend scale have also been updated in 2021 to reflect an improvement in experience.

What impact will this have on my clients in force participating policies?

The reduction in the dividend scale interest rate will have only a modest impact on long-term policyholder values. In many cases, non-guaranteed arrangements, such as premium offset durations, will not be impacted. This change will only affect the amount of dividends credited to a policy going forward. Any dividends already accumulated are vested and can’t be taken away. For most policies, Client dividends will decrease due to the reduction in the dividend scale interest rate, partially offset by improvement in mortality experience.

When can I request an inforce illustration?

Inforce illustrations reflecting the new dividend scale will be available starting April 1, 2021. For policies sold prior to 2010, you will be able to run your own illustration. It’s easy to run. Learn how in this step-by-step guide. For policies sold in 2010 or later, you will be able to request an inforce illustration through Request centre. You will receive a response in about 15 days due to volumes.

Will every Sun Life participating policy see a decrease in the dividend scale?

No.  The reduction in the dividend scale interest rate and mortality experience improvement can impact various products and policies differently. Because of this, some participating policies may see a dividend scale increase, which will provide higher annual dividends than the current dividend scale.

What is the average impact to the various groups of participating policies?

Product group Impact of the dividend payout in 2021/2022
Open Block
Sun Par Protector II
Sun Par Accumulator II
Series 2017
  • Majority of policies will experience a decrease averaging about 4.7%
  • Maximum Plus premium benefit amounts won’t change
Sun Par Protector
Sun Par Accumulator
(series 2010)
  • Majority of policies will experience a decrease averaging about 3.1%
  • Maximum Plus premium benefit amounts won’t change
Sun Classic Life
(series 2002)
  • This block of policies will have an average increase of 7%
Sun Premier Life
(series 2002)
  • Most policies will have an average decrease of 2%
Closed Block
Sun Classic Life
(series 1996)
  • Most policies will have an average increase of 2%
Sun Premier Life
(series 1996)
  • Most policies will have an average decrease of 7%
Opus
(series 1992, 1993, 1994)
  • Most policies will have an average decrease of 9%
All other Par policies
(series issued before 1992)
  • Most policies will have an average decrease of 3%
Miscellaneous
Premium Offset
  • For most policies, there will be no impact to the projected premium offset date.
Special Maturity Dividends
  • Special Maturity Dividends schedule is maintained for this dividend scale review

What dividend scale will apply to a participating policy issued in December 2020?

The dividend scale in effect at the time of the anniversary will apply. In this case, the first anniversary would be in December 2021 so the new 2021 dividend scale would apply.

Is the growth rate within a participating policy the same as the dividend scale interest rate?

No. The dividend scale interest rate is just one component used to determine policyholder dividends and the performance of an individual participating policy. Dividends can be affected by the design of the participating life insurance product, the pattern of guaranteed cash values, the number of premiums paid to the policy and by the age and risk characteristics of the insured person.

How do the current low interest rates affect the dividend scale?

The dividend scale interest rate applicable to Sun Life Participating policies is currently higher than current Canadian Long Term market interest rates. The dividend scale interest rate is not only based on fixed income rate returns, as the participating account holds a diversified mix of assets. We look to both current and future expected experience when setting the dividend scale and the smoothing helps to reduce the impact of short-term fluctuations in the market. Because interest rates in previous years have been more favorable than current conditions, policyholders are benefiting from the fixed-income assets that were purchased in years where yields were higher than they are today. These assets are continually being replaced as they mature with fixed-income assets at today's lower yield. If fixed-income yields remained the same for some time, you would eventually see the dividend scale interest rate reduce slowly due to the lower market rates.

Partially offsetting the low interest rate environment are participating account assets invested in Private Fixed Income and Real Estate. Sun Life has the largest Private Placement team in Canada and is recognized as a leader and one of the most active players in this market. The team seeks private placement investments that achieve yields well in excess of comparably rated public securities; providing favorable spreads, better terms and diversification opportunities. This provides the Sun Life Participating Account with a significant competitive advantage.

Real Estate is another advantage in the Sun Life Par Account. The Canadian real estate portfolio is comprised of high quality, income producing properties, with virtually no leverage. These holdings help manage inflation risk and enhance the overall yield of the Sun Life Participating Account.

What do the low interest rates mean for next year's dividend scale?

The impact of interest rates on next year's dividend scale is not something we can predict; however the current economic uncertainty, recent equity market volatility, and the ongoing low interest rate environment continue to put downward pressure on the dividend scale interest rate. The economic environment continues to be an important consideration when we determine the dividend scale. To help clients understand variability, we continue to urge you to show alternate dividend scales (current scale minus 1% and 2% for Sun Par) when discussing values in illustrations. The Sun Life Participating Account is managed with a long-term objective. The portfolio includes equities, bonds, private fixed income and real estate. This broad diversification of asset classes, combined with prudent management and smoothing, result in a portfolio return that offers policyholders the potential for long-term growth with lower volatility.

