Responding to the needs of Baby Boomers for more flexible annuity income, the U.S. division of Sun Life Financial (NYSE: SLF, TSX: SLF) today announced the launch of Income ON Demand, the industry’s first-ever Income Storage Benefit (ISB). Available for an additional cost with most Sun Life Financial Masters® variable annuities today, this patent-pending Income ON Demand option complements boomers’ investment strategies of accumulating wealth by allowing them to defer part or all of the annual withdrawals permitted under the benefit and to “store” those withdrawals in the contract for future use.
“The old rule of thumb for retirees was to anticipate living off 80% of their pre-retirement income,” said Kevin Hart, President of Sun Life Financial Distributors, Inc. “This is another rule the baby boomers are breaking. Indications and early evidence suggests this healthier, more vibrant retirement boomer generation will spend significantly more money early in retirement as they enjoy their new-found freedom. From travel to pre-funding their grandchildren’s college tuitions, it’s clear boomers won’t be retiring to their rocking chairs soon. They will be enjoying life and spending their money.” It was the boomers’ greater need to control the timing of lifetime withdrawals, which current annuity income solutions in the marketplace are not addressing, which led to the development of Income ON Demand.
This breakthrough feature addresses the new reality of a need for ever-changing income. It combines the availability of annual withdrawals with the flexibility to store that income for future use. It lets today’s pre- and current retirees accomplish four key objectives:
• Secure lifetime income for themselves (as well as their spouses if they choose). This income is equal to 5% of their Income Benefit Base. The Income Benefit Base also can increase automatically, depending on the market performance of the underlying investment options.
• Store deferred withdrawals in a Stored Income Balance. Any amounts in the Stored Income Balance can be withdrawn in a future year in addition to the annual amount available in that year. Alternatively, the contract owner has a one time option within the first ten contract years to use part or all of the Stored Income Balance to increase the Income Benefit Base, which results in the availability of higher annual withdrawal amounts.
• Start, stop and store income payments to meet changing needs throughout retirement.
• Restore the account value to the sum of the purchase payments made in the first contract year, if no withdrawals have been taken within the first 10 years and a down market has driven the account value on the benefit maturity date below the total of the first-year purchase payments.
“With guaranteed income from other annuities, if you don’t use it, you lose it,” said Mary Fay, Senior Vice President and General Manager of Sun Life Financial’s Annuities Division. “But Income ON Demand lets each client start, stop and store their guaranteed income to fund their lifestyles as it evolves throughout retirement. This puts the client—not the contract—in control of the income stream.”
“In 1999, Sun Life Financial led the industry with one of the first Enhanced Earnings Benefits (EEB), and today launches the first Income Storage Benefit, the latest in living benefits design,” added Ms. Fay. “This introduction and innovation reflects Sun Life Financial’s commitment to leading the industry and responding to the emerging needs of the baby boomer generation.”
As part of its commitment to offer annuity income solutions, Sun Life Financial’s wholesalers have received training to serve as Retirement Income Consultants (RIC). Each RIC will focus on helping advisors tailor flexible income plans that enable the new generation of retirees – what Sun Life Financial refers to as the “Income Generation”– to live their lives, their way.
Other Key Features of Income ON Demand and Important Considerations
- Starting at age 55, clients can begin storing the payments they’re guaranteed to receive from their annuity. While they can start taking them as early as age 59 ½, they can choose to store them within their annuity’s Income Storage Benefit at any time. However, any withdrawals before age 59 ½ will have a negative impact on the amount of annual income available beginning at that age.
- As long as the Income Benefit Base is greater than zero, a client’s lifetime withdrawal benefits will continue — even if the account value has been depleted. However, no subsequent purchase payments will be accepted, no death benefit or annuity benefits will be payable and all benefits under the contract other than the Income ON Demand benefit will terminate.
- Withdrawals within the maximum amount allowable for Income ON Demand will have no impact on any future income amount guaranteed for life. If more than the maximum amount is withdrawn, the new Income Benefit Base will be the lesser of the contract value or the previous Income Benefit Base reduced dollar-for-dollar by the amount of the excess withdrawal. Withdrawals in excess of the Stored Income Balance could severely reduce the Annual Income Amount especially if taken in a down market, and may be subject to surrender charges if applicable.
- Variable annuities are suitable for long-term investing, such as retirement investing, and are subject to market risk and may lose value. Withdrawals of taxable amounts are subject to ordinary income tax and, if made prior to age 59 ½, a 10% federal tax penalty may apply. Withdrawals may also be subject to withdrawal charges if they exceed the annual free withdrawal amount. All guarantees are subject to the claims-paying ability of the issuing insurance company.
Availability and costs
Income ON Demand is available today with most Sun Life Financial Masters variable annuities except Masters Access. The current annual charge for this option is 0.65% of the Income Benefit Base for a lifetime guarantee for one individual, and 0.85% if clients want income to also continue for their spouses if they outlive them. The benefit may not be available in all states.
You should consider the investment objectives, risks, charges and expenses of any investment in a variable annuity. The prospectus contains this and other important information. Please request a prospectus for the variable annuity product and any underlying investment options from your financial professional. Read all prospectuses carefully before investing or sending money.
About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of December 31, 2006, the Sun Life Financial group of companies had total assets under management of US $374.7 billion.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol SLF. Visit Sun Life Financial’s website at www.sunlife-usa.com.
Sun Life Financial Masters variable annuities are issued by Sun Life Assurance Company of Canada (U.S.) (Wellesley Hills, MA) in all states except New York. In New York, the contracts are issued by Sun Life Insurance and Annuity Company of New York (New York, NY). All guarantees are based on the claims-paying ability of the issuing company. Variable products are distributed through Sun Life Financial Distributors, Inc. All three companies are members of the Sun Life Financial group of companies.
NOT FDIC/NCUA INSURED ▪ MAY LOSE VALUE ▪ NO BANK/CREDIT UNION GUARANTEE ▪ NOT A DEPOSIT ▪ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
© 2007 Sun Life Financial Distributors, Inc. All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun Life Assurance Company of Canada.
SLPC 16971 (02/07)