Universal Life Product Guide. every life has a story. Updated march 26, 2012.

Transcription

1 ADVISORS PLEASE NOTE: Effective April 23, 2012, the following Designated Indices are being substituted with Designated Indices with similar investment objectives. Accordingly, the names of the corresponding Managed Index Interest Options are updated to reflect the new Designated Indices, as listed below. Designated Index imaxx Canadian Equity Value Fund imaxx U.S. Equity Growth Fund imaxx U.S. Equity Value Fund imaxx Global Equity Value Fund NEW Designated Index Dynamic Value Fund of Canada AGF American Growth Class CI American Value Fund Dynamic Global Discovery Fund Updated march 26, every life has a story. Universal Life Product Guide

2 About this guide This guide contains product information for WealthAdvantage and EstateAdvantage policies. This guide is effective November 28, 2011, and contains product information for WealthAdvantage and EstateAdvantage policies. This material has been prepared for the use of Transamerica s advisors in conjunction with other product information. The intent of this guide is to provide an overview of the WealthAdvantage and EstateAdvantage plans. For a precise understanding of the rights and obligations of the policyowner and Transamerica, please refer to the WealthAdvantage and EstateAdvantage contracts. IMPORTANT: This guide is not designed to provide tax, legal, accounting or other professional advice. If you are not a qualified tax advisor, we recommend that you advise your client to seek the advice of a tax professional. It is the owner s responsibility to determine the consequences to him or her under relevant income tax legislation, and Transamerica assumes no liability to the owner. The sections that reference tax information provide a summary only of the current principal Canadian federal income tax consequences arising under the Income Tax Act (Canada) and the regulations thereunder to prospective owners of WealthAdvantage and EstateAdvantage policies who are residents of Canada. The tax information contained in this guide is based upon the provisions of the Income Tax Act (Canada), the regulations thereunder currently in effect, all proposed amendments thereto publicly released by the Department of Finance (Canada) prior to the date of printing this guide and upon Transamerica s understanding of the administrative practices and policies of the Canada Revenue Agency (CRA) currently in effect. The tax information, wherever contained in this product guide, neither anticipates any changes in law, whether by legislative, governmental or judicial action, nor does it take into account provincial or foreign income tax legislation or considerations. About the guarantees Transamerica makes certain guarantees with respect to WealthAdvantage and EstateAdvantage. These guarantees do not include: The portion of the total fund value attributable to a particular Index Interest Option. This varies in accordance with fluctuations in the daily interest rate formula for each Index Interest Option. The interest rate applicable to the Index Interest Options. In fact, this interest rate may be either positive or negative, depending on the performance of a particular index. A negative interest rate will reduce the benefits and values under this policy, which include but are not limited to the total fund value, the cash surrender value, the net cash surrender value, the maximum benefit amount for a Living Benefit and the death benefit. Transamerica does not accept responsibility for any errors or omissions contained in these materials. The information contained within this document is current as of the date of publication and is subject to change.

3 Every life story is unique, and that s why we offer more than one universal life plan. Each plan addresses different needs, so together with your client, you can choose the plan that is best for now...and for the future. WealthAdvantage EstateAdvantage with Accumulation Bonus EstateAdvantage Low-Fee This product is intended to suit policyholders who plan to invest more aggressively and have longer-term financial goals and investment planning time frames. These products are intended to suit more conservative policyholders with shorter-term financial goals and investment planning time frames. Why choose Transamerica s WealthAdvantage and EstateAdvantage universal life? Financial strength and stability Transamerica has been helping Canadians achieve financial security since Over the years, we ve learned that financial peace of mind means different things to different people. Whether it s saving for retirement, protecting family and assets or helping clients achieve their specific goals, their needs are unique. That s why we offer a diverse range of solutions. We want to be there with the insurance and investment options needed at every stage of life. Transamerica Life Canada is a wholly-owned subsidiary of AEGON N.V., one of the largest insurers in the world. Based in the Netherlands, it has major company operations in Hungary, Spain and the U.K., in addition to the Netherlands and Americas. Transamerica is one of Canada s leading providers of life insurance and investment products. Its financial strength is complemented by a solid network of 18,000 accredited advisors located in all major cities across Canada.

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5 Table of contents 1. Product Overview 1 2. Insurance coverages 4 Coverage and rider issue ages and amounts 4 Coverage types 5 Death benefit options 5 Increasing death benefit 5 Level death benefit 6 During the COI period 6 After the COI period (varies with the COI option) 6 Cost of Insurance (COI) options 7 Mixing COI options 8 Switching COI options 8 Built-in premium tax 8 COI banding 8 Underwriting programs 8 Non-medical underwriting 9 Medical underwriting 9 Overview of required forms 10 Underwriting risk classifications 10 Summary of underwriting program and applicable risk classification by age and face amount 11 Underwriting requirement 12 Underwriting materials 12 Ratings 12 Policies with multiple universal life coverages 14 Multiple universal life coverages 14 Base universal life coverage 15 Multiple life special options 15 Severance Option 17 Change of Primary Life Insured Option 17 Joint life coverages 18 Joint last-to-die 18 Joint first-to-die 21 Switching between joint options 23 Riders 24 Level Cost Rider 24 TermSelect Riders Investment choices 25 Interest Options 25 Relative risk rating 26 Asset allocation solutions 32 Investor Profile Questionnaire 32 Index Allocation Interest Options (passive) 33 Managed Portfolio Options 34 imaxx TOP Portfolio Index Interest Options 34 Transamerica Interest Option fact sheets 35 Rates of return 35 Interest Option transactions 35 Allocation instructions 35 Interest Option transfers Client bonuses 36 Meeting market needs with client bonuses 36 Different bonuses for different needs 36 WealthAdvantage Performance Bonus 36 EstateAdvantage Accumulation Bonus option 36 EstateAdvantage low-fee option 37 A closer look at the universal life client bonuses 38 WealthAdvantage Performance Bonus example Optimizing investments while maintaining tax-exempt status 40 Tax-exempt testing and policy anniversary processing 40 Tax-exempt testing 40 If a policy fails a tax-exempt test 41 If a policy passes a tax-exempt test 41 The 250% rule (or anti-dump-in rule) 41 Maximum premium estimate 41 Recalculating maximum premium estimates) 42 Optimizer Option 42 Eligibility 42 How Optimizer works 42 Optimizing policies with multiple universal life coverages 42 Changing the Optimizer option 43 Termination 43 Illustrating Optimizer on LifeView 43 Side Account 44 Side Account as a safety net 44 How the Side Account works 44 T-Bill Interest Option and Fixed-Rate Interest Options 27 Index Interest Options 28

6 6. Plan flexibility 45 Easy access to funds when needed 45 Policy loans 45 Policy and coverage surrenders 47 Withdrawal order 50 Taxation of loans, withdrawals and surrenders 50 Easy Interest Option changes when needed 51 Allocation instructions for premiums 51 Interest Option transfers 51 Market Value Adjustments (MVAs) 52 Premium flexibility 53 Planned periodic premiums 53 Minimum premiums 53 Maximum premiums 53 Easy insurance coverage adjustments when needed 54 Increasing the face amount 54 Decreasing the face amount 54 Death benefit option changes 54 COI option changes Living Benefits 55 Qualification 55 Types of disability 55 Benefit amount 56 Payment of benefit amount 56 Face amount adjustment 56 Claims for Living Benefits 56 Occupational disability claim 56 Critical condition disability claim 56 Continuous disability 57 Living Benefits: Definitions and highlights 57 Exclusions for disability claims 58 General exclusions 58 Exclusions for pre-existing conditions Optional Benefits 59 Accidental Death and Dismemberment Rider 59 Schedule of losses 59 Definition of accident 59 Termination 59 Exclusions 59 Children s Insurance Rider 60 Coverage availability 60 Eligibility 61 Paid-up term insurance 61 Conversion 61 Coverage termination 61 Rider termination 61 Payor Waiver Riders 62 Payor Waiver of Monthly Deductions on Death or Disability (PWMD) Rider 62 Payor Waiver of Planned Premiums on Death or Total Disability (PWPP) Rider 62 Common terms and conditions for payor waiver riders 63 Waiver Riders 64 Waiver of Monthly Deductions Rider 64 Waiver of Planned Premiums Policy administration 67 Monthly deductions 67 Lapse and reinstatement process 67 Shortage 67 Key benefits 67 Lapse 67 Reinstatements 67 Anniversary statements and estatement Library 68 Claims processing 68 Payment of death claims 68 Placing an order for marketing material or forms 69 Special note about edition dates 69 Other sources for marketing materials 69 Illustration systems (LifeView) How to structure UL insurance for the market you are in 70 Guaranteed UL: Is it possible? 70 Using UL as an investment vehicle 70 Comparing and illustrating UL plans 70 Conclusion 72 Glossary of common terms 73 Index 75

7 1. Product overview Following is an overview of the coverages offered and some of the key options and features available with those coverages. Coverage options Death benefit options Cost of Insurance (COI) option Policy fee Premium tax Joint life coverage options Insurance coverages Single Joint Multiple Life Level (with ART COI only). Increasing (with ART or level COI). (Only one option can be selected per policy.) Annual Renewable Term (ART) to age 100. ART 85/20. Level COI. $10 per month; no extra charge for extra lives. None: built into cost of insurance. Joint life Joint last-to-die Deductions to last death (up to 5 lives). Deductions to first death (maximum 2 lives). Fund value payout options on each death or last death allowed on policies rated up to 300%. Single life insurance option. Minimum issue amounts Adults: Issue amounts and ages Juveniles: (0 to 15) Min. face amount Max. face amount Min. face amount Wealth Advantage Estate Advantage $100,000 $25,000 $20,000,000 (ART COI) $10,000,000 (Level COI) $25,000 (If an additional coverage; otherwise, the minimum face amount of $100,000 applies.) Joint life $100,000 $20,000,000 (ART COI) $500,000 (Level COI) $25,000 Level COI Rider $100,000 $25,000 TermSelect Riders $50,000 Joint first-to-die (up to five lives) Single life insurance option. Survivor Option. Additional death benefit. Switch option from joint first-to-die to joint last-to-die deductions to last death (two lives). Multiple UL coverages Up to 15 insurance coverages. Fund value payout options on each death, last death or proportionate, allowed with insured rated up to 300%. Severance Option allows coverages to be severed from the policy but continue as issued. Change of primary life insured. Issue ages (age nearest birthday) Underwriting programs Non-smoker: 0 to 80 Smoker: 16 to 80 Underwriting (Non-smoker classification for juveniles) Non-medical underwriting program for face amounts below $250,000 and ages 45 and under. Preferred underwriting program at $250,000 and above and ages 16+. * The total face amount for all level cost of insurance coverages and Level Cost Riders for a life insured under all EstateAdvantage policies may not exceed $500,000. [ 1 ]

8 TermSelect Rider Level COI Rider Riders 10-, 20- or 30-year renewable and convertible terms. Level (to 100) (available with level death benefit option only). Cost of Insurance bands Band structure $25,000 to $49,999 $50,000 to $99,999 $100,000 to $249,999 $250,000 to $499,999 $500,000* (For TermSelect Riders only, there are additional COI bands of $500,000 to $999,999, $1,000,000 to $2,499,9999, and $2,500,000+.) Combined banding combines face amounts of all non-joint universal life and rider coverages to determine underwriting program and requirements for each life insured. Investment choices T-Bill Interest Option Fixed-Rate Interest Options: One-, five- and 10-year terms (minimum $500). Guaranteed minimum returns: WealthAdvantage and EstateAdvantage with Accumulation Bonus 1-year: 0% 5-year: 0.5% 10-year: 1.5% EstateAdvantage with low-fee option 1-year: 0% 5-year: 1.75% 10-year: 2.75% Individual Index Interest Options Thirty-two Interest Options providing passive and managed solutions, including: six passive total return Interest Options four passive currency-neutral Interest Options sixteen third-party managed options that index historically consistent, above-average performance from managed investment Canadian mutual funds four imaxx mutual funds that feature outstanding Canadian and international investment managers with proven performance Portfolio Index Interest Options Eight Interest Options providing both passive and managed solutions, including: four passive index allocation portfolio options four managed imaxx TOP asset allocation options indexed to top-performing Canadian, U.S. and international mutual funds Client bonuses WealthAdvantage EstateAdvantage Performance Bonus Credited in years 2+. Percentage tied to policy rate of return (with guaranteed minimums). Applied to the average fund value in the previous year, net of loans. Accumulation Bonus Low Fee Credited in years 2+. Fixed percentage (1.25%). Applied to the average fund value in the previous year, net of loans. No bonus available. Plan flexibility Policy loans 10% charged annual loan rate. 8% credited annual interest rate on Security Account. Internal loan repayment provision available in year 16. Withdrawal order for monthly deductions Monthly Deduction Interest Option. Policyowner picks one Interest Option; otherwise, the default withdrawal order applies. * The total face amount for all level cost of insurance coverages and Level Cost Riders for a life insured under all EstateAdvantage policies may not exceed $500,000. [ 2 ]

9 Plan flexibility (continued) Surrender charges WealthAdvantage Duration: 10 years EstateAdvantage Duration: 7 years Coverage surrender charges (also applies on face amount reductions). Partial withdrawal surrender charges: a percentage of the withdrawal amount (minimum withdrawal $500). 10% free partial withdrawal After the second anniversary, the client can withdraw up to 10% of the net fund value. The maximum amount available for a free surrender is equal to the lesser of: 10% of the net fund value the net fund value, minus three monthly deductions, minus half the total policy coverage surrender charges Optimizer Eligible with face amounts of $250,000 or more. Earliest start is in year 6. Maximum decrease of 15% over years 6 to 10. Interest Option transfers Four free transfers per policy year. Optional benefits Accidental Death and Dismemberment Rider Pays an additional benefit amount if the life insured dies or loses sight or limbs as a direct result of an accident (not available with joint life coverages). Children s Insurance Rider Provides low-cost term coverage on the lives of the life insured s children (including stepchildren or legally adopted children). Allows each child to convert his or her coverage for up to five times the initial coverage amount, subject to certain conditions. Provides paid-up term insurance if the life insured dies before the children, prior to their 25th birthday (other conditions may apply). Waiver and Payor Waiver of Monthly Deductions Rider Monthly deductions are waived for life if the insured becomes totally disabled before age 60, and between ages 60 and 65, monthly deductions are waived for the later of two years and age 65. Payor Waiver of Monthly Deductions Rider is also available to insure the payor on a child s policy (usually a parent). Waiver and Payor Waiver of Planned Premium Rider Premiums, up to a max. of $1,000 per month, are waived if the insured becomes totally disabled before age 65. The amount being waived will be the lesser of the average premiums paid during the 12-month period before disability and $1,000. Payor Waiver of Planned Premium Rider is also available to insure the payor on a child s policy (usually a parent), up to $400 per month. Built-in, no-cost additional benefits Living Benefits Compassionate Assistance Program (CAP) Living Benefits enable your clients to access their fund value by making a request for a lump sum benefit amount upon disability. The policy definition of disability includes both (1) occupational disability and (2) critical condition disability (see contract for 26 covered conditions). There is no age restriction for this built-in feature, which uses new industry-standardized critical illness definitions. This non-contractual feature currently offered by Transamerica allows an owner to receive a loan against the death benefit of his or her policy if the life insured is suffering from a terminal illness and has a life expectancy of two years or less. Upon the death of the life insured, the death benefit payable to any beneficiaries will be reduced by the loan amount, accrued interest and any premiums waived after the loan was issued. (Living Benefit must first be exhausted.) [ 3 ]

10 2. Insurance coverages Coverage and rider issue ages and amounts Coverage options Minimum face amount Maximum face amount WealthAdvantage EstateAdvantage WealthAdvantage EstateAdvantage Minimum issue age Maximum issue age Single life $100,000** $25,000** Joint life $100,000** Multiple life $25,000 juveniles (ages 0 to 15) Minimum issue amounts apply based on single or joint coverages added as part of the multiple life coverage. $20,000,000 (ART COI) $10,000,000 (Level COI) $20,000,000 (ART COI) $500,000* (Level COI) 0 80 Rider Options TermSelect10 $10,000, Single life: $50,000** TermSelect20 $20,000, Joint life: $100,000** TermSelect30 $20,000, Level Cost Rider Single $100,000** Joint $100,000** Single $25,000** Joint $100,000** $10,000,000 $500,000* 0 80 * The total face amount for all level cost of insurance coverages and Level Cost Riders for a life insured under all EstateAdvantage policies may not exceed $500,000. ** Preferred underwriting is automatically applied when the underwriting requirement or a life insured is $250,000 and greater and the insured is 16 years of age or older. Illustrations with face amounts above the stated maximum must be reviewed by Transamerica s Head Office. Any LifeView illustration above the stated maximum will not be valid without Head Office review, and a disclaimer will be printed on the illustration report pages. [ 4 ]