How does the dividend scale interest rate compare to other historical returns?

The performance of the Sun Life Participating Account affects the non-guaranteed values in participating life insurance policies. Sun Life’s long-term strategy and the accounting rules that govern participating policies contribute to providing a stable par account return. The following chart compares the Sun Life Participating Account dividend scale interest rates to Government of Canada (GOC) 10-year bonds, S&P TSX, five-year guaranteed investment certificate (GIC) returns and the Consumer Price Index (CPI).

Year Sun Life Par Account dividend interest rate Government of Canada 10-year bonds S&P TSX total return Five-year GIC Consumer Price Index
1991 10.90 9.76 12.02 8.94 3.75
1992 10.40 8.77 -1.43 7.33 2.17
1993 9.40 7.85 32.55 6.20 1.65
1994 8.65

8.63

 -0.18 7.34 0.23
1995 8.40 8.28 14.53 7.06 1.74
1996 8.15 7.50 28.35 5.64 2.16
1997 8.40 6.42 14.98 4.71 0.78
1998 8.40 5.47 -1.58 4.38 1.00
1999 8.40 5.69 31.71 4.81 2.63
2000

8.40

 5.89 7.41 5.34 3.20
2001 8.40 5.78 -12.57 4.05 0.72
2002 7.90 5.66 -12.44 3.91 3.80
2003 7.90 5.28 26.72 3.13 2.08
2004 7.15 5.08 14.48 2.92 2.13
2005 7.15 4.39 24.13 2.71 2.09
2006 7.15 4.30 17.26 3.16 1.67
2007 7.90 4.34 9.83 3.31 2.38
2008 8.40 4.04 -33.00 3.01 1.16
2009 8.40 3.89 35.05 1.95 1.32
2010 7.40

3.66

 17.61 1.97 2.35
2011 7.40 3.21 -8.71 1.87

2.30
2012 7.15 2.33 7.19 1.65

0.83
2013 7.15 2.72 12.99 1.63 1.24
2014

6.75

 2.60 10.55

1.92

 1.47
2015 6.75 2.02 -8.10

1.47

1.61
2016 6.75 1.80 21.08 1.42 1.50
2017 6.25 2.18 9.10 1.39 1.87
2018 6.25 2.33 -8.89 1.69 1.99
2019 6.25 1.73 22.88 2.08 2.25
2020 6.25 1.08 5.60 1.29 0.95
2021 6.00        

* As of April 1, 2021

What is Sun Life's philosophy on managing the asset mix of the Participating account?

Sun Life takes a long-term view to managing the participating account with the ultimate goal of providing stable returns for our policyholders.

We have a high quality and well diversified asset portfolio that adheres to a research-based process conducted by more than 200 experienced professionals and support staff. Essentially, we buy only what we know, and we make sure our investments are diversified in various industries, companies, asset classes and financial instruments.
We employ a consistent and disciplined approach to identify, measure, monitor and manage risk.
Because the participating account has a long-term investment philosophy and a focus on stable cash flows, we are able to invest in a wide variety of holdings including bonds, mortgages and equities. The portfolio's longer-term investments, such as its private fixed income and real estate components are a good match for the Sun Life Participating Account's long term objectives.

What dividend scale should I be illustrating for clients?

Managing client expectations with respect to policy performance is important. It is critical that clients understand what is guaranteed and what is not guaranteed. In addition, clients need to understand how the non- guaranteed elements may be impacted due to changes in the dividend scale. The “Statement of Variability” of the basic illustration provides clients with an overview of how a change in dividend scale may impact the policy in the future. We encourage you to review this with all clients so they understand the impact a change in the dividend interest rate can have on their policy.

In addition, providing clients with a full alternate dividend scale illustration in addition to a current scale illustration will help give them some context regarding the impact a change in dividend scale will have on their policy values. The Sun Life illustration software automatically illustrates the current dividend scale and the current -1% dividend scale. It also provides the option to show clients a current -2% dividend scale scenario.

We’re maintaining the 2019-2020 Sun Life dividend scale

We’re maintaining the Sun Life dividend scale, including the dividend scale interest rate of 6.25%, effective April 1, 2020. 

The Board of Directors of Sun Life Assurance Company of Canada approved this decision. Their approval is based on the recommendation of Sun Life’s appointed actuary. It’s also in accordance with Sun Life’s dividend policy.

Clients will continue to benefit from Sun Life’s management philosophy. They’ll also benefit from our long-term investment strategy, and the strength of our par account.

