Frequently asked questions (FAQ)

We regularly review our adjustable premium products, including LTCI products. We follow a rigorous actuarial pricing review process and will only change prices when necessary. Here’s a high-level description of what’s involved in that process:

• We look at the various actuarial assumptions we made at the time of the last repricing.
• Then, we compare those assumptions with the actual results we’ve experienced since the time of the last repricing.
• This comparison helps us decide if we need to make changes to those assumptions going forward.
• This, in turn, helps us decide what changes, if any, we need to make to your premiums.

The biggest factors affecting premium changes for the Sun Retirement Health Assist pricing review are:

Factors leading to increased premiums:

• increased claims costs - increases in life expectancy means claims will last longer than we expected because people are living longer than ever;
• low interest rates - although rates did start to increase in 2022, they had been low for over 10 years and this affects the money we’ve invested to pay future claims.

Factors having a positive impact on rates:

• Lapse experience has been favorable.
• We have received fewer claims than expected.

To help ensure our adjustable policy review process is fair to our policyholders, we follow specific laws set out in the federal Insurance Companies Act and guidelines issued by the Office of the Superintendent of Financial Institutions. This is something we take seriously and carefully review. We know it can have a big impact on Clients and how you help them assess their insurance needs.

No, we are not changing premiums because of the Covid-19 Pandemic.

The biggest factors affecting this premium change are:

Factors leading to increased premiums:

• increased claims costs - increases in life expectancy means claims will last longer than we expected because people are living longer than ever;
• low interest rates - although rates did start to increase in 2022, they had been low for over 10 years and this affects the money we’ve invested to pay future claims.

Factors having a positive impact on rates:

• Lapse experience has been favorable.
• We have received fewer claims than expected.

Clarica and Sun LTCI (Series 2005) have higher premium increases for a few reasons.

1. 1. We originally priced these products as early as 1999. We were in a different economic environment and LTCI was a new solution in the Canadian insurance industry.
2. 2. In pricing the product, we made certain assumptions about our projected experience with interest rates, mortality, morbidity, and claims.

The pricing actions taken in 2021 for Clarica and Sun LTCI are based on our increasing experience with these products and the above-mentioned factors.

We first priced Sun RHA in 2013 and had more information about the Long-term care insurance experience by then. The Sun RHA product design is also very different.

Sun RHA is designed so that Sun Life and the Client share the risk from the need for care later in life. That’s why Sun RHA has a coverage effective date:

• five consecutive policy years from the policy date, or
• the policy anniversary immediately following the insured person's 65th birthday and longer waiting periods.

Based on this product design we have had fewer claims with Sun RHA.

Sun LTCI has short waiting periods and no coverage effective date. It is designed so that the Client transfers most of the risk from the need for care later in life to Sun Life.

Clients who do claim for Sun LTCI will receive benefits for longer periods because they can claim earlier and are living longer.

The premium increases for males (up to age 65) are higher due to our claims experience. Since pricing Sun RHA in 2013, we now know that men are claiming longer than we assumed when we launched the product. This means that both men and women are getting good value from their Sun RHA coverage.

There are plan change options available for Clients who cannot, or don’t want to accept their change.

Plan changes available for Sun Retirement Health Assist (RHA) policies

1. Reduce the weekly benefit amount:
   • Minimum: $125
2. Lengthen the waiting period:
   • 730 days (2 years)
3. Remove the optional Return of premium on death (ROPD):
   • The automatic ROPD will still be available on the policy, but if the insured person dies after the coverage effective date, there will be no ROPD value.

To request a plan change for Sun RHA policies use Change form - Long term care insurance (form E220).

We remain committed to the long-term care market through Sun Retirement Health Assist (RHA). Sun RHA will be the product available to support the long-term care conversion option available with Sun CII.

Clients who have the LTCCO on their Sun CII plans will continue to have the option to exercise the benefit between ages 60 – 65. They will be able to convert to Sun Retirement Health Assist (RHA). The conversion calculation will be the same, and the process does not change.

Commission rates on Inforce LTCI are not changing.

Any change in the total premium on the policy will result in an change in commission paid and adjustment to the advisor's account for growth commissions.

Some Clients can save by purchasing coverage before January 1, 2023 as they’ll only receive this reprice once their five-year guarantee period ends.

There are various factors to consider about converting from CII to LTCI. For more information please review the Long term care conversion option page.

Of note, for CII policies with a Return of premium on cancellation or expiry (ROPC/E) benefit. If the Client's CII policy includes ROPC/E - age 65, the Client may want to receive the return of premium before converting. This means they will need to wait until age 65 before conversion.

Three scenarios for the Client to consider with ROPC/E - age 65.

• Convert the total CII benefit before age 65 - the policy will end and no return of premium (ROP) benefit will be payable.
• Convert a portion of the CII benefit between age 60 and 65 - the remaining ROP benefit is prorated to align with the remaining CII coverage. The adjusted ROP benefit will be payable at age 65.
• Convert all or a portion of the CII benefit at age 65 - the Client will be able to access the ROP benefit and convert to LTCI.

Important: This also applies if a policy includes the ROPC/E - 15 years benefit and the ROP amount becomes payable between ages 60-65.