11 Coverage types Coverage types describe combinations of death benefit and Cost of Insurance (COI) options, and the type selected by the client is noted on the data page of each issued policy and other Transamerica reports. Death benefit option COI options Level death benefit ART to 85/20 years Level death benefit ART to 100 Increasing death benefit ART to 85/20 years Increasing death benefit ART to 100 Increasing death benefit The death benefit includes the face amount (the amount of insurance coverage selected), plus the fund value, less any outstanding loans, accrued interest, withdrawals and premiums due. The NAAR is equal to the face amount selected at issue and remains constant, subject to taxexempt increases. (See Tax-exempt testing on page 40 for further details.) = NAAR = Fund value = Death benefit Increasing death benefit Level to 100 Only one death benefit option may be selected per policy. Death benefit options Both WealthAdvantage and EstateAdvantage provide level and increasing death benefit options to reflect different insurance needs and budgets. Regardless of the death benefit option selected, the total death benefit is the Net Amount at Risk (NAAR), defined below, plus the fund value, less any outstanding policy loans, accrued interest and premiums due. However, with some of the Fund Value Payout Options, the fund value may not always be included with each death benefit. (See Joint life coverages or Multiple universal life coverages. ) Only one death benefit option may be selected per policy. This option is available with all COI options. The fund value is paid upon death, in addition to the face amount, unless a different Fund Value Payout Option is specified. (See Joint life coverages or Multiple universal life coverages.) Avoiding pitfalls The death benefit is affected by the performance of the Interest Options. A negative interest rate will reduce the benefits and values under this policy, which include, but are not limited to, the total fund value, the cash surrender value, the net cash surrender value, the maximum benefit amount for a Living Benefit and the death benefit. Potential market Fund Value Payout Options are available for increasing death benefit policies with multiple universal life coverages and/or joint last-to-die coverages. [ 5 ]

12 Level death benefit This option is available only with ART COI. This option keeps the face amount at a fixed, level amount of coverage. Therefore, as the investment portion of the plan grows, the NAAR decreases, which may result in decreasing the COI over time. option. The death benefit, thereafter, is affected by the performance of the Interest Options. However, the death benefit cannot fall below the reset NAAR. Example: If the amount of insurance is $150,000 and the amount allocated to that coverage is $160,000, the NAAR would be zero. The death benefit paid would be $160,000. Monthly COI costs would be zero. = NAAR = Fund value = Death benefit During the COI period (varies with the COI option) The death benefit is equal to the face amount or the proportionate fund value, whichever is greater. The NAAR is equal to the face amount less the fund value. As the fund value increases, the NAAR decreases, which reduces the amount of insurance risk for which COI is charged. The fund value is not guaranteed, and may increase or decrease, depending on market conditions and the volatility of the Interest Options chosen. The annual renewable term (ART) COI rates per $1,000 of NAAR will increase annually until age 100 (for ART to 100 COI) and to the later of age 85 or 20 coverage years (for ART to 85/20). Example: If the amount of insurance is $150,000 and the allocated amount for that coverage is $25,000, the NAAR is $125,000. The death benefit paid would be $150,000, but monthly costs would be based on the guaranteed COI rate, multiplied by the NAAR of $125,000. After the COI period (varies with the COI option) The death benefit is equal to the NAAR as of the last day of the COI period, plus the fund value. The face amount is reset at the NAAR effective on the last day of the COI period and fixed until the policy terminates. The death benefit effectively switches to an increasing death benefit Avoiding pitfalls Under the level death benefit option, after the end of the COI period (i.e., at the later of age 85 or 20 years, for ART to 85/20 years, or after reaching age 100), the death benefit effectively switches to an increasing death benefit option. Thereafter, the death benefit is affected by the performance of the Interest Options. A negative interest rate will reduce the total fund value and the death benefit. If the fund value has exceeded the original face amount, there may be no guaranteed face amount, and the death benefit will be entirely a function of the total fund value. Clients in this situation should consider switching to Fixed-Rate Interest Options and other low-risk options to minimize this risk. On a multiple life policy with a level death benefit option, the proportion of the fund value paid with each death decreases the fund value. Also, the cost of any other coverages that have not yet reached the end of the COI period will continue to be deducted. The face amount may increase under the level death benefit option where there are exempt-test face increases (page 41). Potential market This plan design is especially efficient when clients have a level need for insurance protection and an increasing need for wealth accumulation. In general, the level death benefit also makes insurance more affordable as the client ages, since the NAAR, and in many cases the total COI deducted, decreases as the fund value increases. However, this depends on the performance of the fund value and the applicable COI rates in later years. Those who wish to minimize the COI in later years and who have decreasing insurance needs may consider the Optimizer feature (page 42). [ 6 ]

13 Cost of Insurance (COI) options All of Transamerica s COI options are fully guaranteed. The following COI options are available: Annual renewable term (ART) COI with rates increasing yearly on an attained-age basis. Rates for the applicable coverage will be $0 at the end of the applicable COI period: ART to 85/20: The COI period ends at the later of age 85 or 20 coverage years. ART to 100: The COI period ends at age 100. Level COI:* term to 100, with rates based on issue age. Level rates are guaranteed for the COI period, to age 100, providing the insurance coverage does not change. While the COI period ends at age 100, the coverage remains in force thereafter until death. Note that the level COI option is only available with an increasing death benefit option. Note that joint last-to-die, with deductions to first death, is only available with an increasing death benefit with level COI. Key benefits With either universal life plan, clients may combine coverages with ART and coverages with level COI. Potential market ART to 100 COI will appeal to clients with level or decreasing protection needs and long-term accumulation needs, especially when combined with the Optimizer Option. It provides them with the lowest COI in early policy years, which allows for faster fund accumulation. ART to 85/20 COI is attractive for individuals who do not want to worry about the high COI charges after age 85 (or 20 coverage years, if later). Both ART to 100 and ART to 85/20 COI should be used when the funding level is above the minimum premium and when the insurance need is expected to remain level or decrease over time. Level COI is attractive for individuals who have a permanent insurance protection need. Avoiding pitfalls With ART COI, if the policy is in danger of going into shortage within a 12-month period of the anniversary, then: If paying by Pre-Authorized Debit (PAD) and paying minimum premiums, Transamerica will automatically increase the PAD amount each year to reflect the increased COI rates for that policy year. This is done to reduce the risk of the policy lapsing. We plan to inform clients about the increased amounts approximately 30 days prior to their policy anniversary. This automatic increase is explained in the PAD agreement in the Application and our current Request for PAD form. Please ensure your client reviews this component of the Application and understands the implications. If paying on a direct billing basis, Transamerica will automatically increase the amount displayed on the billing notice that is sent to clients approximately 20 days prior to their policy anniversary. Projected values on illustrations using ART are very sensitive to investment returns. It is critical to illustrate at conservative interest rates. * The total face amount for all level COI coverages and Level Cost Riders for a life insured under all EstateAdvantage policies may not exceed $500,000. [ 7 ]

14 Mixing COI options COI options can be mixed when a policy is issued on multiple lives. This can be illustrated on LifeView by beginning with a base universal life coverage and then adding a new coverage with a different COI option. Note that level COI is only available with the increasing death benefit. Switching COI options In some instances, we allow the COI option for a particular coverage to be changed in a future year. (Please refer to Plan flexibility in this guide for details.) COI deductions The COI is calculated and deducted on a monthly basis from the tax-deferred fund value, regardless of the mode of premium payment. The monthly COI is calculated as the NAAR multiplied by the applicable annual COI factor (found in the policy data page of the contract), divided by 12. With the level death benefit option, the NAAR fluctuates from month to month; therefore, the COI will fluctuate in tandem. The COI factors are guaranteed for the life of the policy unless there is a material change, such as a change of the life insured or the total face amount per life insured. The COI factors are expressed as a rate per $1,000 and vary by gender, smoking status, preferred underwriting classification (if applicable), amount of insurance and issue age (attained age for ART) of the life insured. The monthly COI is adjusted by any applicable ratings. Monthly deductions include the monthly COI, rider costs and the policy fee. Built-in premium tax With both WealthAdvantage and EstateAdvantage, the COI factors include the provincial premium taxes, and we guarantee that we will not charge your clients an additional fee to cover any fluctuations in provincial premium tax. This guarantee is spelled out in the contract and can be found in Section 7: Monthly Deductions. COI banding The COI factor applicable to all coverages for a life insured on any given month will vary, based on the total face amount at the beginning of that month for that life insured. To determine the appropriate COI band for a life insured, we add the face amount of all coverages (including TermSelect and additional coverage riders) for that life insured. This combined banding approach can result in a discount at higher face amounts. Please note that this feature does not apply to joint life coverages. COI bands WealthAdvantage total face amount EstateAdvantage total face amount $25,000 to $49,999 juveniles $25,000 to $49,999 all ages $50,000 to $99,999 juveniles $50,000 to $99,999 all ages $100,000 to $249,999 $100,000 to $249,999 $250,000 to $499,999 $250,000 to $499,999 $500,000+ $500,000+ (Juveniles = 15 days to 15 years) Key benefits Combined banding and built-in premium tax are attractive COI features that are rare in the industry. Most of our competitors charge the provincial premium tax on the full premium, even on the deposits in excess of the COI. Underwriting programs (These rules are applicable to all Transamerica life insurance products.) Transamerica offers two underwriting programs: non-medical medical [ 8 ]

15 Non-medical underwriting Our non-medical approach to underwriting is designed for ease making it easier for your clients to get the protection they need for themselves and their families, while making it easier for you to do business. Providing a better experience for your clients, quicker processing of applications and speedy delivery of policies, our non-medical approach makes it easy to recommend Transamerica Life Canada. Face amount and age availability Our convenient non-medical underwriting applies as follows: Tip: Providing complete details for all questions that are answered with a yes, and ensuring that your application is in good order, can help the underwriter to quickly make a decision and avoid processing delays. Medical underwriting Medical underwriting means the proposed insured s insurability will be assessed by the underwriter based on the information provided in a Life Insurance Application, along with specific medical requirements. Face amount and age availability Medical underwriting applies as follows: Age Face amount Age Face amount 0 16 <$500, <$250, <$100, Not available 0 16 $500, $250, $100, All face amounts In order to qualify for non-medical underwriting, the proposed insured must have lived in Canada for at least 12 months. Requirements The current Long Form Application (LP257) is required. Note that Transamerica reserves the right to request additional medical requirements for any proposed insured (such as blood and urine testing, physician s report, medical examination, etc.) based on the initial assessment of the application. If it is determined by the underwriter that any of the above four medical requirements are necessary, the applicant will fall under what we call medical underwriting. Misrepresentation It s important to ensure that the questions on the application and any questionnaires are answered truthfully and completely. Any misrepresentation can lead to voided contracts and unpaid claims. Medical underwriting also applies where the underwriter assesses the need for further information about a client, based on the information provided on the Long Form Application for non-medical underwriting. Misrepresentation It s important to ensure that the questions on the application and any questionnaires are answered truthfully and completely. Any misrepresentation can lead to voided contracts and unpaid claims. Requirements The Long Form (LP257) or Short Form (LP411) Application can be used for medical underwriting. While the Long Form Application is not required, it can help provide the underwriter with more complete knowledge about your client, which can result in faster underwriting and a better rate for your client. [ 9 ]

16 Overview of required forms For more information on requirements for our underwriting programs, refer to Transamerica s Underwriting Handbook (LP1393). Underwriting program Application required Additional requirements Non-medical Medical A current Long Form Application (LP257) must be completed.* Current Short Form Application (LP411) can be used.* The Long Form Application (LP257) may also be used, and can help to provide more details to the underwriter, which can result in speedier processing of your application. It could help you manage your client s expectations with regards to the risk classification the underwriter applies. Be sure to provide complete details on the application, particularly for any yes answers. Include a cover letter or use the remarks section if you need more room. Refer to the Underwriting Requirements Chart (LP501).* * To determine the most current edition of our applications, visit Transamerica s website at or click on Marketing Materials/Forms and Applications in our LifeView illustration software. Underwriting risk classifications We offer five underwriting risk classifications: Elite non-smokers Preferred non-smokers Standard non-smokers Preferred smokers Standard smokers Tobacco use Have not used cigarettes, cigarillos (little cigars), cigars, pipe, shisha/hookah (water pipe), nicotine patch, Nicorette chewing gum or any other smoking cessation products, marijuana, hashish, betel nuts, snuff or tobacco in any other form in the last 24 months. Have not used cigarettes, cigarillos (little cigars), cigars, pipe, shisha/hookah (water pipe), nicotine patch, Nicorette chewing gum or any other smoking cessation products, marijuana, hashish, betel nuts, snuff or tobacco in any other form in the last 12 months. Do not use tobacco products. Smoke more than 12 cigars per year, use a pipe or chewing tobacco, but do not use any other tobacco products. Are users of tobacco products. Health Excellent medical and non-medical history. Good medical and non-medical history. Average medical and non-medical history. Good medical and non-medical history. Average medical and non-medical history. Lifestyle Statistically excellent risks. Statistically good risks. Statistically average risks. Statistically good risks. Statistically average risks. We will offer cigar smokers standard non-smoker rates if the cigar use is limited to 12 cigars per year and the urine test results are negative for cotinine (nicotine). For those qualifying for non-medical underwriting, a urine test is not needed. NICORETTE is a registered trademark of the GlaxoSmithKline Group of Companies. [ 10 ]

17 Preferred and elite underwriting risk classes Preferred underwriting is automatically applied when the underwriting amount* for a life insured is $250,000 and greater and the insured is 16 years of age or older. For preferred underwriting, we consider facts that go beyond the gender and smoking habits of your clients. We look at other health-related factors, such as physical build, lifestyles and personal and family health history, to consider their eligibility for an elite, preferred or standard classification. If your clients have a longer life expectancy, based on these factors, our preferred underwriting program can substantially reduce their life insurance premiums. Summary of underwriting program and applicable risk classification by age and face amount Age Face amount Applicable underwriting program Applicable risk classifications <$500,000 Non-medical $500,000+ Medical Standard non-smoker Standard non-smoker <$250,000 Non-medical Standard smoker Elite non-smoker Preferred non-smoker $250,000+ Medical Standard non-smoker Preferred smoker Standard smoker <$100,000 Non-medical Standard non-smoker $100,000 $249,999 Medical Standard smoker Elite non-smoker Preferred non-smoker $250,000+ Medical Standard non-smoker Preferred smoker Standard smoker Standard non-smoker <$250,000 Standard smoker Elite non-smoker Medical Preferred non-smoker $250,000+ Standard non-smoker Preferred smoker Standard smoker * The underwriting requirements and amount are based on the total amount of life insurance for a particular life insured, including single life and joint life coverages and riders (within 6 months). [ 11 ]

18 Underwriting requirement The underwriting requirement is based on the total amount of life insurance for a particular life insured on one policy, including single life and joint life coverages, as well as riders (Level Cost and TermSelect Riders). Example Insured 1 Insured 2 Coverage 1 Single life universal life for $200,000 Insured 1 is not eligible for a preferred or elite underwriting risk classification, as the total amount of life insurance is $200,000, and preferred and elite underwriting risk classification begin at $250,000 and greater. Underwriting materials Coverage 2 Single life TermSelect $70,000 Coverage 3 Single life universal life for $180,000 Insured 2 is eligible for a preferred or elite underwriting risk classification, because the total amount of life insurance ($70,000 + $180,000) is $250,000, and therefore qualifies for preferred or elite. Avoiding pitfalls In this example, if Insured 2 cancelled the TermSelect rider, this would drop the sum insured below the $250,000 amount, and thus the preferred rate classification for the remaining coverage (coverage 3) would no longer apply, and Insured 2 would be paying non-preferred rates from then on. The following is a list of underwriting materials that can be ordered through our icanorder website. Some materials are only available in PDF format, and are available online through our Transamerica.ca website or through our illustration software, LifeView. Long Form Life Application Supplement to the Life Insurance Application also automatically populated in LifeView with illustration. Underwriting Age and Amount Requirements Chart Form number LP257 LP343 LP501 Available for order or through Transamerica.ca Order Website (PDF only) Website (PDF only) Underwriting Handbook LP1393 Order Avoiding pitfalls As determining the appropriate class can only be done after all evidence has been submitted and assessed, it is recommended you use care when speaking to your clients about their risk classification, so as best to manage your client s expectations and to avoid potential disappointments. While it is all right to let them know there s a possibility that they may qualify for a preferred or elite underwriting risk classification if you indeed think that they will be eligible it is still best to provide quotes for only the standard classes. This helps prevent the client from being disappointed if the premium quoted later is higher, because they did not qualify for the better risk classification. Ratings What is a rating? Certain factors such as our gender, age, family history, current conditions, lifestyle choices and whether or not we smoke can impact when we are likely to die. Depending on these factors, one individual may have a greater risk of dying earlier than another. If there is an increased risk of an individual dying earlier than normal, then the individual s mortality is also considered to be higher than normal. To offset that risk, an individual who presents a greater than average risk with regards to mortality, may be charged a higher premium rate. In the insurance industry, individuals with a higher mortality are said to have Extra Mortality. [ 12 ]