The dividend scale interest rate isn’t the return that a Client can expect from their policy. The rate reflects the investment experience of the par account, and is only part of a Client’s dividend. Other portions of a dividend include mortality, expenses, taxes and lapses. The dividend scale is sensitive to the performance of these factors. 

Our decision to maintain the Sun Life dividend scale isn’t an indicator of future performance. We recommend you continue to show Clients illustrations using the current -1% and -2% dividend scale interest rates. 

Thank you for helping Canadians achieve lifetime financial security and live healthier lives. 

Want to know more?

Learn how Sun Life’s participating life insurance products can help Clients achieve their goals, or contact the Sales Desk.

2020/2021 Dividend Scale announcement video

We’re maintaining the 2019-2020 Sun Life dividend scale

We’re maintaining the Sun Life dividend scale, including the dividend interest rate of 6.25%, effective April 1, 2019.

The dividend scale is sensitive to changes in performance factors such as investment performance, mortality rates, taxes, lapses and expenses. Our decision to maintain the Sun Life dividend scale isn’t an indicator of future performance, so we recommend you continue to show clients illustrations using the current -1% and -2% dividend scales.

The dividend scale interest rate isn’t the return that a client can expect to receive on their policy. It’s a rate that we set and it reflects the investment experience of the par account that is passed back as part of the dividend. Other portions of a client’s specific dividend include mortality, expenses and taxes.

The Board of Directors of Sun Life Assurance Company of Canada approved this decision based on the recommendation of Sun Life’s appointed actuary, and in accordance with Sun Life Financial’s dividend policy.
Clients will continue to benefit from Sun Life’s prudent management philosophy, our long-term investment strategy and the strength of our large and well-established par account.

For new business, continue to show illustrations using the current -1% and -2% dividend scales. Learn more about Sun Life’s participating life insurance products and continue to help clients achieve their objectives with par.

Thank you for your ongoing support of our goal to help Canadians achieve lifetime financial security and live healthier lives.

Contact: salesdesk@sunlife.com

We’re maintaining the 2018-2019 Sun Life Financial dividend scale

We’re maintaining the Sun Life Financial dividend scale, including the dividend interest rate of 6.25%, effective April 1, 2018.

The dividend scale is sensitive to changes in performance factors such as investment performance, mortality rates, taxes and expenses. Our decision to maintain the Sun Life Financial dividend scale isn’t an indicator of future performance, so we recommend you continue to show clients illustrations using the current -1% and -2% dividend scales.

The dividend scale interest rate isn’t the return that a client can expect to receive on their policy. It’s a rate that we set and it reflects the investment experience of the par account that is passed back as part of the dividend. Other portions of a client’s specific dividend include mortality, expenses and taxes.

The Board of Directors of Sun Life Assurance Company of Canada approved this decision based on the recommendation of Sun Life Financial’s appointed actuary, and in accordance with Sun Life Financial’s dividend policy.

Clients will continue to benefit from Sun Life Financial’s prudent management philosophy, our long-term investment strategy and the strength of our large and well-established par account. You can request an inforce illustration to show clients how their policy is projected to perform.

For new business, continue to show illustrations using the current -1% and -2% dividend scales. Learn more about Sun Life Financial’s participating life insurance products and continue to help clients achieve their objectives with par.

Thank you for your ongoing support of our goal to help Canadians achieve lifetime financial security and live healthier lives.

Contact: salesdesk@sunlife.com

A message from Léo Grépin, Senior Vice President, Individual Insurance and Wealth

The Board of Directors of Sun Life Assurance Company of Canada (Sun Life Financial) approved a recommendation to decrease the dividend scale for participating policies issued by Sun Life Financial. Effective April 1, 2017, the new dividend scale interest rate* will decrease 50 basis points to 6.25% with updates to mortality, expense and lapse experience.

The current economic uncertainty, recent equity market returns and the ongoing low interest rate environment create downward pressure on the dividend scale interest rate. To help clients understand potential variability, we continue to recommend that you reference the alternate dividend scales (current minus 1% and minus 2% for Sun Par) when discussing values from the illustration. Sun Life Financial’s combination of a long-term investment strategy, a large well-established par account and a prudent management philosophy continues to provide strong returns for our participating policy owners.

Key highlights

  • The Sun Life dividend scale interest rate* will decrease by 50 basis points (bps), resulting in a new dividend scale interest rate of 6.25%
  • The 2017 dividend scale will reflect updated mortality, expense and lapse experience
  • The new dividend scale applies to all Sun branded participating plans
  • The Sun Life Participating account is a well-diversified and high quality asset portfolio of almost $9 billion
  • Sun Par Protector and Sun Par Accumulator continue to be very competitive product offerings providing clients with lifetime protection

Our participating policy owners continue to be well served by Sun Life Financial’s strong capital position, and financial strength. Thank you for your ongoing support of our continued goal to help Canadians achieve lifetime financial security with a trusted global financial services leader.

