With Sun Par Accumulator II and Protector II, policyholders have the opportunity to earn dividends on the base insurance portion of their plan. Policyholder dividends are paid annually, on the policy anniversary date, and are not guaranteed. For more information please refer to the Advisor guide or policy.
Paid-up additional insurance (PUA)
Any dividends credited to the policy are used to purchase paid-up additional insurance which is added to the base insurance amount, creating another layer of permanent protection. This layer, as well as the base insurance amount is the basis for earning dividends, resulting in a compounding effect of dividend earning potential. The paid-up additional insurance has a cash value accumulating over time on a tax-preferred basis.
The enhanced insurance dividend option enables clients to establish a permanent life insurance policy in a cost-effective manner. On each policy anniversary any policy owner dividend credited is used to purchase a combination, determined by Sun Life, of yearly term insurance and paid-up additional insurance. This combined amount of insurance is equal to the enhanced insurance amount set out in the client's policy. Any paid-up additional insurance purchased is added to the existing paid-up additional insurance, creating another layer of permanent insurance. In addition to the base insurance amount, each layer is the basis for earning dividends, resulting in a compounding effect for dividend earning potential.
The maximum enhanced insurance amount depends on the insured person's issue age, smoking status, coverage type, and premium payment period. The minimum enhanced amount is $1,000.
Annual premium reduction
This dividend option can provide clients with a cost-effective way to pay their premiums. We use any policy owner dividends credited to the policy to reduce the premium for the next policy year. If in the future the policy owner dividends exceed the annual premium, then the excess is held in the withdrawable premium fund. This dividend option is only available if the client is paying premiums on an annual basis.
Dividends on deposit (DOD)
With this dividend option, any policy owner dividends credited to the policy are automatically deposited into an account similar to a savings account with Sun Life. The policy owner dividends in this account earn interest daily at a rate we determine. The interest is compounded annually and clients have access to these dividends at any time. Any interest earned is taxable.
This option gives the client the opportunity to receive their annual dividends in cash. All or a portion of the cash dividends may be taxable as income.