19 The increased risk, and thus the extra premium charged, of an individual is quantified using one of two methods: Extra percentage tables; and Permanent and temporary flat extra premiums Extra percentage tables When there are health issues, for example, elevated blood pressure, the extra percentage tables are used. The increased risk or Extra Mortality, of an individual is quantified as a percentage where 100% represents the normally expected health risk (mortality). This percentage is then applied to the standard premium or cost of insurance. As an example, consider two individuals, Anne and Sally. Both are female, both age 35 and both are non-smokers. However, Anne has a health condition, which increases her risk of dying sooner compared to Sally, who is healthy. Thus, Anne would receive a rating for elevated mortality. Say that Anne s health condition has a rating of 50%, this would mean Anne s insurance policy would carry a rating of 150% (100% Normal Mortality + 50% Extra Mortality). If Anne s health condition improves over time, the rating may be reduced or removed if she applies to have it reviewed and if the underwriting is favourable with regard to the entire medical history. An application for a rating review can be made at least two years after the rating was applied. In some cases, when the risk is particularly high (typically higher than 400%), an insurance company may not be prepared to assume the risk and the proposed insured may be declined. Permanent and temporary flat extra premiums Permanent This approach calls for a fixed extra premium per thousand dollars of sum insured/face amount over and above the standard premium charge. The additional mortality risk is likely to be present over a certain period of time. For example, Bob has a history of reckless driving and has received five speeding tickets over the last two years. Because those who drive recklessly are more likely to die sooner than those who don t, Bob will receive a rating. If Bob changes his driving habits and no longer speeds, he may apply after two years to have the rating removed or decreased. Some avocations such as scuba diving or mountain climbing could draw an extra premium for the life of the policy or until the lifestyle of the insured has changed and an application is made to have it removed. Temporary Similar to permanent, this approach also calls for a fixed extra premium per thousand dollars of sum insured/face amount over and above the standard premium charge. However, unlike a permanent flat extra a temporary flat extra is on a temporary basis or a designated period of time. The extra premium may only be charged for a fixed number of years. For example, Gary is a hobby pilot and does not have enough experience time according to his record. In two years, he will have achieved his required number of experience hours. So, Gary receives a temporary rating for those two years, which will drop off automatically without the need for application or review. Reconsideration of ratings and declines If your client receives a rating, he or she may be eligible for future reconsideration of that rating. Likewise, if your client has been declined, there may be circumstances under which we would review that decision. Reconsideration will only be possible if the overall medical history and lifestyle has improved. [ 13 ]

20 Reconsideration of medical ratings is not always possible. Some conditions are unlikely to improve over time. For example, consider Type 1 diabetes (insulin dependent). The longer the client has Type 1 diabetes, the greater the risk of complications and thus the greater the mortality. As such, Type 1 diabetic ratings are unlikely to be eligible for reduction in subsequent years. Knowing that reconsiderations may be a possibility will help you deliver the rated policy to your client. It will also provide you with a basis to follow up with your client in the future with the chance to review the rating or to turn a declined individual into a client (insured). Good to know Generally percentage and permanent extra premiums can only be reviewed after two years and new medical evidence will be required. The change of the rating is subject to the new evidence received and the assessment by the underwriter at that time. Good to know For joint life policies, for the rating of any of the lives to be reviewed, new medical evidence is required on all lives insured. The rating reconsideration may be declined if any of the lives insured are no longer in the same risk class as when the policy was originally issued. Good to know For the review of certain lifestyle ratings, such as those related to an avocation, we will request only the appropriate questionnaires and will not require medical requirements or information. For other ratings, however, we will complete a full review, which can include medical, financial, travelling and lifestyle underwriting. Policies with multiple universal life coverages Multiple universal life coverages With WealthAdvantage and EstateAdvantage, more than one universal life coverage can be included under the same policy without any additional policy fee. Each coverage must satisfy the minimum and maximum face amount requirements. (See Coverage and rider issue ages and amounts on page 4.) The main difference between multiple universal life coverages and a Level Cost Rider (see Riders on page 24 for more information) is that when calculating the death benefit or NAAR, no fund value is attributed to the face amount payable for the Level Cost Rider. As well, no surrender charges are applicable for additional coverage. Since there are no surrender charges associated with riders, the maximum tax-exempt room is lower than when using UL coverages. Within the universal life contracts, a primary life insured is someone who is insured under a universal life coverage. There may be several primary life insureds on a policy having multiple universal life coverages. In general, upon the death of any life insured, his or her death benefit will be paid to the beneficiary specified for that coverage, and the policy will continue with the remaining lives insured, provided at least one primary life insured is surviving. Under the level death benefit option, the fund value that is attributed to each coverage in order to calculate the NAAR and the associated COI is determined proportionately, based on the face amount for each coverage. The policy matures when the last universal life coverage terminates. Only one death benefit option may be selected per policy. [ 14 ]

21 Base universal life coverage There are certain privileges attributed to the base universal life coverage. For example, on a multiple life policy, the Optimizer Option will reduce the face amount for the base universal life coverage only. As well, some riders and optional benefits are only available with the base universal life coverage, such as the Children s Insurance Rider. The base universal life coverage is usually indicated as Life 1 on the life insurance application or Base Coverage on the LifeView illustration software. Key benefits Only one policy fee applies. The investment component is conveniently administered through centralized policy Interest Options. Premium billing and policy administration are applied to the entire policy, rather than to each life insured. Up to 15 coverages (any combination of base coverages and riders) can be included under one policy, including the support of up to five lives on joint first-to-die coverages. The policyowner can assign separate beneficiaries for each coverage under the policy. If your clients select the increasing death benefit option, they may have either ART or level COI options for different lives. Any coverage can be severed from the original policy and continued under a different policy, at any time. (See Severance Option. ) A policy fee will be added to a severed coverage under its own policy. A life insured for a specific coverage can be changed (See Change of Primary Life Insured Option. ) Multiple life special options Fund Value Payout Options Unless a different Fund Value Payout Option is specified, the death benefit will include the applicable proportionate fund value, based on the total face amount for the life insured. Proportionate fund value payout is specified in the contract and does not require a separate contract endorsement. Alternate Fund Value Payout Options are available at time of issue with an increasing death benefit option. Transamerica offers Fund Value Payout Options for all lives who are issued without a rating or are rated up to a maximum of 300%. The Fund Value Payout Options must be illustrated with LifeView and specified on the Supplement to the Life Insurance Application. These options are added to the policy as contract endorsements and will be specified on the data page and policy statement. Depending on the option selected, in addition to the face amount for each coverage, the death benefit will be as follows: Proportionate: The proportionate fund value is payable upon each death (default). Each death: The total fund value, less three monthly deductions, is payable upon each death (minimum $500 payout). Last death: The total fund value is payable at last death only. Potential market Multiple life coverages are attractive to both businesses (corporations and partnerships) and families, because they offer great flexibility, without additional policy fees. [ 15 ]

22 Example of how Fund Value Payout Options work: Insured 1 Insured 2 Insured 3 Face amount $200,000 Face amount $100,000 Face amount $100,000 Total fund value = $80,000 at date of death Monthly deduction = $1,000 Example of proportionate fund value payout Insured 1 Insured 2 Insured 3 Proportionate fund value $40,000 Proportionate fund value $20,000 Proportionate fund value $20,000 If Insured 1 dies first, the death benefit = $240,000 If Insured 2 dies first, the death benefit = $120,000 If Insured 3 dies first, the death benefit = $120,000 Each death Insured 1 Insured 2 Insured 3 Death benefit = face amount + total fund value 3 monthly deductions If Insured 1 dies first, the death benefit = $277,000 If Insured 2 dies first, the death benefit = $177,000 If Insured 3 dies first, the death benefit = $177,000 Last death Insured 1 Insured 2 Insured 3 If Insured 1 dies first, the death benefit = $200,000 If Insured 2 dies second, the death benefit = $100,000 If Insured 3 dies last, the death benefit = $100,000 + fund value [ 16 ]

23 Multiple extras or table ratings Fund Value Payout Options are available for cases rated with a total mortality equal to 300% or less. Severance Option The Severance Option is a provision within the base universal life contracts that allows universal life coverages to be severed from the original policy and continued under another policy. How does it work? Over time, changes in circumstances may lead the owners of a multiple life policy to re-evaluate their needs. The Severance Option allows the policyowners to sever a coverage from the multiple life policy and maintain that coverage independently, and, if applicable, to keep the remaining coverages together on the multiple life policy. Life 1 Primary insured Life 1: 1. Wants to leave the policy. 2. Passes away. Life 2 Life 3 Life 4 Life 2, 3 and 4 may: 1. Apply for separate single life policies. 2. Stay together on a multiple life policy. A severed coverage is a continuation of the original coverage and will include the same coverage date, face amount, rates, surrender charge schedule, owner and proportionate fund value. The funds that are transferred to a severed coverage do not incur surrender charges and are not considered taxable, providing that ownership of the coverage has not changed. Currently, no administrative fee is charged for this service; however, Transamerica reserves the right to charge a fee. Key benefits Useful for corporate-owned policies where an employee has left the company. If ownership for the severed coverage is changed to the insured, this may be considered to be a taxable disposition. Useful for families that might want to sever coverages due to a dissolution of marriage, or for children who have become adults and wish to have separate insurance coverage. Avoiding pitfalls Although ownership can be changed at any point after the coverage is severed, the change may be deemed a taxable disposition. Under spousal rollover rules, a taxable disposition may not take place if ownership changes to spouse, child or grandchild. Change of Primary Life Insured Option The Change of Primary Life Insured Option is a provision within the base universal life contracts that allows an owner to change one primary life insured for another primary life insured. The new person to be insured, who must be less than 70 years of age, is fully underwritten, and the COI will be payable based on the current age of the newly added life insured. Currently, an administrative fee of $150 is charged for this service. Key benefits Useful for business purposes when one employee is leaving the company and the business is insuring a new employee. Useful in situations involving a dissolution of marriage. [ 17 ]

24 Joint life coverages Transamerica s universal life contracts can also be issued with joint first-to-die or joint last-to-die coverages. Joint life coverages are provided as an endorsement to the contract. The lives insured under a joint life coverage, the joint insureds, share a single death benefit, and the lives are combined to produce a Single Equivalent Age (SEA) and underwriting class for the purpose of calculating the COI. Joint life coverages may be combined with single life coverages on one universal life policy. We require a minimum face amount of $100,000 for each joint life coverage. In the event of simultaneous deaths, or where the sequence of deaths cannot be determined, the death benefit will be divided by the number of the deceased joint insureds. Joint last-to-die and joint first-to-die coverages are identified on the contract data page with the applicable SEA. Optional benefits, including the Accidental Death and Dismemberment Rider, the Waiver Rider and the Payor Waiver Rider, are not available with joint life coverages. The Children s Insurance Rider is available on the first life of a joint first-to-die coverage, providing this coverage is the base universal life coverage (identified as Life 1 in the application). Potential market Traditionally, joint life coverages have been used in family situations: joint first-to-die is used for income protection needs, and joint last-to-die is used for estate planning needs. There is an increasing trend toward using joint life coverage to insure business interests. For example, joint first-to-die can be used to fund a buy-sell agreement, or for key person insurance. Key benefits On a joint last-to-die basis, there is usually a lower COI, compared with single life coverage on either of the individuals. On a joint first-to-die basis, there is usually a lower COI, compared to the total cost of separate coverages on each life (e.g., one joint face amount of $500,000, versus having two separate coverages with face amounts of $500,000 each). For example, say a husband and wife ages 35 and 30, respectively, who are both non-smokers, require $500,000 of level life insurance. The cost for separate coverages is $2,995 and $1,950; if they purchase a joint-firstto-die universal life plan, the cost would be $3,875. These costs do no reflect the policy fee. On each joint coverage, up to five lives can be supported. Joint last-to-die Joint last-to-die universal life coverages are available with two options for deductions: deductions to first death and deductions to last death. The deduction option must be specified on the LifeView illustration report that is submitted to Transamerica, as well as on the Supplement to the Life Insurance Application. This option is added to the policy as a contract endorsement and is displayed on both the data page and on the policy statement. Instead of using different insurance rates for these two options, different SEA formulas are used. Deductions to last death is less expensive (based on a younger single equivalent age) than deductions to first death. The Fund Value Payout Options and the Single Life Insurance Option are available with both deductions to first death and deductions to last death. However, you may not combine deductions to first death with deductions to last death on one contract. Refer to the Glossary of common terms for a definition of SEA. [ 18 ]

25 Deductions to first death This option is only available on a base universal life joint last-to-die coverage with level COI and an increasing death benefit. This option is limited to two lives, with each joint insured being between 18 and 80 years of age; neither of the joint insureds may be a substandard risk. When this option is selected and the first joint insured dies, insurance charges for this joint last-to-die coverage cease. Deductions to last death This option is available for any joint last-to-die coverage and includes up to five lives, including substandard lives. When this option is selected, insurance charges are applicable for this coverage until the death of the last life insured. Potential market A joint last-to-die policy with deductions to first death is attractive for estate preservation, covering the COI for the surviving insured, and is often purchased in combination with the each death Fund Value Payout Option (see following section). Switching between joint last-to-die deduction options* From To Administrative rules Deductions to first death Deductions to last death Deductions to last death Deductions to first death No underwriting is required. Signed illustration with new SEA based on attained ages. Up to five lives. Underwriting is required: Part 2 of Policy Change Application (LP386). Signed illustration with new SEA based on attained ages. Level COI (only after change). Available with two lives. No substandard risk. Avoiding pitfalls If the policy only includes one joint last-to-die with deductions to first death, upon the death of a joint insured, no further monthly deductions, including the policy fee, will be deducted. However, the deductions to first death option does not cover insurance costs for multiple life coverages, additional coverage riders and optional benefits that are included on the same policy. It only covers the COI for the applicable joint last-to-die coverage. As well, for policies with multiple universal life coverages, the policy fee will continue as long as deductions are taken from the fund value for the other insurance coverages, optional benefits and riders. If a potential joint insured is rated during the underwriting process, the joint last to-die with deductions to first death coverage will not be available. However, joint last-to-die with deductions to last death may be issued. Fund Value Payout Options These options are available only at time of issue, on policies with one joint last-to-die universal life coverage with an increasing death benefit option, issued without ratings, or where a joint life insured is rated up to a maximum of 300%. The Fund Value Payout Options must be specified on the LifeView illustration report that is submitted to Transamerica and specified on the Supplement to the Life Insurance Application. These options are added to the policy as contract endorsements and will be specified on the data page and policy statement. If the client does not specify an option, last death will be selected automatically as the default. ART to 100 level COI deductions continue to SEA age 100, and ART 85/20 to the later of age 85 of SEA and 20 years. * These administrative rules are non-contractual and are subject to change and other criteria based on administrative guidelines in effect on the date of the request. [ 19 ]

26 Depending on the option selected, in addition to the face amount for each coverage, the death benefit is as follows: last death: the total fund value at last death (default) each death: the total fund value, less three monthly deductions, upon each death (minimum $500 payout), with the remaining fund value paid at the last death Example of each death Fund Value Payout Option Insured 1 Insured 2 Face amount: $500,000 Monthly deduction = $500 Total fund value = $50,000 Insured 1 dies Total fund value 3 monthly deductions = $48,500 Remaining policy fund value = $1,500 Example of last death Fund Value Payout Option Insured 1 Insured 2 Face amount: $500,000 Monthly deduction = $500 Total fund value = $50,000 Multiple extras or table ratings Fund Value Payout Options are available for insureds rated with a total mortality equal to 300% or less. Key benefits With each Fund Value Payout Option, a different beneficiary can be specified for the fund value and for the face amount. In this way, for example, the children may be designated as beneficiaries for the face amount to offset estate taxes, and the surviving spouse may be designated as beneficiary for the fund value to help cover funeral expenses and other costs. This can be specified in the general comments section of the Life Insurance Application or provided to Transamerica as a letter from the owner. Single Life Insurance Option This option is included in both joint last-to-die endorsements (deductions to first death and deductions to last death), and is available at no extra charge. It allows a joint last-to-die universal life coverage to be split into two or more separate coverages (depending on the number of joint lives insured under the original coverage) without further evidence of insurability. The split coverage is a continuation of the original coverage. The proportionate fund value will be transferred to each of the split coverages without incurring surrender charges. This transfer should not trigger taxation, providing that ownership has not changed. (See Avoiding pitfalls under Multiple Life Special Options: Severance Option on page 17.) Life 1 Life 2 (up to five) $1,000,000 payable on first death Insured 1 dies Divorce or dissolution of a business partnership No fund value is paid out. The face amount and total fund value are paid at last death. Life 1 $500,000 Life 2 $500,000 [ 20 ]

27 This special option is similar to the Multiple Life Severance Option and the joint first-to-die Single Life Insurance Option. The most significant differences are that with the joint last-to-die version, the split may only occur subject to the specified contingent events, and the NAAR is allocated equally among the joint insureds. Eligibility Must be exercised prior to age 70 of the oldest of the joint life insureds. Not available if any of the joint lives are issued as substandard risks. Joint first-to-die Survivor Option This option is included in the joint first-to-die endorsement and is available at no extra charge. Within 90 days of the death of the first joint insured, the surviving insured(s) may apply for single insurance coverage without medical evidence of insurability. The new insurance coverage is based on current age and rates and uses the current issue date. Life 1 Life 2 Life 3 Life 4 $1,000,000 payable on first death Although no medical evidence of insurability is required, Death of Life 2 we reserve the right to financially underwrite any one of the joint insureds prior to the time the new policy takes effect. Please refer to a sample contract for the detailed terms. Life 1 $1,000,000 Life 3 $1,000,000 Life 4 $1,000,000 Contingent events Within 180 days of a Certificate of Divorce being issued for the joint life insureds. On the dissolution of the corporation or partnership, except in the case of bankruptcy, providing that the coverage was being used to fund a bona fide purchase obligation under a written partnership or shareholder s agreement, contingent on the death of a joint insured. Terms of the Single Life Insurance Option The current coverage date is used. The maximum death benefit is the lesser of the original face amount divided by the number of joint lives insured and $1,000,000 (for amounts that exceed $1,000,000, underwriting is required). Original rates apply, based on attained age. Key benefits Provides future flexibility in case of dissolution of marriage or business dissolution. Eligibility for exercising the option Not available for substandard risks. Not available if any of the surviving joint insureds have reached age 70. Available within 90 days of the date of death of the first to die. Available if the policy was in force and all monthly deductions have been paid to the date of death of the first to die. Terms of new insurance policy Same plan of insurance. Maximum face amount for each joint insured is the NAAR applicable for the original coverage immediately prior to the date of death of the first to die. The new policy will take effect on the 90th day following the date of death of the first to die, providing at least three monthly deductions have been received. An annual policy fee will apply. [ 21 ]