More details on the impact of the dividend scale change will be communicated in January 2017.

Please see the Q & A for additional information on the dividend scale.

Léo

* The dividend scale interest rate is not the portfolio yield of the Sun Life Participating Account. The rate is based on the portfolio yield and is used in calculating the dividend scale.

What impact will this have on my clients in force participating policies?

The reduction in the dividend scale will have only a modest impact on long-term values. Total cash value and total death benefits under the new 2017 scale are reducing on average 5% over 20 years. In many cases non-guaranteed arrangements, such as premium offset durations, will be modestly impacted.

Will Eos be updated for version 2010 Sun Par policies with the new 2017 dividend scale?

Eos will not be updated with the 2017 dividend scale. For sales of Sun Par plans that will be issued before 2017, you can illustrate using the 2016 dividend scale. We recommend you continue to use current -1% and current -2% to show the variability possible in a participating plan. In force illustrations will be available on the dividend scale effective date of April 1, 2017.

Will the 2017 dividend scale be available in the new illustration software?

Yes, the new illustration software will reflect the 2017 dividend scale for all new Sun Par plans issued after January 1, 2017.

What dividend scale will apply to a participating policy issued in December 2016?

The dividend scale in effect at the time of the anniversary will apply. In this case, the first anniversary would be in December 2017 so the new 2017 dividend scale would apply.

What variables affect the performance of individual participating policies?

There are a number of factors that contribute to the calculation of policyholder dividends. Mortality experience, expenses, taxes and lapses all contribute in addition to the dividend scale interest rate.

Is the growth rate within a participating policy the same as the dividend scale interest rate?

No. The dividend scale interest rate is just one component used to determine policyholder dividends and the performance of an individual participating policy. Dividends can be affected by the design of the participating life insurance product, the pattern of guaranteed cash values, the number of premiums paid to the policy and by the age and risk characteristics of the insured person.

How do the current low interest rates affect the dividend scale?

The dividend scale interest rate applicable to Sun Life Participating policies is currently higher than current Canadian Long Term market rates. The dividend scale interest rate is not only based on fixed income rate returns, as the participating account holds a diversified mix of assets. We look to both current and future experience when setting the dividend scale and the smoothing helps to reduce the impact of short-term fluctuations in the market. Because interest rates in previous years have been more favorable than current conditions, policyholders are benefiting from the fixed-income assets that were purchased in years where yields were higher than they are today. These assets are continually being replaced as they mature with fixed-income assets at today's lower yield. If fixed-income yields remained the same for some time, you would eventually see the dividend scale interest rate reduce slowly due to the lower market rates.

Partially offsetting the low interest rate environment are participating account assets invested in Private Fixed Income and Real Estate. Sun Life has the largest Private Placement team in Canada and is recognized as a leader and one of the most active players in this market. The team seeks private placement investments that achieve yields well in excess of comparably-rated public securities; providing favourable spreads, better terms and diversification opportunities. This provides the Sun Life Participating Account with a significant competitive advantage.

Real Estate is another advantage in the Sun Life Par Account. The Canadian real estate portfolio is comprised of high quality, income producing properties, with virtually no leverage. These holdings help manage inflation risk and enhance the overall yield of the Sun Life Participating Account.

What do the low interest rates mean for next year's dividend scale?

The impact of interest rates on next year's dividend scale is not something we can predict; however the current economic uncertainty, recent equity market returns, and the ongoing low interest rate environment continue to put downward pressure on the dividend scale interest rate. The economic environment continues to be an important consideration when we determine the dividend scale. To help clients understand variability, we continue to urge you to show alternate dividend scales (current scale minus 1% and 2% for Sun Par) when discussing values in illustrations. The Sun Life Participating Account is managed with a long-term objective. The portfolio includes equities, bonds, private fixed income and real estate. This broad diversification of asset classes, combined with prudent management and smoothing, result in a portfolio return that offers policyholders the potential for long-term growth with lower volatility.

How does the dividend scale interest rate compare to other historical returns?

The performance of the Sun Life Participating Account affects the non-guaranteed values in participating life insurance policies. Sun Life Financial's long-term strategy and the accounting rules that govern participating policies contribute to providing a stable par account return. The following chart compares the Sun Life Participating Account dividend scale interest rates to Government of Canada (GOC) 10-year bonds, S&P TSX, fiver-year guaranteed investment certificate (GIC) returns and the Consumer Price Index (CPI).

