Universal Life 

Life Saver

Original line of business: Royal Sun Alliance

Updated on: Dec 19, 2018

Product snapshot

Life Saver and Life Saver II are universal life products originally sold by Royal Sun Alliance through the 1990s.  Product features differ by version issued.  Rate scales (RS) 1 through 4 are considered Life Saver and RS5 through RS9 are considered Life Saver II.  Both level and YRT COI options are available on all versions.

Basic product information

Sample contract: N/A

Dividend options: N/A

Bonus: Yes 

Dividend options

There are no dividends on this product.  It is a UL product, not par

Bonus 

There are two types of bonus:  interest and funding.  The interest bonus applies on RS4 through RS9.  After year 10, an extra .50% is added to the rate for all new or reinvesting GIAs and the DIA.  The funding bonus applies on RS5 through RS9.  If the fund value (net of any loan) is > $10,000, the monthly equivalent of .25% is credited to the policy

Premium paying period

At issue, the COI duration went to age 100.  In 2003, an enhancement was made that reduced the COI duration to age 95.  Additionally, RS5 and later versions have a COI bonus that reduces the COI (for Level COI only) by 10% once the coverage has been inforce for 15 years 

At any time prior to age 90 and after the policy has been in force for 10 years, the client has the contractual option to switch to level COI (this was not offered for RS1 & RS2, it was only introduced starting with RS3 and onward)

  • This benefit is only available to the primary life insured for RS3 & RS4
  • For Life Saver II (RS5 to RS9), it can be done prior to age 90 and after the insurance coverage has been inforce for one complete year
  • May not be exercised with death benefit options of indexed. COI stops at age 95
  • Additionally, all versions have a paid-up option.  After year 10, and prior to age 90, the CSV can be exchanged for a paid up insurance amount.  In the earlier versions, there is a table of paid up amounts in the contract.  Once elected, premiums cannot be paid and no CSV is available.  There may be a partial CSV release and there may be tax consequences as a result.  All other benefits and additional life coverages are deleted

Policy fees

  • The monthly admin charge is guaranteed to never increase
  • On RS1 through RS4, the monthly charge on single & joint coverages is $7, deducted for the life of the policy

Deposit load

Deducted from all deposits, the premium tax rate is based on the province of residence of the policy owner (not province of issue) and will change if they move to a new province or if provincial tax rates change

Values, loans & withdrawals

Non forfeiture option: Yes

Loans: Yes

Withdrawals: Yes

Non-forfeiture option

  • If payments have ceased on a Life saver policy and the policy has value, the value on the policy is utilized to keep it in force and to cover monthly deductions. The process is called "premium vacation"
  • A policy owner may make a request to stop payments and go on premium vacation at any time
  • Additionally, all versions have a paid-up option.  After year 10, and prior to age 90, the CSV can be exchanged for a paid up insurance amount.  In the earlier versions, there is a table of paid up amounts in the contract.  Once elected, premiums cannot be paid and no CSV is available

Loans

Note:  Loans are not available on Life Saver I (RS1 to RS4) policies  

  • Minimum loan is $500
  • The maximum loan is 85% of the cash value in the DIA and GIAs
  • Loan interest is 6% fixed, compounded annually 

Withdrawals 

  • Partial withdrawals are allowed
  • At no time is the death benefit of the policy permitted to drop below $25,000. This means that a policy owner who has a level death benefit of $25,000 would not be permitted to take a partial surrender
  • The equity and managed funds are valued daily 

Cash value

The cash surrender value is equal to:  

  • The account value of the policy; less
  • A fee equal to the greater of $25 and any market value adjustment; less
  • Any surrender charges; less any loan plus loan interest

Reduced paid up

After the policy has been in force for at least 10 years and if the insured has not reached age 90, the policy may be changed to paid up insurance for a reduced amount as follows:  

  • The paid up insurance will be level
  • Premiums stop and cannot resume
  • Any additional benefits terminate, and any additional life coverages will be terminated
  • There is no cash value for the paid up policy 

The paid-up policy must be for at least $25,000 (we can change this amount) but cannot be for more than the current death benefit. This may require a payout of the excess cash in the fund with possible tax consequences. A table of guaranteed conversion factors is included in earlier versions of Life Saver 

Riders & benefits

Premium offset/holiday: Yes

Premium offset/holiday

  • If payments have ceased on a Life Saver policy and the policy has value, the value in the policy is utilized to keep it in force and to cover monthly deductions. The process is called "premium vacation"
  • A policy owner may make a request to stop payments and go on premium vacation at any time

Death benefit 

  • The principal life can choose any of the available death benefit options and his/her death benefit can include the account value of the policy
  • All additional lives have only the level death benefit option available
  • The principal life's death benefit option can be changed at any time if it results in a decrease in the amount at risk 

Changes in the principal life's death benefit coverage that increase the amount at risk (i.e., level to increasing) can be done at any time up to age 70 and require medical evidence

Reinstatement period

3 years

Convertible

N/A