28 The age of the person insured is based on the date of the new policy (attained age). Same class of risk as original coverage. Although no medical evidence of insurability is required, we reserve the right to financially underwrite any one of the joint insureds prior to the time the new policy takes effect. Potential market Attractive for the income protection market. Key benefits A surviving joint insured can purchase new insurance protection without submitting new medical evidence of insurability. Additional death benefit The additional death benefit is included in the joint firstto-die endorsement and is available at no extra charge. It provides for an additional death benefit to be paid, providing that the second death occurs within 90 days of the first death and is not the result of suicide or selfinflicted injury. Life 1 Life 2 Life 3 $300,000 payable on first death 90 Days Eligibility for exercising the option Not available if any of the joint lives insured under the applicable coverage are substandard risks or are 70 years of age or older at issue of the original policy. Not available if an application for a new life insurance policy was made for the surviving insureds. Subject to the terms of the additional death benefit. Not available if either death is the result of suicide or self-inflicted injury. The additional death benefit is equal to the NAAR applicable for the joint first-to-die coverage at the time of the first death. It excludes any additional benefits or riders that may be attached to the policy. The additional death benefit is payable only once, regardless of the subsequent deaths of other joint insureds within the same 90-day period. Potential market Beneficial for the income protection market. Provides an additional source of income to a family should both parents die within a short period of time. Single Life Insurance Option This option is included in the joint first-to-die endorsement and is available at no extra charge. This option allows a joint first-to-die universal life coverage to be split into two or more policies (depending on the number of joint lives insured under the original coverage) without medical evidence of insurability. Life 2 passes away $300,000 death benefit paid. Life 3 passes away within 90 days of Life 2: $300,000 additional death benefit. Life 1 survives coverage terminates. The split coverage is a continuation of the original coverage. The proportionate fund value will be transferred to the split policy without incurring surrender charges. This transfer should not trigger taxation, provided that ownership has not changed. (See Avoiding pitfalls under Multiple Life Special Options: Severance Option. ) [ 22 ]

29 Life 1 Life 2 (up to five) $1,000,000 payable on first death Life 1 $1,000,000 Coverage needs change Life 2 $1,000,000 This special option is similar to the Multiple Life Severance Option and the joint last-to-die Single Life Insurance Option. The most significant differences are that with the joint first-to-die version, the split is at the discretion of the owner and is not subject to contingent events, and the NAAR for each split coverage is equal to the NAAR prior to the split. Eligibility for exercising the option Must be exercised prior to age 70 of the oldest of the joint life insureds. Transamerica reserves the right to require medical evidence of insurability for joint insureds classified as substandard at time of issue. Transamerica reserves the right to financially underwrite any of the joint insureds for whom the split coverage is requested. Terms of the Single Life Insurance Option The current coverage issue date is used. The maximum face amount is as follows: with a level death benefit, equal to the original face amount less the proportionate fund value with an increasing death benefit, equal to the original face amount Key benefits Provides future flexibility in case there is a need to split the insurance coverage. Switching between joint options The switch option allows clients to change from joint first-to-die to joint last-to-die, should their insurance needs change. The SEA will be calculated based on the individual ages and the original issue date of the joint firstto-die coverage. In other words, the clients will get the same SEA had they purchased a joint last-to-die coverage originally. The issue date is preserved when the switch option is exercised. From To Administrative rules Joint first-to-die Joint last-to-die Joint last-to-die (deductions to last death only) Joint first-to-die No underwriting required. Available any time after 10th policy anniversary. Must be exercised prior to policy anniversary nearest the oldest insured s 70th birthday. This feature applies to two lives insured only. Not available. Key benefits Adaptable to lifecycle needs as income replacement gives way to estate succession or tax liability coverage. Original rates apply, based on attained age. An administrative fee may apply. Please refer to a sample contract for the detailed terms. [ 23 ]

30 Riders Your clients may require temporary or long-term additional insurance protection to cover additional lives or to protect loan payments, mortgages or university expenses. Riders may be added at the time of issue or once the policy is in force. Full underwriting is required, based on current age and amount. The two main differences between base coverages and riders is that: No fund value is allocated to the rider. Surrender charges are not applicable to riders. Level Cost Rider The Level Cost Rider is similar to the level COI universal life coverage, and may be established as either single life or joint life insurance protection. The advantage of adding this rider is that it is available with no surrender charges, for the same cost as level COI coverage. The Level Cost Rider can only be purchased with a level death benefit policy and an ART COI base universal life coverage. By adding the Level Cost Rider to either a WealthAdvantage or an EstateAdvantage plan, your clients benefit from one policy fee, combined premium payments and enhanced tax-deferral opportunities. Since the rider does not share in the fund value, it is able to coexist with a level death benefit policy, unlike traditional level COI coverage. A Level Cost Rider may be severed and maintained as a stand-alone plan; however, some differences will be applicable, including surrender charges and policy fees. TermSelect Riders TermSelect Riders provide low-cost term insurance for 10-, 20- and 30-year terms. It should be noted that mortality costs are deducted monthly, and accordingly, the costs should be compared to a stand-alone term product on a monthly PAD basis. For minimum and maximum issue amounts, refer to Coverage and rider issue ages and amounts on page 4. Key benefits Riders are conveniently administered through the universal life policy. We offer combined banding, which means that we combine the face amounts of all non-joint insurance coverages and riders on one life to set the rate band for these coverages. There are no additional policy fees. Riders can be used to increase the tax-deferral (MTAR) room in the policy, especially in the early years when the base coverage MTAR is growing. TermSelect riders are convertible, which means that they may be converted to a eligible universal life plan at attained age (and at the then-current rates) at any time up to age 71, without further evidence of insurability. Avoiding pitfalls Dropping, severing or converting any rider causes the tax-deferral MTAR room to drop. Special joint life options (such as additional death benefit, Survivor Option, deductions to first death, etc.) are not applicable for the additional coverage or TermSelect riders. [ 24 ]

31 3. Investment choices Interest Options The power of universal life lies in its tax-deferred investment growth. Funds invested in Transamerica s universal life policies accumulate on a tax-deferred basis within limits set out in the Income Tax Act and its regulations and form part of the tax-free* death benefit and Living Benefits. One key benefit is that the pre-tax investment earnings can be used to pay for the COI. Over the long term, tax-deferred funds generally have the advantage of generating higher net returns than taxable investments with the same risk/return profile. Once you determine the need for life insurance, you can use LifeView, Transamerica s illustration software, to show your clients the benefits of investing in universal life rather than taxable investments. Your clients may choose any combination of Interest Options: Daily Interest Option Fixed-Rate Interest Options Passive Index Interest Options Managed Index Interest Options Individual Options Portfolio Options Individual Options Portfolio Options Treasury Bill (T-Bill) Interest Option Terms of one, five and 10 years Currency-exposed total return Canadian Equity Total Return U.S. Large Cap Total Return U.S. New Technologies Total Return Japanese Equity Total Return European Equity Total Return Canadian Bond II Index Allocation Program (IAP) Conservative Balanced Growth Aggressive Growth imaxxfunds imaxx Cdn. Bond imaxx Cdn. Fixed Pay imaxx Cdn. Equity Growth imaxx Global Equity Growth imaxx TOP Conservative Portfolio imaxx TOP Balanced Portfolio imaxx TOP Growth Portfolio imaxx TOP Aggressive Growth Portfolio Currency-neutral Can-U.S. Large Cap Can-U.S. 21st Century Can-European Can-Asian Third-party managed Mackenzie Cundill Canadian Balanced Fidelity Cdn. Balanced TD Dividend Growth CI Signature Select Canadian Fidelity Canadian Disciplined Equity CI Cdn. Small/Mid Cap Mutual Beacon CI Value Trust Corporate Class AGF International Stock Class Invesco International Growth Class Mackenzie Cundill Value Fidelity NorthStar Dynamic Value Fund of Canada (as of April 23, 2012) AGF American Growth Class (as of April 23, 2012) CI American Value (as of April 23, 2012) Dynamic Global Discovery (as of April 23, 2012) [ 25 ]

32 Relative risk rating Relative risk represents Transamerica Life s assessment of the potential volatility of the Interest Option selected, relative to other Interest Options. While higher-risk Interest Options may be more volatile in the short term, they generally offer the potential for higher returns over the long term. Relative risk Low Moderate High Very high Daily Interest Option T-Bill Interest Option Fixed-Rate Interest Options Terms of one, five and 10 years Passive Index Interest Options Canadian Bond II Balanced Index (IAP) Conservative Index (IAP) Canadian Equity Total Return European Equity Total Return U.S. Large Cap Total Return Can-European Can-U.S. Large Cap Growth Index (IAP) Aggressive Growth Index (IAP) U.S. New Technologies Total Return Japanese Equity Total Return Can-Asian Can-U.S. 21st Century Managed Index Interest Options imaxx Canadian Bond imaxx TOP Conservative Portfolio imaxx TOP Balanced Portfolio Mackenzie Cundill Canadian Balanced Fund Fidelity Canadian Balanced Fund imaxx Cdn. Fixed Pay imaxx Cdn. Equity Growth imaxx TOP Growth Portfolio imaxx TOP Aggressive Growth Portfolio Dynamic Value Fund of Canada (as of April 23, 2012) AGF American Growth Class (as of April 23, 2012) CI American Value Fund (as of April 23, 2012) Dynamic Global Discovery Fund (as of April 23, 2012) CI Signature Select Canadian Fund TD Dividend Growth Fund Fidelity Cdn. Disciplined Equity Fund Mutual Beacon Fund CI Value Trust Corporate Class AGF International Stock Class Invesco International Growth Class Mackenzie Cundill Value Fund Fidelity NorthStar Fund CI Canadian Small/Mid Cap Fund [ 26 ]

33 T-Bill Interest Option and Fixed-Rate Interest Options WealthAdvantage = WAV 7, EstateAdvantage with accumulation bonus = EAV 7, EstateAdvantage, low-fee = EAN 7 Interest Option Provides interest based on the return of Guaranteed calculation Guaranteed minimum WAV 7 and EAV 7 EAN 7 WAV 7 and EAV 7 EAN 7 T-Bill Interest Option One-, five- and 10-year Fixed-Rate Interest Options All Fixed-Rate Interest Options Government of Canada Treasury Bills 90% of the yield of Government of Canada Treasury Bills with terms to maturity of up to one year, less 2.75% calculated daily. 90% of the yield of Government of Canada Treasury Bills with terms to maturity of up to one year, less 1.50% calculated daily. 0% per annum In addition to being available as an Interest Option, the T-Bill Interest Option also holds money until the $500 minimum deposit requirement is met for Fixed-Rate Interest Options. The automatic transfer feature can be applied for on the Supplement to the Life Insurance Application or the Allocation form (PS425). Government of Canada bonds, one-, five- and 10- year terms. Interest fixed at time of premium payment ; 90% of the yield of a comparable Government of Canada bond, less 2.75%. Interest fixed at time of premium payment ; 90% of the yield of a comparable Government of Canada bond, less 1.50%. One 0% per annum 0% per annum Five Ten 0.50% per annum 1.50% per annum 1.75% per annum 2.75% per annum A Market Value Adjustment (MVA) will apply if money is withdrawn from a Fixed-Rate Interest Option prior to the maturity of the term (except MVAs do not apply for monthly deductions (covering the COI and policy fee) and the payment of death benefits). Minimum deposit requirements: T-Bill Interest Option: no minimum All Fixed-Rate Interest Options: $500 Key benefits Transamerica guarantees the availability of at least one Fixed-Rate Interest Option within each of the universal life contracts with a minimum guarantee of 1.5% for WealthAdvantage and EstateAdvantage with Accumulation Bonus, and 2.75% for EstateAdvantage, low-fee. Unlike some competitors, Transamerica does not charge an MVA on monthly deductions from our Fixed-Rate Interest Options. Potential market These Interest Options may suit very risk-averse clients who want secure fund growth. They can be used for a portion of a client s portfolio, to balance more aggressive investment options. The T-Bill Interest Option is ideal when used with the Monthly Deduction Interest Option. (Please refer to page 46.) [ 27 ]

34 Index Interest Options Transamerica s Index Interest Options are index-linked interest accounts, as opposed to mutual funds, in which clients own an interest in underlying securities. To qualify as a tax-exempt insurance policy, the funds in a universal life policy must form part of Transamerica s general assets. Transamerica offers both currency-neutral and currencyexposed options that link to foreign market indexes, as well as managed Index Interest Options that link to mutual funds and portfolios. Designated index The credited interest rate for each Index Interest Option is related to the performance of an underlying financial instrument or index, such as units of a mutual fund or segregated fund, equity shares, a particular stock, bond or other financial index, and/or a combination of such instruments or indices. Each such financial instrument, index or combination thereof, is referred to as a designated index. Transamerica reserves the right to substitute one designated index, or component thereof, for another designated index with similar investment objectives, and to adjust the percentage weightings of particular components of any composite designated index in accordance with market conditions. Interest rate calculation The return on any Index Interest Option is guaranteed to be 100% of the comparative daily increase or decrease of the corresponding designated index, including any dividends, adjusted to Canadian dollars (where applicable), less an Interest Option fee. To simplify how the Interest Option fee works, we ve separated the Interest Options into three key categories: Passive Index Interest Options (includes Index Allocation Portfolios) Passive currency-neutral Index Interest Options Managed Index Interest Options Note that for all Index Interest Options, the Interest Option fee is deducted on each calendar day. Passive and managed currency-exposed Index Interest Options The Interest Option fee is guaranteed not to change, and the fee is deducted on each calendar day. The Interest Option fee for the Index Allocation Portfolios results from the combination and weightings of each passive Index Interest Option making up the portfolios. Passive currency-neutral Index Interest Options The Interest Option fee is equal to or less than: the guaranteed total fee for such Index Interest Option (see tables), less an amount equal to the management fee, not including taxes, of the corresponding underlying index, as applicable. Passive Index Interest Options Having no discretionary portfolio management, passive Index Interest Options closely follow the performance of major stock and bond benchmarks such as the S&P/TSX 60 or the S&P 500. This includes price variations both negative and positive of the component stocks and any dividends they pay. Currency-exposed Index Interest Options Currency-exposed Index Interest Options are subject to the fluctuations between the currency of the underlying investment and the Canadian dollar. The daily credited return is affected by each day s change in the Canadian dollar exchange rate. Therefore, while the investment is held, a declining Canadian dollar enhances returns, and a rising dollar diminishes returns. Some clients may have difficulty understanding the currency-exposed Interest Options available in UL plans. We have developed a tool to help you explain to your clients that their returns are affected by the exchange rate between the Canadian dollar and the currency of the country where the option s underlying investments have been made, and that because of this, exchange rates can significantly increase or decrease the return of an Interest Option, regardless of the investments return in their native country.* [ 28 ]

35 Currency-neutral Index Interest Options Currency-neutral Index Interest Options use hedging strategies to emulate the performance of a foreign index, while minimizing the effect of fluctuations in the Canadian dollar. Passive Index Interest Options Index Interest Option Designated index Indexed dividend 1 Foreign currency exchange 2 Guaranteed Interest Option fee (annual equivalent) WAV 7 and EAV 7 EAN 7 Canadian Equity Total Return S&P/TSX 60 Composite Stock Price Index 3 Yes Not applicable U.S. Large Capitalization Total Return Standard & Poor s 500 Composite Stock Price Yes Yes Index 3 U.S. New Technologies Total Return NASDAQ 100 Stock Index 3 Yes Yes European Equity Total Return 75% Dow Jones EURO STOXX 50 Price Index 25% Financial Times Stock Exchange (FTSE) 100 Share Index 3 Yes Yes % (3.00%) % (1.75%) Japanese Equity Total Return Nikkei 225 Stock Average 3 Yes Yes Canadian Bond II Scotia Capital Markets Universe Bond Index 3 Yes Not applicable Passive Currency-neutral Index Interest Options Guaranteed total fee WAV 7 and EAV 7 EAN 7 Can-U.S. Large Capitalization Can-Am Fund (Variable Investment Option) N/A N/A Can-U.S. 21st Century Can-European Can-Daq 100 Fund (Variable Investment Option) Can-Euro Fund (Variable Investment Option) N/A N/A N/A N/A % (3.00%) % (1.75%) Can-Asian Can-Asian Fund (Variable Investment Option) N/A N/A * Go to Transamerica.ca and download The Informed Consumer, Lisa s Condo A lesson in currency exchange. 1 The indexed dividend is an index number that represents the dividend distribution on securities comprising the applicable index, and such number will be obtained from such internationally recognized quotation service as Transamerica may choose from time to time. 2 The applicable exchange rate on any day will be calculated by Transamerica on the basis of the end-of-day value of the Canadian dollar as compared with the relevant foreign currency as determined by Transamerica. Such end-of-day value of the Canadian dollar will be the rate obtained from such internationally recognized quotation service as Transamerica may choose from time to time. 3 Transamerica s universal life policies and contracts are not issued, sponsored, endorsed, sold or promoted by Toronto Stock Exchange, Standard & Poor s (The McGraw-Hill Companies Inc.), The Nasdaq Stock Market, Inc., STOXX Limited (Dow Jones & Company, Inc.), FT-SE International Limited, Nihon Keizai Shimbun, Inc., or Scotia Capital Inc., AGF Funds Inc., Invesco Trimark., Brandes Investments Partners & Co., CI Investments Inc., Fidelity Investments, Franklin Templeton Investments Corp., TD Asset Management Inc. and Mackenzie Financial Corporation. None of such entities or their affiliates makes any representation or warranty, express or implied, whatsoever regarding the advisability of selecting any Interest Option, making any investment or acquiring the policy contract, and none of such entities bears any liability with respect to the policy or contract. [ 29 ]