Year Sun Life Par Account dividend interest rate Government of Canada 10-year bonds S&P TSX total return Five-year GIC Consumer Price Index
1991 10.90 9.76 12.02 8.94 3.75
1992 10.40 8.77 -1.43 7.33 2.17
1993 9.40 7.85 32.55 6.20 1.65
1994 8.65

8.63

 -0.18 7.34 0.23
1995 8.40 8.28 14.53 7.06 1.74
1996 8.15 7.50 28.35 5.64 2.16
1997 8.40 6.42 14.98 4.71 0.78
1998 8.40 5.47 -1.58 4.38 1.00
1999 8.40 5.69 31.71 4.81 2.63
2000

8.40

 5.89 7.41 5.34 3.20
2001 8.40 5.78 -12.57 4.05 0.72
2002 7.90 5.66 -12.44 3.91 3.80
2003 7.90 5.28 26.72 3.13 2.08
2004 7.15 5.08 14.48 2.92 2.13
2005 7.15 4.39 24.13 2.71 2.09
2006 7.15 4.30 17.26 3.16 1.67
2007 7.90 4.34 9.83 3.31 2.38
2008 8.40 4.04 -33.00 3.01 1.16
2009 8.40 3.89 35.05 1.95 1.32
2010 7.40

3.66

 17.61 1.97 2.35
2011 7.40 3.21 -8.71 1.87

2.30
2012 7.15 2.33 7.19 1.65

0.83
2013 7.15 2.72 12.99 1.63 1.24
2014

6.75

 2.60 10.55

1.92

 1.47
2015 6.75 2.02 -8.10

1.47

1.61
2016 6.75        
2017 6.25        

*As of April 1, 2017

What is Sun Life's philosophy on managing the asset mix of the Participating account for Sun Par Protector II, Sun Par Accumulator II and Sun Par Accelerator policies?

Sun Life takes a long-term view to managing the participating account with the ultimate goal of providing stable returns for our policyholders.

We have a high quality and well diversified asset portfolio that adheres to a research-based process conducted by more than 200 experienced professionals and support staff. Essentially, we buy only what we know, and we make sure our investments are diversified in various industries, companies, asset classes and financial instruments.

We employ a consistent and disciplined approach to identify, measure, monitor and manage risk.
Because the participating account has a long-term investment philosophy and a focus on stable cash flows, we are able to invest in a wide variety of holdings including bonds, mortgages and equities. The portfolio's longer-term investments, such as its private fixed income and real estate components are a good match for the Sun Life Participating Account's long term objectives.

What dividend scale should I be illustrating for clients?

Managing client expectations about policy performance is important. It is critical that clients understand what is guaranteed and what is not guaranteed. In addition, clients need to understand how the non- guaranteed elements may be affected by changes in the dividend scale. The "Statement of Variability" of the basic illustration provides clients with an overview of this. We encourage you to review it with all clients so they understand how a change in the dividend interest rate can affect their policy.

Providing clients with a full alternate dividend scale illustration in addition to a current scale illustration will help give them some context about the impact a change in dividend scale will have on their policy values. The Sun Life illustration softwareautomatically illustrates the current dividend scale and the current -1% dividend scale. It also provides the option to show clients a current -2% dividend scale scenario and illustrating this possibility is recommended.

Effective April 1, 2017

Product group Impact of the dividend payout in 2017/2018
Sun Par Protector
Sun Par Accumulator
Series 2010
  • Majority of policies will experience a decrease averaging about 4.1%
  • Maximum Plus Premium benefit premiums won't change.
  • The projected premium offset dates will not be affected.
Sun Classic Life
Series 2002
  • This block of policies will have an average decrease of 23.6%
  • The lapse factor was impacted by this dividend scale review
Sun Premier Life
Series 2002
  • Most policies will have an average decrease of 4.2%
Sun Classic Life
Series 1996
  • Most policies will have an average decrease of 9.6%
Sun Premier Life
Series 1996
  • Most policies will have an average decrease of 5.7%
Opus
Series 1992, 1993, 1994
  • Most policies will have an average increase of 8.9%
All other participating policies
Series issued before 1992
  • Most policies will have an average increase of 0.7%
Miscellaneous
Premium offset (excluding series 2010)
  • In most cases there will be no impact to the projected premium offset date. For policies that are impacted, the projected premium offset dates may be delayed by 1 - 2 years.
Special Maturity Dividends
  • Policies with Special Maturity Dividends will see an additional 10.3% increase to the annual dividend in addition to the changes above

Effective April 1, 2016

Product group Impact of the dividend payout in 2016
All Sun Life policies No change

Effective April 1, 2015

Product group Impact of the dividend payout in 2015
All Sun Life policies No change