36 Individual managed Index Interest Options Managed Index Interest Options link returns to the performance of AEGON Fund Management s imaxxfunds, imaxxtop Portfolios and sixteen third-party mutual funds, including funds from AGF Funds, Invesco Trimark, CI Investments, Dynamic Funds, Franklin Templeton Investments, Fidelity, Mackenzie Investments and TD Asset Management Inc. These Interest Options are not mutual funds; they simply index the performance of certain mutual funds. Clients are not purchasing units in the mutual funds, but are receiving an interest rate that is credited each business day and is guaranteed to be 100% of the funds retail class return, net of the retail class mutual fund management fee, less an Interest Option fee (if applicable). imaxxfunds imaxx mutual funds feature outstanding Canadian and international investment managers with proven performance track records. Interest Options based on imaxxfunds are a popular choice and provide a strong platform for meeting your clients investment objectives. imaxx Index Interest Options are held within the tax-exempt universal life plan and should not be confused with imaxxfunds themselves, which are purchased separately through AEGON Fund Management. imaxx Funds Managed Index Interest Options Index Interest Option Designated index Guaranteed Interest Option fee (annual equivalent) WAV 7 and EAV 7 EAN 7 imaxx Canadian Bond imaxx Canadian Bond Fund imaxx Canadian Fixed Pay imaxx Canadian Equity Growth imaxx Canadian Fixed Pay Fund imaxx Canadian Equity Growth Fund % (1.25%) 0% imaxx Global Equity Growth imaxx Global Equity Growth Fund Dynamic Funds is a registered trademark of its owner, used under license, and a division of GCIC Ltd. [ 30 ]

37 Third-party managed Index Interest Options The addition of twelve managed Index Interest Options rounds out the investment lineup for Transamerica s universal life plans. These options were selected for their historically consistent, above-average performance and proven money managers. They were chosen using a process that is similar to the one used for selecting the underlying funds for TOPs. These third-party managed Index Interest Options are a great complement to the management styles and asset classes offered through imaxxfunds. Third-party managed Index Interest Options Index Interest Option Mackenzie Cundill Canadian Balanced Fidelity Canadian Balanced Designated index Mackenzie Cundill Canadian Balanced Fund Fidelity Canadian Balanced Fund Guaranteed Interest Option fee (annual equivalent) WAV 7 and EAV 7 EAN 7 TD Dividend Growth TD Dividend Growth Fund CI Signature Select Canadian CI Signature Select Canadian Fund Fidelity Canadian Disciplined Equity Fidelity Canadian Disciplined Equity Fund CI Canadian Small/Mid Cap Mutual Beacon CI Canadian Small/Mid Cap Fund Mutual Beacon Fund % (1.50%) 0% CI Value Trust Corporate Class CI Value Trust Corporate Class Fund AGF International Stock Class AGF International Stock Class Fund Invesco International Growth Class Invesco International Growth Class Fund Mackenzie Cundill Value Mackenzie Cundill Value Fund Fidelity NorthStar Fidelity NorthStar Fund Dynamic Value Fund of Canada Dynamic Value Fund of Canada AGF American Growth Class CI American Value AGF American Growth Class CI American Value Fund % (1.25%) 0% Dynamic Global Discovery Dynamic Global Discovery Fund Disciplined Equity and NorthStar are registered trademarks of FMR Corp. [ 31 ]

38 Avoiding pitfalls Index Interest Options are not advisable if your client is making only minimum or near-minimum deposits. It is a good planning technique to test projections made using LifeView illustration software under various interest scenarios to understand the potential for variability. CLHIA guidelines require that an alternate rate of return also be illustrated to demonstrate interest sensitivity; LifeView illustration software provides this, for your convenience. While the potential long-term rewards of our Index Interest Options may be greater than for our Fixed- Rate Interest Options, the risk associated with the Index Interest Options is also higher. A negative interest rate will reduce the benefits and values under this policy, including, but not limited to, the total fund value, the net cash surrender value and the death benefit. Key benefits The Interest Option fee is guaranteed not to change for each managed Index Interest Option and passive Index Interest Option. Note that other competitors may not guarantee the daily fee and may only state an approximate annual fee. All Interest Options offer competitive Interest Option fees. No minimum investment in any Index Interest Option is required to gain access to the expertise of imaxxfunds managers. The Investment Income Tax (IIT) is built in to our fees, and we will not deduct any amount above the guaranteed total fee or the Interest Option fee. Asset allocation solutions Transamerica offers two powerful ways to offer an asset allocation strategy based on your clients risk tolerance and investment goals: Index Allocation Interest Options combine major stock and bond market indexes to capture investment returns passively. imaxx TOP Portfolio Index Interest Options combine the skills of a variety of leading mutual fund managers to produce superior managed investment returns. The two programs feature options with specific risk/return profiles that make it easy to strike the right balance. Investor Profile Questionnaire The Investor Profile Questionnaire (built into LifeView or available for ordering through informco, our distribution warehouse, Form LP1402) helps you identify your clients investment risk tolerance so that you can advise them of the appropriate investment mix. We encourage you to use this questionnaire to structure a dialogue about investment strategies with your clients, even if your client chooses his or her own investment mix. For a comprehensive investment solution, you can recommend one or more asset allocation portfolios based on the IAP and imaxx TOP Portfolio Index Interest Options. Investor profile Passive option Managed option Very conservative Conservative Moderate Aggressive Very Aggressive Index Allocation T-Bill Interest Option or Fixed- Rate Options Conservative Balanced Growth Aggressive Growth TOP Portfolio Not applicable imaxx TOP Conservative Portfolio imaxx TOP Balanced Portfolio imaxx TOP Growth Portfolio imaxx TOP Aggressive Growth Portfolio The Investor Profile Questionnaire may suggest that your client invest in the T-Bill Interest Option or Fixed-Rate Interest Options, where there is no risk of negative returns. [ 32 ]

39 Index Allocation Interest Options (passive) The mixes within each Index Allocation Interest Option cover a broad range of world indexes, and the daily return of each Interest Option is the daily weighted return of the specified mix of underlying passive Index Interest Options. This method of calculating the interest rate ensures that your clients investment mix is rebalanced daily. The Interest Option fee is a weighted average of the Interest Option fees of the underlying Index Interest Options. AEGON Capital Management s experienced team of investment management professionals will be monitoring the Index Allocation Interest Option mixes regularly to ensure that market conditions are reflected. As part of this service, we reserve the right to substitute, add or delete any underlying Interest Option. This service is available at no additional fee, and there is no minimum balance required. If your clients financial goals or risk tolerance levels change, they may switch to another Index Allocation Interest Option at any time. The following table provides the current weightings for each Index Allocation Interest Option. Index Interest Option Conservative Balanced Growth Aggressive Growth T-Bill Interest Option 10% 5% 0% 0% Canadian Bond Index Interest Option II 50% 35% 20% 0% Canadian Equity Total Return 20% 25% 30% 35% U.S. Large Capitalization Total Return 15% 25% 30% 35% U.S. New Technologies Total Return 0% 0% 0% 5% European Equity Total Return 5% 10% 15% 20% Japanese Equity Total Return 0% 0% 5% 5% Total 100% 100% 100% 100% Index Interest Option Designated index Indexed dividend 1 exchange 2 Foreign currency Guaranteed Interest Option fee (annual equivalent) WAV 7 and EAV 7 EAN 7 Conservative Balanced Growth Aggressive growth See above chart for the index weightings. Refer to applicable underlying index (noted on page 28 under passive Index Interest Options.) Refer to applicable underlying index (noted on page 28 under passive Index Interest Options.) % (2.90%) % (2.95%) % (3.00%) % (3.00%) % (1.73%) % (1.74%) % (1.75%) % (1.75%) [ 33 ]

40 Key benefits Encourages the diversification of investments to help minimize volatility. Automatic daily rebalancing of investment mix. Guaranteed Interest Option fees. The flexibility to choose passive and/or professionally managed Interest Options. Managed Portfolio Options imaxx TOP Portfolio Index Interest Options Ranging from conservative to aggressive growth, imaxx TOP Portfolios are ideal for investors seeking a comprehensive investment solution. imaxx TOP Portfolio Index Interest Options are held within the tax-exempt universal life plan, and should not be confused with the imaxx TOP Portfolios offered through AEGON Fund Management. These Interest Options are not mutual funds; they simply index the performance of certain imaxx TOP Portfolios. Index Interest Option Designated index WAV and EAV EAN imaxx TOP Conservative Portfolio imaxx TOP Conservative Portfolio* imaxx TOP Balanced Portfolio imaxx TOP Growth Portfolio imaxx TOP Balanced Portfolio* imaxx TOP Growth Portfolio* % (1.25%) 0% imaxx TOP Aggressive Growth Portfolio imaxx TOP Aggressive Growth Portfolio* AEGON Fund Management Inc. was quantitatively assisted in the process of designing the asset mix and selecting the underlying mutual funds for imaxx TOP Portfolios by Mercer Investment Consulting. All final investment decisions were made by AEGON Fund Management Inc. imaxx TOP portfolios comprise mutual funds from leading mutual fund companies such as AGF, Invesco Trimark, Brandes Investments Partners, CI Investments, Fidelity Investments, Franklin Templeton Investments, Mackenzie Investments and TD Asset Management Inc. allocates assets among equity and/or fixed-income mutual funds managed by some of Canada s most proven money managers is continuously monitored and rebalanced to ensure that it stays within its target fund mix Remember, any portion of the fund value held in the index allocation or imaxx TOP Portfolio Interest Options is not guaranteed and fluctuates with the performance of the underlying options. Each imaxx TOP Portfolio: employs a fund of funds approach and is optimized for a specific risk profile * The asset allocations and/or sector weightings set out herein are target estimates only, provided for general information and illustrative purposes only. The underlying mutual fund used for the Index Interest Option is not necessarily required to have identical allocations. [ 34 ]

41 Transamerica Interest Option fact sheets We are committed to keeping you up to date on the performance of our Interest Options. Our Interest Option fact sheets contain information that will assist you in selecting and monitoring Interest Options that are consistent with your clients evolving financial goals. The fact pages include historical rates of return, top 10 holdings, sector weightings, fees and relative risk rankings. The Interest Option fact sheets are available on our website. Rates of return Rates of return for our universal life Interest Options are displayed on the Transamerica website ( Rates of return are measures of historical performance at a specific point in time. They are not indicative of future interest returns. Interest Option transactions Allocation instructions Interest Option allocation instructions can be modified at any time to take full advantage of market conditions and to meet your clients financial objectives. Interest Option transfers Your clients can request fund transfers between Interest Options at any time. Transfers can also be made to and from the Fixed-Rate Interest Options (although an MVA will apply if the transfer is made before the applicable terms mature). Contractually, your clients may make four transfers per policy year within their universal life policies without incurring transfer fees. We reserve the right to charge a fee if more than four transfers are made per policy year. For your convenience, we ve separated the allocation form from our Fund Code Chart (LP946), resulting in two cleaner, simpler forms. Please refer to the Allocation Form (PS425) for Interest Option transfers. [ 35 ]

42 4. Client bonuses WealthAdvantage and EstateAdvantage offer client bonuses designed to enhance their effectiveness in meeting the needs of their target markets. WealthAdvantage has a Performance Bonus, while EstateAdvantage includes an Accumulation Bonus and, for cost-sensitive clients, offers a low-fee option without a bonus. Transamerica offers guaranteed, unconditional bonuses that do not vary with the type of investment option selected. This means that every single client receives a bonus (if the bonus option is chosen). Meeting market needs with client bonuses WealthAdvantage EstateAdvantage Performance Bonus Accumulation Bonus option Low-fee option Market and policyowner behaviour Bonus design Focus on growth and taxdeferred accumulation of funds. Higher investment risk tolerance; more likely to invest in a diversified portfolio more heavily weighted in equities. Fund-based bonus linked to policy rate of return with higher accumulation potential. Performance Bonus most beneficial when funds perform well. Guaranteed minimums ensure a competitive bonus is always credited. Focus on insurance protection and guarantees. More conservative; likely to invest in portfolios more heavily weighted in lower-returning fixed-income investments. Note: A choice between the Accumulation Bonus and the low-fee option must be made at issue. Fixed percentages that do not vary based on fund performance. No bonus. Different bonuses for different needs WealthAdvantage Performance Bonus Higher potential, with guarantees Many products available in the market today base their bonuses on interest earned, without a minimum guarantee. This means your clients may not get a bonus in the years they need it most when rates of return are low. The variable WealthAdvantage Performance Bonus offers the higher accumulation potential of a variable bonus, but with a strong guaranteed minimum. EstateAdvantage Accumulation Bonus option Predictable, fixed-rate bonus payments Predictable, stable, easy-to-understand bonuses can be important to the income replacement and estate preservation markets. The EstateAdvantage Accumulation Bonus rate is level and fixed for the life of the policy; accordingly, this bonus does not have the same upside (or downside) potential as the WealthAdvantage Performance Bonus. [ 36 ]

43 EstateAdvantage low-fee option Clients at the estate-planning stage of life may not have enough time to benefit from long-term UL bonuses. Other clients may want higher cash values in the earlier years of the policy and more liquidity. Still others may want to take advantage of managed Interest Options and minimize the cost of active money management. We created a low-fee EstateAdvantage plan to meet these needs and more. Compared with the WealthAdvantage Accumulation Bonus, clients receive more value immediately, such as lower guaranteed Interest Option fees (at least 1.25% lower) and higher interest rates (at least 0.50%) for the Fixed-Rate Interest Options. Comparing the bonus rates for all three bonuses The chart below compares the WealthAdvantage Performance Bonus to the EstateAdvantage Accumulation Bonus. 3.00% 2.50% 2.00% Bonus % 1.50% 1.00% 0.50% 0.00% Policy Years WealthAdvantage Minimum WealthAdvantage Maximum EstateAdvantage Accumulation Bonus [ 37 ]

44 A closer look at the universal life client bonuses Common features of all bonuses Guaranteed. Unconditional. Do not vary based on investment option selected. Bonus percentages are applied to the previous year s average monthly fund value (excluding policy loans i.e., the Security Account and the Side Account). Payable at the beginning of the policy year. Credited proportionately to each Interest Option in accordance with most recent allocation instructions (an advantage in contrast to some competitors who credit to a specified account). WealthAdvantage Performance Bonus EstateAdvantage Accumulation Bonus Years credited Features Calculation Payable at the beginning of each policy year commencing year two. Bonus percentage is based on policy s rate of return. Guaranteed maximum and minimum bonus interest percentages increase over time and can substantially improve long-term policy performance. A = B x C Where: A is the bonus amount in respect of a policy year. B is the sum of the fund value (net of policy loans and Side Account) on each monthly date in the previous policy year, divided by 12. C is a percentage determined according to the second column of the following table, but in no event will the percentage be greater than the maximum specified or less than the guaranteed minimum as follows: Guaranteed Policy years Percentage minimum Maximum % x D 0.75% 1.50% % x D 1.00% 1.85% 27 and 30.00% x D 1.00% 2.60% thereafter D is the policy rate of return for the previous policy year, calculated using the Modified Dietz Method Payable at the beginning of each policy year commencing year two. Bonus percentage is fixed for life of policy. A = B x C Where: A is the bonus amount in respect of a policy year. B is the sum of the fund value (net of policy loans and Side Account) on each monthly date in the previous policy year, divided by 12. C = 1.25%. [ 38 ]

45 WealthAdvantage Performance Bonus example Average fund value during year 16 Policy rate of return 0% 6% 12% $30,000 $30,000 $30,000 EstateAdvantage Accumulation Bonus example Average fund value during year 16: $30,000 Bonus %: 1.25% Bonus (A) = Average fund value (D) x Bonus % (E) = $30,000 * 1.25% = $375 Year 17 bonus % 23.25% 23.25% 23.25% Multiplied by the factor 0.000% 1.395% 2.790% Actual bonus % applied 1.00% (minimum) 1.395% 1.85% maximum) Let s look further at the example using a 0% policy return: WealthAdvantage Performance Bonus example Average fund value during year 16: $30,000 Policy rate of return: 0% Year 17 bonus %: 23.25% Bonus (A): Average fund value (B) x [year 17 factor x policy rate of return (D)] = Factor x policy rate of return (D) = $30,000 (B) x factor x policy rate of return (D) = $30,000 x [23.25% x 0%] = $30,000 x 1.000% (C) = $ Note: Year 17 factor x policy rate of return (C) = 0.000%, lower than the minimum 1.0%; therefore, the guaranteed minimum of 1.0% was used for (C) in the calculation. Key benefits Transamerica deposits the bonuses deposited based on the client s investment allocation, unlike some competitors, who deposit the bonus to their equivalent of the T-Bill Interest Option on each bonus anniversary. Some competitors UL bonuses are conditional on a minimum fund value, and/or vary depending on the choice of Interest Option. Further, some illustrations compound the bonus at the illustration interest rate, even though the bonus is automatically invested in a Treasury Bill Interest Option with a lower rate of return. These variables can seriously compromise your illustrations. You can count on Transamerica s illustrations, because our bonuses are guaranteed, not conditional on investment choice, not conditional on policyholder activity and are automatically credited to the client s existing investment options. [ 39 ]

46 5. Optimizing investments while maintaining tax-exempt status We test each policy on its annual policy anniversary date and, if necessary, make the adjustments required to ensure that it retains its tax-exempt status under the current legislation. We offer features, such as the Optimizer Option and the Side Account, that work in conjunction with this process to provide your client with optimal tax deferral. Tax-exempt testing and policy anniversary processing Tax-exempt testing It is the intention of Transamerica that each policy will maintain its tax-exempt status as defined in Section 148 of the Income Tax Act (Canada). This section defines a notional exempt-test policy and an associated accumulating fund that sets the benchmark for maximum tax-exempt cash surrender value accumulation in any given policy year. The following graph illustrates how the accumulating fund for a $1,000,000, ART to 85/20 years COI exempt-test policy grows over time for a male non-smoker, starting at age 45. ART exempt-test policy (ETP) line 1,200 1,000 MTAR Amount ($,000) x Policy Year [ 40 ]

47 Policy year In order to maintain tax-exempt status, policies must pass an exempt test. We will test each policy at the policy anniversary to ensure that the total cash surrender value, including outstanding policy loans, is less than the accumulating fund of the applicable exemption test policy, as defined within the Income Tax Act (Canada) and its regulations. If a policy fails a tax-exempt test One or both of the following actions will occur to maintain the tax-exempt status of the policy. 1. Process exempt-test face increases Subject to legislative maximums and other conditions, we will increase the sum insured (face amounts plus any previous exempt-test face adjustments, for all coverages, including additional coverage and term riders) without evidence of insurability. In general, the death benefit (including the fund value) can increase a maximum 8% per policy year. 2. Process a withdrawal of excess funds and deposit it in the Side Account This withdrawal does not incur surrender charges, but may incur a MVA (if applicable). The withdrawal would only occur if the policy does not pass the tax-exempt test even after an exempt test face increase has been administered. If a policy passes a tax-exempt test Transamerica will reduce exempt-test face increases that were previously made to the face amount by an amount that maintains the tax-exempt status of the policy, up to the total amount of exempt-test face increases. If the Optimizer Option has been elected, all exempt-test face increases must be reduced to nil before the Optimizer can be applied. The 250% rule (or anti-dump-in rule) Starting at the 10th policy anniversary, Transamerica will ensure that each policy passes the test for the 250% (antidump-in) rule at each policy anniversary. In general terms, starting at the end of the 10th policy year and every year thereafter, we must ensure that the cash surrender value of the universal life policy is not greater than 250% of the cash surrender value three years earlier. In the worst-case scenario, in which the cash surrender value is equal to zero at the end of the seventh year, the policy in the 10th year will have close to the same exempt room as a policy in its third year (in other words, the duration of the policy will be reset for exempt-test purposes). Please note, however, that if your clients do not make any excess deposits until after the seventh year, then it does not mean they will not be able to invest any excess funds after that point. In fact, our Maximum Taxable Actuarial Reserve (MTAR) process will effectively reset the policy s MTAR duration such that the policy will start an exempt line. However, your clients will have more room to shelter funds if they actually invest prior to the end of year seven. Maximum premium estimate Upon settling a policy, and at the beginning of each subsequent policy year, a maximum premium estimate is calculated for the policy year, based on the current taxexempt testing requirements, the policy status and an assumed accumulation rate used to project the total fund value. This estimate is illustrated on LifeView and is shown on the policy statements. It is used as follows: Throughout the year, when premiums are being paid, Transamerica will accept premiums up to the maximum premium estimate, and the balance of excess funds will be deposited in the Side Account on behalf of the owner and not deposited within the tax-exempt Interest Options as a UL premium. At the beginning of any policy year, if there are funds in the Side Account, we will automatically transfer funds from the Side Account back into the universal life policy s tax-exempt Interest Options, subject to the maximum premium estimate for that policy year, without subjecting them to premium tax. [ 41 ]

48 Recalculating maximum premium estimates The maximum premium estimate is recalculated if a coverage face amount increases or decreases, or if there are material non-financial changes, such as a change in smoker status, lives insured, etc. Avoiding pitfalls A policy may still fail a tax-exempt test even though premiums have been accepted into the policy and are less than the maximum premium estimate. This can occur if the investment performance of the policy exceeds the return projected in calculating the maximum premium estimate. Please caution your clients that the Income Tax Act (Canada) may change at any time, and this may affect the tax status of their policy. Transamerica reserves the right to refund premiums paid and to modify policies in order to reflect changes in applicable income tax laws or Canada Revenue Agency requirements, including the requirements for tax-exempt status. Optimizer Option This option is suitable for clients who use their universal life plan to maximize tax-deferred investment growth and, over time, to minimize insurance charges. The Optimizer works in conjunction with the tax-exempt processing by automatically monitoring and reducing the face amount, where possible, to the Optimizer minimum face amount that has been specified by the owner. (This minimum may be no lower than the plan minimum $100,000 for WealthAdvantage and $25,000 for EstateAdvantage.) The owner also selects the starting year (which may be no earlier than the end of the sixth policy year) and the capped face amount (below which the face amount will not drop). Eligibility Although this feature is available on both universal life plans, it will have greater appeal to WealthAdvantage policyholders and to the accumulation market, especially in conjunction with ART to 100 COI rates. This option may be elected at the time of issue or after the policy is issued, providing the applicable starting face amount is at least $250,000 and the COI type is ART. How Optimizer works We will notify your client 60 days in advance of the Optimizer start date. Then we will automatically reduce the face amount on each policy anniversary following the Optimizer start date, providing the policy has passed the tax-exempt test and all applicable exempt test face increases have been removed. The annual amount of optimization will be equal to the maximum decrease that can be made while maintaining the tax-exempt status of the policy and while respecting the Optimizer minimum face amount. However, in the following circumstances, optimization will not occur, or the rate of optimization will be limited: Optimization will not occur if there is more than $100 in the Side Account. We reserve the right to change this minimum amount. Optimization will not reduce the face amount below the client-specified Optimizer minimum face amount. Optimization will not reduce the face amount below the plan minimum: $100,000 for WealthAdvantage and $25,000 for EstateAdvantage. The annual rate of optimization for policy years 6 through 10 is limited to 15%. This safeguard helps protect your clients against market fluctuations in the early years of the policy. Any reductions in face amount will occur in decrements of $1,000, rounding down to the nearest $1,000. Optimizing policies with multiple universal life coverages With multiple universal life coverages, only the face amount for the base (first) universal life coverage will be optimized. This coverage is identified on the contract data page. [ 42 ]

49 Changing the Optimizer option The Optimizer start year may be changed, provided that we receive a written request to do so at our Head Office at least 30 days prior to the date optimization is scheduled to begin. The Optimizer minimum face amount may be changed, provided that we receive a written request to do so at least 30 days prior to the next scheduled optimization date. This amount may not be lower than the minimum face amount for the plan ($100,000 for WealthAdvantage and $25,000 for EstateAdvantage) or higher than the applicable face amount immediately prior to the effective date of the change. Client-requested termination: Clients may choose to terminate the Optimizer Option. Notice must be received at our Head Office at least 30 days prior to the next optimization date. Termination The Optimizer Option will terminate when one of the following occurs: The COI period has ended for the coverage being optimized. The COI is changed from ART to level. The policy lapses. We receive a written request for termination from the owner. If optimization has been terminated, it can be reactivated at any time. Illustrating Optimizer on LifeView In order to limit the potential for unjustifiable face amounts from an underwriting perspective, we require that premiums be spread over a few years. The specific rule we will enforce is that the first-year premium cannot exceed 40% of the total premiums for all years up to and including the Optimizer start date. The excess funds will be deposited into the Side Account and will come back into the policy when this is allowable in conjunction with tax-exempt rules. For example If your client wants to deposit a total of $100,000 into the tax-exempt policy, we will allocate $40,000 to year one and calculate the face amount needed to deposit that amount. The excess $60,000 will be deposited into the Side Account. Key benefits The Optimizer performs best when premium streams have stopped or are reduced to minimal amounts. You don t have to start optimization at the end of the sixth policy year, but that is the earliest start date allowed. The rate limit of 15% that is in place until the end of the 10th policy year protects the performance of the policy in its early years from an accelerated decrease that might result from market declines, leaving little room for future increases in value. Potential market Attractive in situations where a universal life policy is purchased for accumulation purposes, and where there will be a decreasing need for life insurance protection over time. The Optimizer is available for single life, joint life and multiple life coverages. However, on multiple life policies, the Optimizer can only be applied to the first coverage. The Optimizer usually works best with a level death benefit. However, some clients understand face plus fund, or increasing death benefit, better than a level death benefit; in these cases, the Optimizer may be appropriately added to an increasing death benefit. [ 43 ]

50 Avoiding pitfalls In some cases, it may be more efficient to select a lower starting face amount and deposit the excess funds in the Side Account. Taxes for these excess funds may be less than the COI of the higher initial face amount. Large withdrawals, fund value payouts, Living Benefits, policy splits or severances, and large market fluctuations may affect the rate of optimization. When a significant amount of the fund value is withdrawn from a policy with the Optimizer Option, you should explain the potential impact to your clients, i.e., a potentially large decrease in the face amount. If optimization results in the adjusted face amount falling into a lower rate band, higher COI rates may apply. You might want to consider keeping the Optimizer minimum face amount within the same rate band as the starting face amount to prevent this from happening. Side Account The Side Account is a deferred annuity contract established between the owner and Transamerica in conjunction with each UL policy. Side Account as a safety net The main function of the Side Account is to act as a processing account or safety net in conjunction with taxexempt processing. Throughout the year, when premiums are processed, any premiums in excess of the maximum premium estimate will be transferred to the Side Account. At the policy anniversary, if a policy fails the tax-exempt test, funds may have to be transferred to the Side Account. In the new policy year, funds are transferred from the Side Account back into the policy, up to the maximum premium estimate for the new policy year. How the Side Account works Application and ownership the Supplement to the Life Insurance Application also includes a request for the Side Account deferred annuity contract, and this contract is automatically issued with every WealthAdvantage and EstateAdvantage policy. In this way, the owner of the universal life policy will also be the owner of the Side Account, and will retain control of his or her funds regardless of where the funds reside. Of course, the owner may remove funds from the Side Account at any time, at no additional cost, and without any surrender charges. Side Account interest rates The Side Account matches the return of the T-Bill Interest Option; however, the interest is not tax-deferred. Interest is taxed, and a T-5 slip (Relève 3 for Quebec) is issued each year. Deferred annuity contract As a deferred annuity contract, the funds are paid out at the death of the annuitant as a tax-free benefit to the beneficiary. However, the owner must pay taxes annually on the accrued interest. The annuitant is defined as the last surviving life insured from the linked universal life policy, and the beneficiary for the Side Account is the beneficiary designated for that life insured. The maturity date is equal to the 100th birthday of the last surviving life insured under the applicable universal life policy. In most cases there will be no funds remaining in the Side Account at maturity. However, if there are funds remaining in the Side Account, they are paid as an annuity when the contract matures. Key benefits The Side Account benefits generally from the same creditor protection rules that apply to an annuity contract issued by a life insurance company. The Side Account is automatically issued with every universal life policy; you don t have to request it. We don t require a separate application for the Side Account. When your client applies for a universal life policy, [ 44 ]

51 6. Plan flexibility In addition to the other benefits of WealthAdvantage and EstateAdvantage, there is a substantial amount of flexibility to accommodate future changes. Easy access to funds when needed Funds accumulate within Transamerica s universal life plans on a tax-deferred basis. The policy fund value is accessible to your client, subject to surrender charges, and can be used for a variety of purposes, or the funds can remain within the policy and become payable as a taxfree death benefit. Your clients may access their net cash surrender value by making partial withdrawals or by fully surrendering their policies. The net cash surrender value equals the total fund value minus any applicable surrender charges, MVAs and any outstanding policy loans and accrued interest. Clients may also access funds through policy loans. Accessing cash from a policy may result in tax consequences (refer to Taxation of loans, withdrawals and surrenders ). Let s look at an example in policy year four (male nonsmoker, age 40, $250,000 WealthAdvantage face amount, level death benefit, ART 100 COI, illustrated at 4% with a $5,000 premium) that shows the maximum amount based on different withdrawal options. Example Policy year four Fund value $19,864 Cash surrender value $6,614 Maximum loan amount $13,055 Policy loans The fund value of the policy can be used as collateral for a loan from Transamerica. The mechanics of a policy loan A policy loan can be requested by completing the applicable section of the Policy Service Application (PS 339) or through a letter from the policyowner. The policyowner must provide the policy number, and can either request a specific amount or request the maximum policy loan available. When requesting the maximum policy loan, there are two different calculations available: The maximum policy loan is the contractual maximum amount available to the policyowner. This amount is the total fund value less any outstanding loans and accrued interest, less half the applicable surrender charges, any applicable MVAs (for Fixed-Rate Interest Options) and the sum of three monthly deductions. This calculation also reserves an additional 0.5% to allow for approximately three months of loan interest. For Investment Loan Strategy (ILS) marketing concepts, or if the client is taking out the policy loan at the beginning of the policy year and wants to protect the policy from lapsing, the maximum investment policy loan is recommended. The maximum investment policy loan calculation is similar to that for maximum policy loan, but it reserves sufficient funds to cover at least three monthly deductions and loan interest for the remainder of the policy year. [ 45 ]

52 Both the maximum policy loan and the maximum investment policy loan can be illustrated using the LifeView software. The maximum loan amount is also displayed on policy statements and on webcappow. The maximum investment policy loan is displayed on webcappow if the policy has been identified as ILS and the INVL marketing concept code is displayed. The minimum loan amount a policyowner may choose is $500 (after any applicable MVAs). Unlike a cash withdrawal, the total fund value of the policy is not reduced by the amount of the loan. In fact, the funds backing the loan do not leave the policy: the loan amount is transferred to the Security Account Interest Option, following any applicable MVA (for Fixed- Rate Interest Options). The loan amount is moved to the Security Account Interest Option according to the default withdrawal order or according to the policyowner s instructions (see Withdrawal order ). Note that if the money is in the managed Index Interest Options, taking a policy loan may be a two-day process. The funds held in the Security Account Interest Option may not be withdrawn or transferred to another Interest Option until the loan or a portion of the loan is repaid. The cash surrender value of the policy, as well as the death benefit, is reduced by the amount of the outstanding policy loan and accrued interest. These funds are also excluded from the bonus calculation. Loan interest rates The policyowner is charged 10% annual interest on the loan, calculated daily. While the funds backing the loan reside in the Security Account Interest Option, loan interest at the guaranteed annual rate of 8% is applied, and the resulting interest is credited to the Treasury Bill Interest Option on a daily basis. Funds in the Treasury Bill Interest Option can be transferred to other Interest Options or used to pay monthly deductions. All interest rates are fully guaranteed within our contract. Loan repayment Transamerica offers owners several options for loan repayment. No loan repayment If a loan repayment is not received before the policy anniversary, Transamerica will replace the existing policy loan with a loan that will comprise the original loan amount, plus any interest accrued since the previous policy anniversary. When this occurs, funds are transferred from other Interest Options to the Security Account Interest Option, using the default withdrawal order, such that there are sufficient funds backing the loan amount. In the policy year, interest will accrue on the loan amount. Loan repayment An owner may decide to pay any amount towards the loan. Any loan repayment must be clearly marked as such; otherwise, it will be considered a premium payment and will be allocated to the fund value in accordance with the owner s premium allocation instructions. When all or a portion of the loan amount has been paid, the equivalent amount will be released from the Security Account Interest Option to the Treasury Bill Interest Option or in accordance with the owner s specific instructions. Loan repayments pay down outstanding loan balances first, and then accrued interest. Internal loan repayment At anytime after the 15th policy anniversary, the owner may request the repayment of all or part of any outstanding loan and/or accrued interest by internal loan repayment, meaning first, from the portion of the total fund value then allocated to the Security Account Interest Option, and then from any another Interest Option, in accordance with the owner s instructions. [ 46 ]