Effective April 1, 2014

Product group Impact of the dividend payout in 2014
Sun Par Protector
Sun Par Accumulator
Series 2010
  • Majority of policies will experience a decrease averaging about 4%
  • Enhanced insurance dividend option maximums won't change.
  • Maximum Plus Premium benefit premiums won't change.
  • The projected premium offset dates will be extended by an average of 1 - 3 years.
Sun Classic Life 
Sun Premier Life
Series 1996 & Series 2002
  • Most policies will have decreases between 0% to10% next year
Opus
Series 1992, 1993, 1994
  • Most policies will have decreases between 0% to 20% next year
All other participating policies
Series issued before 1992
  • Most policies will have decreases between 5% to 30% next year
Miscellaneous
Premium offset (excluding series 2010)
  • Non-enhancement policies - the projected premium offset dates may be delayed up to three years for most policies.
  • Enhancement policies - the projected premium offset dates may be delayed up to five years for most policies.
Special maturity dividends (SMD)
  • No change was made to the SMD scale

Effective April 1, 2013

Product group Impact of the dividend payout in 2013
All Sun Life policies No change

Effective April 1, 2012

Product group Impact of the dividend payout in 2012
Sun Par Protector and Sun Par Accumulator
Series 2010
  • Majority of policies will experience a decrease averaging about 3%.
  • Enhanced insurance dividend option maximums won’t change. Some maximum plus premium benefit premiums will decrease, but most won’t change.
  • In a relatively small number of cases, the projected premium offset dates may be delayed by one year.
Sun Classic Life
Series 1996 & Series 2002

Closed block (policies issued before demutualization in March 2000)

  • Most policies will see decreases ranging from approximately 0% to 10%
  • Some projected premium offset dates may be delayed by one to three years.

Open block (policies issued since demutualization in March 2000)

  • Most policies will see changes ranging from a 10% decrease to a 10% increase.
  • Some projected premium offset dates may be delayed by one to three years.
Sun Premier Life
Series 1996 & Series 2002

Closed block (policies issued before demutualization in March 2000)

  • Most policies will see decreases ranging from approximately 0% to 5%.

Open block (policies issued since demutualization in March 2000)

  • Young issue ages will have up to a 5% decrease while older ages will have up to a 10% increase.
Opus
Series 1992, 1993, 1994
  • Majority of policies will experience a decrease ranging from approximately 0% to 5%.
  • Some projected premium offset dates may be delayed by one to two years.
All other participating policies
Series issued before 1992
  • Majority of policies will experience a decrease ranging from approximately 0% to 10%.   
  • Some projected premium offset dates may be delayed by one to two years.

Effective April 1, 2011

Product group Impact of the dividend payout in 2011
All Sun Life policies No change

Effective April 1, 2010

Product group Impact of the dividend payout in 2013
Sun Classic Life and Sun Premier Life
Series 1996

Closed block (policies issued before Sun Life's demutualization in March 2000)

  • Some policies will see small increases
  • Most policies will see decreases ranging from approximately 0% to 40%

Open block (policies issued since Sun Life's demutualization in March 2000)

  • Most policies will see small increases
  • Some policies will see decreases ranging from approximately 0% to 30%
Opus 
Series 1992, 1993, 1994
  • Majority of policies will experience a decrease ranging from approximately 10% to 40%
All other participating policies 
Series issued before 1992
  • Majority of policies will experience a decrease ranging from approximately 20% to 50%

A message from Brigitte Parent, General Manager, Individual Insurance & Wealth

I am pleased to announce that the Board of Directors of Sun Life Assurance Company of Canada (Sun Life Financial) approved a recommendation to maintain the dividend scale for participating policies issued by Sun Life Financial. Effective April 1, 2016 the dividend scale interest rate* will remain at 6.75%. The lapse, mortality and expense factors also remain unchanged.

The current economic uncertainty, recent equity market returns and the ongoing low interest rate environment continue to put downward pressure on the dividend scale interest rate. The future economic environment will continue to be an important consideration in the determination of the dividend scale. To help clients understand the potential variability, we continue to recommend that the alternate dividend scales (current dividend scale minus 1% and minus 2% for Sun Par) be referenced when discussing values from the illustration. Sun Life Financial's combination of a long-term investment strategy, a large well-established par account and a prudent management philosophy continue to provide good value to our participating policyholders.

Key highlights

  • The dividend scale interest rate* will remain at 6.75%.
  • The Sun Life Participating account is a well-diversified and high quality asset portfolio of almost $9 billion.
  • Sun Par Protector and Sun Par Accumulator continue to be very competitive product offerings providing clients with lifetime protection.