53 Key benefits Policy loans provide owners with greater access to the equity of their universal life policy in the early contract years than cash withdrawals. Loan interest rates are fully guaranteed for life within the policy contracts. The LifeView illustration system is equipped to illustrate policy loans and the repayment of loans, including the impact of a particular loan on a policy and internal policy repayments. If the policy loan has been made for qualified investment purposes, the interest may be a taxdeductible investment expense. The owner is responsible for submitting a T2210 tax form to Transamerica for verification. Transamerica will verify an amount up to the amount of interest accrued since the last policy anniversary, and within certain limitations. If you are interested in learning more about this strategy, refer to Transamerica s Investment Loan Strategy. Avoiding pitfalls If loan interest is not paid out of pocket (from outside the policy), the owner increases the risk that the policy will lapse. Owners should be made aware of the possible tax consequences of taking out a policy loan (see Taxation of loans, withdrawals and surrenders ). Owners are advised to consult with a tax professional to discuss questions about whether the interest can be tax-deducted, and to discuss the amount of the deduction for the specific circumstances. For further information on the taxation of loans, see Taxation of loans, withdrawals and surrenders. Policy and coverage surrenders Monthly deductions are structured to spread the cost of compensation, underwriting, administration and set-up of the universal life policies over a number of years. However, when policyowners cancel their plans or coverages, or reduce the face amount early, Transamerica collects a surrender charge in order to recover some of the up-front costs, so those who continue their insurance policies aren t penalized. Both WealthAdvantage and EstateAdvantage may be fully surrendered (full surrender of all coverages) at any time for their net cash surrender value. Net cash surrender value refers to the total fund value of the policy, less any applicable policy loans (including principal and accrued interest), surrender charges and MVAs (if applicable). Types of surrenders The owner may request the following types of surrenders. Coverage surrenders Full: the full surrender of a coverage and the associated proportional fund value associated with the coverage. The surrender of all coverages in a policy constitutes a full surrender of the policy. Partial: a reduction of the face amount of a particular coverage. Partial surrender: a withdrawal from the fund value. The policy is fully surrendered when fewer than three months of deductions remain within the policy after a withdrawal. The total surrender charge on a policy is the sum of the surrender charges for all coverages under the policy. The surrender charge will be deducted from the fund value, based on the default withdrawal order (as defined in the policy and described on page 51). [ 47 ]

54 Coverage surrenders For coverage surrenders for ART and level COI coverages, surrender charges run for: ten years from the coverage effective date for WealthAdvantage seven years from the coverage effective date for EstateAdvantage The surrender charges are based on the age and sex of the life insured, the face amount and the length of time the coverage has been in force. Calculating coverage surrender charges Coverage surrender charge = x A x B Partial surrenders 10% free partial surrender amount once per year Your clients can make cash withdrawals from their WealthAdvantage and EstateAdvantage plans. In each policy year after the second policy anniversary, the owner may request one free partial surrender amount, to which surrender charges will not apply ( free partial surrender ). The maximum amount available for a free partial surrender is equal to the lesser of: 10% of the net fund value the net fund value, minus three monthly deductions, minus half the total policy coverage surrender charges A = a surrender factor specified in the contract; it varies by the age of the life insured on the coverage date B = the face amount being surrendered or the amount of a face amount reduction Let s look at an example using a coverage with a current face amount of $100,000: Surrender factor: $10 1. Full coverage surrender Surrender charge = x $10 x $100,000 = $1, Face reduction of $25,000 Surrender charge = x $10 x $25,000 = $250 The Optimizer Option provides automatic face amount reductions in conjunction with tax-exempt testing without incurring surrender charges. (For more information, please refer to Optimizer Option in this guide, below Optimizing investments while maintaining tax-exempt status. ) The written request, dated and signed, for a partial surrender must specifically indicate that the right of free partial surrender is being exercised; failure to do so will result in the forfeiture of that right for the applicable partial surrender request. The right may be used for a subsequent partial surrender request within that policy year. The right of free partial surrender may be used for any one partial surrender request in each policy year. WealthAdvantage free partial surrender example Net fund value = $10,000 Total policy coverage surrender charges = $3,000 Net cash surrender value = $7,000 Monthly deduction = $100 Maximum amount available for free partial surrender = lesser of [ 10% x $10,000; $10,000 - (3 x $100) - (1 2 x $3,000) ] = lesser of [ $1,000 ; $10,000 - $300 - $1,500 ] = lesser of [$1,000 ; $8,200 ] = $1,000 [ 48 ]

55 Partial surrender charges A fixed percentage surrender charge, specified in the contract, which varies by year, applies for all partial surrenders that do not qualify for the free partial surrender during: EstateAdvantage partial surrender charge example Fund value = $100,000 Net cash surrender value = $60,000 the first seven years of the policy for EstateAdvantage the first 10 years of the policy for WealthAdvantage Minimum withdrawal: $500 Maximum withdrawal: Net cash surrender value, minus three monthly deductions The minimum amount that may be surrendered from a policy is $500. The maximum that may be requested as a partial surrender is equal to the net cash surrender value, less three monthly deductions. Any request for surrender greater than the maximum would constitute a request for full surrender. The schedule of partial surrender charges is shown below. EstateAdvantage Monthly deduction = $400 Maximum withdrawal = $58,800 Partial surrender request = $45,000 Year two partial surrender charge % = 12% Partial surrender charge = $ 5,400 Net payment = $ 39,600 If a withdrawal of more than $58,800 is requested, the withdrawal would be considered a full surrender request. Year % WealthAdvantage Year % Avoiding pitfalls An MVA will apply to any withdrawals from Fixed- Rate Interest Options. The death benefit is always reduced by any partial surrenders. In addition, if the level death benefit option has been selected, a cash withdrawal will cause the face amount to be reduced by the amount of the funds withdrawn; for a multi-life policy, the reduction will be proportional across all UL coverages. Partial surrender charges are deducted from the surrender amount requested, and the net amount is paid to the client. The client may ask for a net surrender amount, and we will calculate what the gross amount needs to be. [ 49 ]

56 Withdrawal order Monthly Deduction Interest Option Clients can use the Supplement to the Life Insurance Application to specify one Interest Option from which their monthly deductions are to be withdrawn. Contractually, clients may change the Monthly Deduction Interest Option once a year at no charge; however, we reserve the right to charge a fee if this option is changed more frequently. Default withdrawal order If a Monthly Deduction Interest Option is not specified, the default withdrawal order applies for monthly deductions as follows: 1. T-Bill Interest Option. 2. Index Interest Options, in proportion to the value in each option, compared to the total value of all Index Interest Options. 3. Fixed-Rate Interest Options: funds are removed from Fixed-Rate Interest Options last, to minimize the number of MVAs required. Funds that are closest to maturity are selected first. Partial surrenders For withdrawals, funds will first be taken from the Side Account. When these funds are depleted, the default withdrawal order applies, or the order specified by the policyowner. Surrender charges deducted upon face amount reduction These are deducted using the default withdrawal order. Policy loans The default withdrawal order applies to funds (sufficient to back the loan) being transferred into the Security Account Interest Option for policy loan purposes. However, the client may request that funds be transferred from specific Interest Options. Taxation of loans, withdrawals and surrenders Clients should be made aware that any partial surrender or loan might be subject to taxation. Policy loan taxation differs from the taxation of partial surrenders. Policy loans reduce the Adjusted Cost Basis (ACB) on a dollar-for-dollar basis. On the other hand, withdrawals are taxed using a proportional ACB amount. Taxation of policy loans Any policy loan up to the policy s ACB is not taxable, but it reduces the ACB dollar-for-dollar. Once the ACB is reduced to zero, any additional loan is fully taxable. In general, the ACB is defined as the total amount of deposits received at a given point, less the cumulative net cost of pure insurance, as defined in the Income Tax Act, and less the taxable portion of previous loans and withdrawals. On client statements, the Maximum Amount Available for Loan on a Tax-Free Basis is displayed. However, for more up-to-date information, we recommend that you contact your distributor office just prior to a request for a loan and ask them for the maximum amount available for a loan on a tax-free basis. Your distributor office has access to our webcappow system, which will provide them with information based on the policy fund value on the previous business day. Note that the amount quoted is not guaranteed and is subject to change, due to fluctuations of the policy fund value and depending on the date we receive the signed request. [ 50 ]

57 Taxation of withdrawals and surrenders* If the cash surrender value is greater than the ACB, then a portion of the withdrawal will be taxable. If your clients choose to make a withdrawal from the contract s cash surrender value, or if the entire contract is surrendered, the tax liability will be based on the realized gain of the total cash surrender value. This realized gain is defined as follows: upon surrender: the excess of the total cash surrender value over the adjusted cost basis upon partial surrender: the excess of the withdrawal over the proportional amount of the contract s adjusted cost basis, where: proportional adjusted cost basis = adjusted cost basis of contract x partial withdrawal total cash surrender value ACB example The following assumes the partial surrender occurs after the surrender charge period. Cash surrender value = $60,000 Adjusted cost basis (ACB) = $30,000 Partial surrender request = $20,000 Easy Interest Option changes when needed Allocation instructions for premiums Interest Option allocation instructions can be modified at any time to take full advantage of market conditions and to meet your clients financial objectives. Interest Option transfers Your clients can request fund transfers between Interest Options to reflect their changing risk profile or financial objectives. Transfers can also be made to and from the Fixed-Rate Interest Options (although a MVA will apply if the transfer is made before the applicable terms mature). Contractually, your clients may make four transfers per policy year within their universal life policies without incurring transfer fees. We reserve the right to charge a fee if more than four transfers are made per policy year. The current fee is $25 per transfer. Key benefits You might want to consider using the four free Interest Option transfers per policy year as part of a quarterly review of your clients financial portfolio mix. With Transamerica, you have access to quarterly electronic UL statements. Fund transfers within a universal life policy are not subject to taxation. Proportional ACB 30,000 x 20,000 / 60,000 = $10,000 Taxable amount of partial surrender = $20,000 $10,000 = $10,000 * Based on current interpretation of the Income Tax Act Canada, its regulations and any other relevant legislation. [ 51 ]

58 Market Value Adjustments (MVAs) An MVA applies to funds that are withdrawn from the Fixed-Rate Interest Options, including transfers, Living Benefit payouts, partial surrenders and policy surrenders. MVAs do not apply for monthly deductions or the payment of a death benefit. The MVA is determined separately for each amount being withdrawn or transferred, and will start with the Fixed-Rate Interest Option closest to maturity. An MVA also applies to forced surrenders due to tax-exempt testing. In general, MVAs are fees that are charged for early withdrawal of funds from the Fixed-Rate Interest Options; they help recover the costs that Transamerica incurs for the early termination of the investment. MVA = current value of requested surrender amount discounted value of requested surrender amount The discounted value is the projected value at the guaranteed rate to the end of the term, discounted to the current date at the current interest rate + 1%. The MVA formula compares the actual credited interest rate for the account being redeemed against the current rate credited for a Fixed-Rate Interest Option with a term closest to the remaining term. It reflects this calculation against the number of days left to maturity divided by 365 days. The MVA formula can only result in a decrease in the value of the withdrawal (i.e., no credits will be given). MVA example A client puts $1,000 into a five-year-term Fixed-Rate Interest Option with a guaranteed interest rate of 5%. Two years later, the client wants to withdraw this money from the Fixed-Rate Interest Option. An MVA reduces the value of the surrender amount if interest rates for the remaining term are greater than the original interest rate, less 1%. For example, if the interest rate for an equivalent three-year term period at that time is 4% or less, an MVA would not apply. However, an MVA is applicable if the interest rate for an equivalent three-year term is greater than 4%. For example, if the interest rate at that time is 6%, the MVA is calculated as follows: A = the value of the original deposit at the end of two years = $1000 x (1 + 5%) ^ 2 = $1, B = MVA % = 1 - [(1 + C)/ (1+D) ] ^ (E / 365) = 1 - [ (1 + 5%) / (1+ (1% + 6%)) ] ^ ( 3 x 365 / 365) = 5.503% where C is the per annum interest rate for the applicable Fixed-Rate Interest Option term, the funds allocated to which are to be transferred, surrendered or withdrawn. D is 1% per annum plus Transamerica s then-current per annum interest rate applicable to the Fixed-Rate Interest Option on the effective date of the transfer, surrender or withdrawal for the closest term to E (below). E is the number of full days remaining to the maturity date of the applicable Fixed-Rate Interest Option term, the funds allocated to which are to be transferred, surrendered or withdrawn. The MVA charge is then 5.503% x $1, = $60.67 [ 52 ]

59 Premium flexibility Your clients will have the flexibility to increase or decrease premiums, pay at unscheduled dates or stop and restart payments, providing the policy does not go into shortage (for more details, refer to Section 9 of this guide). Planned periodic premiums When you illustrate your clients financial solution and apply for insurance coverage, you will be asked to specify the planned periodic premiums (also known as the sundry amount) and the mode of premium payment (monthly or quarterly PAD, or quarterly, semi-annual or annual direct payment). Unlike term insurance, the premium mode does not change the manner in which the COI is calculated: all costs, including the policy fee, are deducted monthly from the fund value. For universal life insurance, the equivalent of the monthly mode is always used for optional benefits and term riders in conjunction with the monthly deductions. The planned periodic premiums and the premium mode can be changed at your clients convenience. Minimum premiums Premiums are subject to minimum requirements to keep the coverage in force, as well as maximum limits, to keep the policy tax-exempt. The minimum premium for the first three years is stated on the contract data page; it is equal to: the policy fee ($120), plus (the total year one COI for all ART coverages x 150%), plus (the total year one COI for all ART coverages x 150%), multiplied by (Waiver of Monthly Deduction Rider % and/or Payor Waiver of Monthly Deduction Rider %, if applicable), plus the total COI for all level COI and riders (excluding the WMD and PWMD riders). In year four and onward, the minimum premium is equal to: the policy fee ($120), plus the total COI for all coverages and riders. Note: The minimum monthly premium for either of Transamerica s universal life plans is $ Avoiding pitfalls Please be sure to explain to your clients the risk of market fluctuations and that additional premiums may be required to keep the policy in force. If the policy is in danger of going into shortage within a 12-month period of the anniversary, then: If paying by PAD (PAD and paying minimum premium), Transamerica will automatically increase the PAD amount each year to reflect the increased COI rates for that policy year. This is done to reduce the risk of the policy lapsing. We plan to inform clients about the increased amounts approximately 30 days prior to their policy anniversary. If paying on a direct billing basis, Transamerica will automatically increase the amount displayed on the billing notice that is sent to clients approximately 20 days prior to their policy anniversary. This automatic increase is explained in the PAD agreement in the Application and our current PAD request form. Please ensure your client reviews this component of the Application and understands the implications. Maximum premiums Upon settling a policy, and at the beginning of each subsequent policy year, a maximum premium estimate is calculated for the policy year. Premium payments made throughout the year that exceed the maximum premium estimate will be credited to the Side Account. As well, each policy is tested at every policy anniversary, and Transamerica takes certain measures to retain the taxexempt status of a policy, including transferring excess funds to the Side Account. A maximum premium for the following year is calculated at every policy anniversary and [ 53 ]

60 shown on the policy statement. (For more information about the maximum premium estimate and tax-exempt testing, please refer to Tax-exempt testing and policy anniversary processing. ) Easy insurance coverage adjustments when needed Your clients universal life insurance coverages may be modified after the policy has been issued to reflect changing needs. Increasing the face amount The face amount for a coverage may be increased at any time, subject to evidence of insurability, underwriting and the plan face amount maximum. The minimum increase amount is $25,000. A new surrender charge schedule will apply to each increase in the face amount, and new suicide and incontestability periods are established for the increase. No administrative fee is currently charged for this service; however, we reserve the right to charge a fee in the future. Decreasing the face amount The face amount may be reduced at any time without any underwriting requirements. The minimum decrease amount is $25,000, and the face amount may not be reduced below the plan minimum. However, when a client requests a reduction in face amount within the surrender charge period (for ART and level COI only), a partial surrender charge will apply in proportion to the amount of the face amount being reduced. No administrative fee is charged for this service; however, we reserve the right to charge a fee in the future. (For more information about the surrender charges as the result of decreasing the face amount, please refer to Policy and coverage surrenders. ) The Optimizer Option provides automatic face amount reductions in conjunction with taxexempt testing without incurring surrender charges. (For more information, please refer to Optimizer Option in this guide, below Optimizing investments while maintaining tax-exempt status.) Death benefit option changes The client may change the death benefit option after the policy has been issued. If the NAAR increases as the result of the death benefit option change, underwriting will be required, and a policy change fee (the current fee is $150) will apply for this service. If the NAAR does not increase as the result of the death benefit option change, underwriting will not be required, and no fee is charged for this service. COI option changes The following coverage type options may be changed at any time, at current rates, on an attained age basis: From: Increasing death benefit with ART to 85/20 years Increasing death benefit with ART to 100 Level death benefit with ART to 85/20 years Level death benefit with ART to 100 To: Increasing with level cost Up to age 80 No further medical evidence of insurability is required. Other changes to coverage types may be allowed, subject to Transamerica s current business practices. If the NAAR is increased as the result of a COI change, two options are available: The face amount(s) may be adjusted to maintain the risk to Transamerica at the time of change, with no further evidence of insurability required. The client may choose to increase the NAAR. However, this change will be subject to underwriting, and a $150 policy change fee will be charged for this service. EstateAdvantage The total face amount for all level COI coverages and Level Cost Riders for a life insured may not exceed $500, for all EstateAdvantage policies. [ 54 ]