Our participating policyholders continue to be well served by Sun Life Financial's strong capital position and financial strength. For over 150 years Sun Life Financial has been helping customers achieve lifetime financial security. Thank you for your ongoing support of our continued goal to help Canadians achieve lifetime financial security with a trusted global financial services leader.

For additional details on the dividend scale, please see the Q&A.

* The dividend scale interest rate is not the portfolio yield of the Sun Life Participating Account. The rate is based on the portfolio yield and is used in calculating the dividend scale. The dividend scale interest rate is only one component of many that are used to calculate the dividend scale that is applicable to a specific policy. Other factors include mortality, expense and lapse experience.

A message from Brigitte Parent, Senior Vice-President, Individual Insurance and Wealth.

I am pleased to announce that the Board of Directors of Sun Life Assurance Company of Canada (Sun Life Financial) approved a recommendation to maintain the dividend scale for participating policies issued by Sun Life Financial. The dividend scale interest rate* will remain at 6.75%. This dividend scale will be in effect from April 1, 2015 to March 31, 2016.

The Sun Participating account is a well-diversified and high quality asset portfolio of almost $9 billion. A number of factors including investment returns, mortality, expense, and lapse experience affect the dividend scale. Sun Life Financial's combination of a long-term investment strategy, a large well-established par account and a prudent management philosophy continues to provide strong returns for our participating policyholders.

Key highlights:

  • The dividend scale interest rate* will remain at 6.75%.
  • The dividends on deposit interest rate will remain at 3.25%.
  • Sun Par Protector and Sun Par Accumulator continue to be very competitive product offerings providing clients with lifetime protection.

Our participating policyholders continue to be well served by Sun Life Financial's strong capital position and financial strength. We continue to offer all clients a strong suite of products and Sun Par Protector and Sun Par Accumulator provide excellent value.

For 150 years Sun Life Financial has been helping customers achieve lifetime financial security. Thank you for your ongoing support of our continued goal to help Canadians achieve lifetime financial security with a trusted global financial services leader.

For additional details on the dividend scale, please see the Q&A posted on the advisor site.

* The dividend scale interest rate is not the portfolio yield of the Sun Life Participating Account. The rate is based on the portfolio yield and is used in calculating the dividend scale. The dividend scale interest rate is only one component of many that are used to calculate the dividend scale that is applicable to a specific policy. Other factors include mortality, expense and lapse experience

As communicated on January 14, 2014, the 2014/2015 policyholder dividend scale is decreasing for Sun Life Financial (SLF) participating policies issued by Sun Life Assurance Company of Canada. This dividend scale will be in effect from April 1, 2014 to March 31, 2015.

A number of factors including investment returns, mortality, expenses and lapse experience affect the dividend scale. In spite of continued lower interest rates, only a relatively modest decrease is required, offering strong client value and demonstrating the strength and stability of the Sun Life Participating Account. The 2014 dividend scale interest rate will decrease to 6.75%.

Impact to policyholders

Participating policyholders will receive information specific to their policy on their policy anniversary statements beginning in mid-March. In-force policy illustrations will show the new dividend scale beginning April 1, 2014, and will reflect the projected long-term impact the dividend scale changes will have on the non-guaranteed policy values, such as cash surrender values and premium offset dates.

SLF enhancement plans have guaranteed premiums but may have adjustable death benefits. Any enhancement policies that have no gauarantee or a 10 year guaranteed death benefit that are past the 10 year guaranteed period may experience a death benefit decrease in 2014. Most policyholders will not experience a decrease in their current death benefit as a result of the 2014/2015 dividend scale.

For highlights of the impact of this decrease to the 2014 dividend payout by product group, please see the Sun Life Financial Dividend Scale Impact chart.

A message to independent advisors from Brigitte Parent, Senior Vice-President, Individual Insurance and Investments.

I am pleased to announce that the Board of Directors of Sun Life Assurance Company of Canada has approved the company's recommendation to maintain the current dividend scale for participating policies issued by SLF, including Sun Par Protector and Sun Par Accumulator. The 2013/2014 dividend scale interest rate* will continue to be 7.15 per cent and will be in effect from April 1, 2013 to March 31, 2014.

Participating policies may be eligible to receive dividends based on a variable scale set by the company each year. Despite current economic conditions, we have been able to maintain the par dividend scale. However, this environment continues to put downward pressure on yields, which means we could be required to reduce the scale in the future. Make sure you use alternate dividend scale reports for all illustrations you produce, and review them with clients so they understand the impact a change in the dividend interest rate can have on their policies. Beginning with the March 2013 Eos release, the alternate scenario of current dividend scale -1 per cent report will become part of the basic illustration, providing you and clients with complete tables of values using both the current dividend scale interest rate and the current rate less 1 per cent. The alternate scenario of current dividend scale less 2 per cent will continue to be available as an optional report. The basic illustration will continue to display the comparison table with illustrated values based on all three scenarios: current; -1 per cent; and -2 per cent.

The rate for dividends on deposit for policies issued by SLF will decrease by 50 basis points. The new rate will be 3.25 per cent for most blocks.

New business: Sun Par Protector and Sun Par Accumulator

Sun Par Protector and Sun Par Accumulator continue to be very competitive product offerings, providing clients with lifetime protection and the opportunity to earn policyholder dividends. Our competitive position remains strong. Our capital strength, diversified business model and prudent risk management practices form a foundation from which we fulfill our promises to customers.

For more information on participating life insurance and dividends, sign in to the SLF advisor site and refer to Understanding Sun Par Protector and Sun Par Accumulator policyholder dividends or Answers about… participating (par) life insurance for all other par policies.

Thank you for your ongoing support. Our clients are well served by your professional advice, SLF's strong capital position, financial strength, professionally managed investment portfolio and risk management practices. Clients can continue to rely on us to be there when they need us the most.

Brigitte Parent

*The dividend scale interest rate is not the portfolio yield of the Sun Life Participating Account. The rate is based on the portfolio yield and is used in calculating the dividend scale. The dividend scale interest rate is only one component of many that are used to calculate the dividend scale that is applicable to a specific policy. Other factors include mortality, expenses and lapse experience.

This message has been sent on behalf of Kevin Strain, Senior Vice-President, Individual Insurance and Investments

At the December board meeting, the Board of Directors of Sun Life Assurance Company of Canada ("Sun Life") approved a recommendation to decrease the dividend scale for most participating policies issued by Sun Life Financial (SLF). This dividend scale will be in effect from April 1, 2012 to March 31, 2013.

A number of factors including investment returns, mortality, expense and lapse experience affect the dividend scale. Despite the current economic uncertainty and unprecedented low interest rate environment, only a relatively modest decrease is required, offering strong client value and demonstrating the strength and stability of the Sun Life Participating Account. Our par policyholders continue to be well served by SLF's strong capital position, financial strength, professionally managed investment portfolio and risk management practices.

In-force business - SLF participating life insurance products

  • The 2012 dividend scale interest rate* will decrease by 25 basis points (bps), resulting in a new dividend scale interest rate of 7.15 per cent.
  • The dividend on deposit rate will be 3.75 per cent, except for RRSP policies and Bermuda policies with a variable loan clause.

In addition to the interest rate, some blocks were adjusted for other experience factors that changed. The overall impact of all the changes varies by block. More details will follow in March. In-force illustrations reflecting the new values will be available on April 1, 2012. We will update policyholder statements to reflect any changes to premium offset dates.

New business - Sun Par Protector and Sun Par Accumulator

Sun Par Protector and Sun Par Accumulator continue to be very competitive product offerings, providing clients with lifetime protection. In many cases, our competitive positioning has improved despite this modest dividend scale decrease as several other carriers have announced their own dividend scale reductions.

  • The 2012 dividend scale interest rate will decrease by 25 bps, resulting in a new dividend interest rate of 7.15 per cent.
  • On average Sun Par Protector and Sun Par Accumulator will see a decrease of approximately of 3 per cent in their annual dividend with the 2012 dividend scale.
  • In a relatively small number of cases, the projected offset point may be delayed by one year, under this new dividend scale.
  • The dividend on deposit rate will decrease by 25 bps to a rate of 3.75 per cent.
  • Enhanced insurance dividend option maximums won't change.
  • Some maximum plus premium benefit premiums will decrease, but most won't change.

Illustrations for new sales will be available with the January 27, 2012 Eos 5.4 CD. Please install the CD as soon as you receive it to illustrate the new values. In the meantime, please ensure clients understand that non-guaranteed values illustrated are based on a higher dividend scale. We recommend using an alternate dividend scenario for all illustrations you produce; both current -1% and current -2% are available on Eos.

Par policyholders will receive information specific to their policy on their policy anniversary statements. For more information on participating life insurance and dividends, refer to Understanding Sun Par Protector and Sun Par Accumulator policyholder dividends or Answers about… participating (par) life insurance.

We continue to offer clients a strong suite of products, and our Sun Par Protector and Sun Par Accumulator provide excellent value. Thank you for your ongoing support of our goal to help Canadians achieve lifetime financial security with a trusted global financial services leader.

*The dividend scale interest rate is not the portfolio yield of the Sun Life Participating Account. The rate is based on the portfolio yield and is used in calculating the dividend scale. The dividend scale interest rate is only one component of many that are used to calculate the dividend scale that is applicable to a specific policy. Other factors include mortality, expenses and lapse experience.