61 7. Living Benefits Living Benefits enable your clients to access their fund value by making a request for a lump sum benefit amount upon a disability. The policy definition of disability includes occupational disability and critical condition disability. Living Benefits are a powerful feature that can help your clients deal with the financial hardships caused by a disability. This benefit is included in the base contract. Eligibility is based on the following: issue ages: 0 80 for non-smokers and for smokers (same as base plan) available on policies with single life, multiple life and joint coverages available to coverages where none of the lives insured have a rating greater than 300% total mortality Qualification To qualify for the Living Benefit, the following conditions must be satisfied: The life insured is not excluded by amendment. The disability exists on the date the claim is made. One of the following occurs while the policy is in force: The life insured is diagnosed with an occupational disability and continues to be disabled without interruption until the waiting period has expired. The life insured is diagnosed with a critical condition disability and the survival period has expired. Types of disability A critical condition disability is a disability that results from either: a critical condition that occurs while the policy is in force, and prevents the life insured from performing the regular substantial activities the life insured was engaged in prior to the onset of the critical condition any condition that has been diagnosed as terminal and is expected to result in death within 24 months of diagnosis A critical condition disability excludes any disability resulting from a cause described under the Exclusions section of the policy. An occupational disability is a disability that: results from a disease that first appears or a bodily injury that first occurs after the effective date, while the policy is in force continues without interruption during the applicable waiting period prevents the life insured from either of the following: i. performing substantially all of the material duties of his or her occupation ii. if the life insured is not engaged in a gainful occupation, prevents the life insured from performing the regular substantial activities the life insured was engaged in prior to the onset of the Injury or sickness An occupational disability excludes any disability resulting from a cause described under the Exclusions section of the policy. [ 55 ]

62 Benefit amount The benefit amount is determined according to the following formula: BA = A (B + C + D) where: BA is the benefit amount. A is the total fund value. B is the sum of all principal, accrued interest and other amounts outstanding in respect of any loans under the policy. C is the sum of all monthly deductions due but not then paid. D is the sum of three monthly minimum premiums. Payment of benefit amount The benefit amount is payable as a lump sum. The benefit amount payable to the policyowner will be the benefit amount, less the MVA (if applicable). The benefit amount and MVA (if applicable) will be deducted from the total fund value, based on the policyowner s instructions. If the policyowner does not provide such instructions, then the benefit amount will be deducted in accordance with the default withdrawal order. Face amount adjustment If a Living Benefit has been paid, the face amount(s) for the policy will be adjusted to preserve the NAAR that is in effect on the date the benefit amount is paid. A payment of the Living Benefit will reduce the death benefit(s) and the total fund value of the policy by the benefit amount (and MVA, if applicable) paid. Claims for Living Benefits A claim for Living Benefits may be made by written request to the Head Office, and must include the evidence described below. Occupational disability claim A claim for a Living Benefit resulting from an occupational disability must be received within one year from the date the occupational disability occurred. Transamerica must receive, at the Head Office, evidence satisfactory to it of: the life insured being diagnosed with the occupational disability the date(s) on which the occupational disability began the life insured remaining under the normal and customary care of a doctor, such doctor being competent to provide appropriate care for the condition causing occupational disability such supplementary evidence as required by Transamerica, from time to time, including, without limitation, an examination of the life insured by a doctor or doctors designated by Transamerica Critical condition disability claim A claim for a Living Benefit resulting from a critical condition disability must be received within 90 days from the diagnosis of the critical condition disability. Transamerica must receive, at the Head Office, evidence satisfactory to it of: the life insured being diagnosed with the critical condition disability the date(s) on which the critical condition disability was diagnosed such supplementary evidence as required by Transamerica, from time to time, including, without limitation, an examination of the life insured by a doctor or doctors designated by Transamerica [ 56 ]

63 Continuous disability The waiting period or survival period for a Living Benefit claim is waived when: Such claim is made within 12 months of a previous claim, and both claims are for the same or a related cause for which the waiting period or survival period has expired, such determination to be made by Transamerica. Such disability begins within 12 months of the date on which the previous disability has ceased. Living Benefits: Definitions and highlights Critical condition means any one of the following conditions: Alzheimer s disease Aortic surgery Aplastic anemia Bacterial meningitis Benign brain tumour Blindness Cancer (life-threatening) Coma Coronary angioplasty Coronary artery bypass surgery Deafness Heart attack Heart valve replacement Kidney failure Loss of independent existence Loss of limbs Loss of speech Major organ failure; on waiting list Major organ transplant Motor neuron disease Multiple sclerosis Occupational HIV infection Paralysis Parkinson s disease Severe burns Stroke Survival period means the period starting on the date of diagnosis of the critical condition disability and ending 30 days following the date of diagnosis of the critical condition disability, except where modified elsewhere under the policy. The survival period does not include the number of days on life support. The life insured must be alive at the end of the survival period and must not have experienced irreversible cessation of all functions of the brain. For those conditions which have a qualifying period, for example, 90 days for bacterial meningitis and paralysis, the survival period runs concurrently with that condition s qualifying period. Waiting period means the 90-day period following the date on which the occupational disability first occurs, as provided under the terms of the policy. [ 57 ]

64 Exclusions for disability claims General exclusions Transamerica will pay no benefit amount if the disability in respect of the life insured results directly or indirectly from: any bodily injury that occurs while a life insured has been determined to be legally intoxicated, under the influence of any alcohol, non-prescription drugs, including, but not limited to, narcotics or sedatives, or using or taking any prescription drugs other than as prescribed by a doctor and in accordance with a doctor s instructions when the use of such substances was a proximate cause for the disability the voluntary taking of poison, inhalation of gas, or taking of a non-prescription drug or chemical the life insured s commission of or attempted commission of a criminal act, or any loss sustained while incarcerated for a criminal act the life insured s engaging in an illegal occupation the operation of any vehicle, however powered, while the life insured has alcohol in the blood in excess of the legal limit declared or undeclared war, invasion, hostility, acts of a foreign enemy or any act incident to war or any armed conflict, including service in the armed forces the life insured s participating in any riot, civil commotion, revolution, rebellion, insurrection, explosion of war weapons or terrorist activities Exclusions for pre-existing conditions No Living Benefit will be payable if Transamerica determines that the life insured, in respect of whom a Living Benefit would otherwise be payable, suffered from a disability or a disease, bodily injury or critical condition causing the disability at the issue date or a date of reinstatement of this policy. That determination will be based on disabilities, diseases, bodily injuries, critical conditions or other conditions specifically identified in, or that can reasonably be inferred to have existed at that time of, the Application, an application of reinstatement, a related declaration of health or other information available to Transamerica. The policyowner is cautioned that a payment of the Living Benefit will reduce the death benefit(s) and the total fund value of the policy by the total of all benefit amounts and MVA (if applicable) paid. Key benefits Living Benefits provide added peace of mind for your clients. They provide tax-free and surrender-chargefree benefits.* Clients do not have to worry about the funds in a long-term contract when they need emergency access in case of disability. Avoiding pitfalls Clients with a rating greater than 300% total mortality are not covered by the benefit. the life insured s intentional self-inflicted injury or any act of, or attempt to commit suicide regardless of whether the life insured is sane or insane service, travel, flight or descent from any kind of aircraft if the life insured acted in any capacity other than as a fare-paying passenger * Based on Transamerica s interpretation of the Income Tax Act, claims for Living Benefits disability benefits are not currently administered as taxable dispositions from our universal life policies. However, Transamerica does not guarantee, and is not responsible for, the tax treatment applicable to this policy feature. Transamerica s interpretation does not constitute advice or an opinion to clients regarding taxation of this policy feature, and relevant tax authorities could decide to challenge it. Please advise your clients to consult their legal or tax experts for an opinion on this matter in relation to their particular circumstances. [ 58 ]

65 8. Optional benefits Accidental Death and Dismemberment Rider Issue ages: 15 to 55. This rider must be added at time of issue. Available with single life or multiple life coverages. Not available with joint life coverages. The Accidental Death and Dismemberment (AD&D) Rider provides an additional benefit amount between $25,000 and $350,000 should your client die, lose limbs or lose sight as a direct result of an accidental injury. This additional benefit amount may not be greater than the face amount for the base coverage. This additional benefit amount doubles should your client die or lose limbs or sight as a direct result of an accident while travelling in a building elevator, as a passenger in a public conveyance or as a direct result of fire or explosion in a public building. Schedule of losses The full benefit amount is payable for: loss of life total and irrecoverable loss of sight of both eyes loss of both hands loss of both feet loss of one hand and one foot loss of sight of one eye and the loss of either one hand or one foot One-half the benefit amount is payable for: loss of both thumb and index finger on one hand loss of one hand or one foot total and irrecoverable loss of sight of one eye Definition of accident For the purpose of this rider, the loss must be a direct result of bodily injury caused exclusively by an external violent and accidental means, without negligence on the rider life insured s part, and resulting directly and independently of any disease, sickness, medical disorder or medical treatment, or any other causes specified in the exclusions while the rider is in force. In addition, the accidental death must occur within one year from the date of the accident and before the policy anniversary nearest the life insured s 65th birthday. Termination This rider terminates at the earlier of: the date a benefit amount is paid the policy anniversary nearest the life insured s 65th birthday Exclusions A benefit is not paid if the loss results directly or indirectly from: Any accidental death or bodily injury that occurs while a rider life insured has been determined to be legally intoxicated, under the influence of any alcohol, nonprescription drugs, including, but not limited to narcotics or sedatives, or using or taking any prescription drugs other than as prescribed by a physician, when the use of such substances was the proximate cause for the loss. The voluntary taking of poison, inhalation of gas or taking of a drug or chemical. The rider life insured s commission of or attempted commission of a criminal act, or any loss sustained while incarcerated for a criminal act. The rider life insured s engaging in an illegal occupation. Bodily or mental infirmity, disease of any kind, or medical or surgical treatment of that infirmity or disease. [ 59 ]

66 This does not include bacterial infections resulting from an accidental cut or wound or accidental ingestion of a poisonous food substance. Injuries which are not evidenced by a visible contusion or wound on the outside of the rider life insured s body. This provision will not apply in the case of a drowning or exposure, and it also will not apply to internal injuries caused by accidental means revealed by an autopsy. The operation of any vehicle, however powered, while having alcohol in the blood in excess of the legal limit. Declared or undeclared war, invasion, hostility, acts of a foreign enemy or any act incident to war or any armed conflict, including service in the armed forces. Participating in any riot, civil commotion, revolution, rebellion, insurrection, explosion of war weapons or terrorist activities. Suicide, self-inflicted injury or any act of, or attempt to commit suicide as stated in the provisions of the policy to which the rider is attached. Service, travel, flight in or descent from any kind of aircraft if the rider life insured acted in any capacity other than as a fare-paying passenger. Key benefits This rider provides quality accidental death and dismemberment benefits at a low cost, and the cost is conveniently included in the monthly deductions. If an insured loses limbs or sight as a direct result of an accidental injury, the family may need extra money to provide for lost income or to provide for home modifications and other extra expenses not covered. Children s Insurance Rider Issue ages: 15 days to not yet 19 years old for children. Age 20 to 55 years old for the parent (the policyowner). Coverage availability This rider may be added after issue. Available with single life. Available with joint first-to-die coverages. Only available on the base universal life coverage. Not available with joint last-to-die coverage. This rider is designed to provide low-cost life insurance coverage for the unmarried children (including legally adopted and stepchildren) of the base life insured, to age 25, as long as they are members of the life insured s household, whether residing with the insured or at school full-time, and not married. It includes an attractive conversion option that can provide up to five times the initial coverage amount without evidence of insurability. If the parent dies, the rider provides paid-up term life insurance up to the child s 25th birthday or marriage (if earlier). Benefit Amount Minimum benefit amount $5,000 Maximum benefit amount (sold in units of $5,000) $30,000 Avoiding pitfalls The Accidental Death and Dismemberment Rider should not be confused with the Accidental Death Benefit (ADB) Rider that was offered as part of a special marketing program for a limited time to qualifying Transamerica clients. The ADB Rider is not for sale outside of this special program. This benefit amount is payable for every child insured under the rider. [ 60 ]

67 Eligibility The children must be at least 15 days old and not yet 19 years of age. While this rider is in force, additional children born to or legally adopted by the life insured are automatically included, providing they are at least 15 days old and not yet 19 years of age. This rider provides coverage for the children until they have married or have reached 25 years of age, whichever occurs first. Although this rider does not trigger any age and amount medical requirements, both the life insured and the children are underwritten on the basis of a medical questionnaire that is included within the Life Insurance Application. A child who is considered a substandard risk at the time of issue will not be covered under this rider. Parents who are considered a substandard risk greater than a 200% total mortality rating may not purchase the Children s Insurance Rider. Paid-up term insurance If the life insured dies before the children, the rider will be exchanged for a non-participating paid-up term insurance policy for each unmarried child under the age of 25. Each paid-up term insurance policy: provides the same amount of coverage as the rider terminates on the child s 25th birthday or 90 days after marriage, whichever is earlier contains the same conversion privileges as the rider Conversion Each child may convert the rider to any eligible permanent or universal life insurance plan for up to five times the child s coverage (but not less than the published minimum for the plan) without evidence of insurability. We must receive the conversion request in writing within a 31-day period following the earliest of any of the following events: the expiry date of the rider (parent s age 65) the date the child marries (within 90 days following the event) any time between the child s 21st and 25th birthday Coverage termination The rider provides insurance coverage for the children until the earliest of: the date the children have reached age 25 the date the children are married the termination of the rider Rider termination This rider terminates at the earliest of: the policyowner s request to terminate the rider the date of lapse due to insufficient premiums the policy anniversary nearest the parent s 65th birthday the death of the parent Avoiding pitfalls Although insurance coverage ends for a child when he or she turns 25 or is married, the rider will continue on the policy, and COI will continue to be deducted as part of the monthly deductions. Since we allow children to be added without notice after the rider has been issued, we cannot know when the rider should be terminated. For this reason, we remind the owner about the rider coverage period and expiry date on both the contract s data page and the policy statements. We require the owner to provide instructions to terminate this rider before age 65, if no more children are covered. To ensure all eligible children are covered, please notify Transamerica s Head Office when insuring any children. This rider is available to Life 1, as specified on LifeView and the Supplement to the Life Insurance Application. If insurance is required for children of another or a different insured, you may wish to suggest a TermSelect rider or another insurance coverage. Key benefits Provides inexpensive coverage for children without requiring a separate policy. Includes an attractive conversion option that ensures that your clients children will qualify for life insurance. [ 61 ]

68 Payor Waiver Riders We offer two Payor Waiver Riders that provide additional protection for single life policies issued to children and insure the payor, usually a parent of the child, for the amount of the premiums or monthly deductions. If the payor dies or becomes totally disabled, he or she may no longer be able to make planned premium payments or cover the cost of monthly deductions for their child s insurance policy, and this may have a serious effect on the planned growth of the fund value. Payor Waiver of Monthly Deductions on Death or Disability (PWMD) Rider Issue ages: 15 days to 15 years (child) 20 to 55 years (payor). This rider may not be added after issue. Available with single life policies only. Available for one or two payors. Not available with joint life coverages or policies with multiples coverages. Monthly deductions (see Glossary of common terms ) are waived when the payor dies or is considered totally disabled under the terms of the rider (see Definition of total disability and Maximum benefit period duration at the end of Payor Waiver Riders ). This rider terminates at the earliest of the following events: the policy anniversary nearest the child s 25th birthday the policy anniversary nearest the payor s 65th birthday Rider cost and minimum premium The cost for this rider is calculated on a monthly basis as a percentage of total monthly deductions (including multiple and flat extra ratings), excluding the costs of this rider and any other Payor Waiver Rider. The minimum premium for this rider is calculated as a percentage of total minimum premiums for the child s coverage, excluding the minimum premium of this rider and any other Payor Waiver Rider. The minimum premium is listed on the data page. The applicable percentage varies with the age of the payor and the maximum possible waiver benefit period. Payor Waiver of Planned Premiums on Death or Total Disability (PWPP) Rider Issue ages: 15 days to 15 years (child) 20 to 55 years (payor). This rider may not be added after issue. Available with single life policies only. Available for one or two payors. Not available with joint life coverages or policies with multiple coverages. This rider waives premiums should the payor be considered totally disabled under the terms of the rider (see Definition of total disability and Benefit period for waiver benefits at the end of Payor Waiver Riders ). This rider also waives premiums should the payor die. At time of application, the owner must specify the insured annual waiver amount (up to a maximum of $4,800), and the rider premium is based on a percentage rate multiplied by this amount. This percentage varies with the age of the payor and the maximum possible waiver benefit period. When a claim for this rider is approved, the monthly waiver amount will be the lesser of the insured annual waiver amount and the total amount of premiums paid to the policy 12 months directly before total disability began, or when death occurs, divided by 12. The monthly waiver amount will not exceed $400. This rider terminates at the earlier of the following events: the policy anniversary nearest the child s 25th birthday the policy anniversary nearest the payor s 65th birthday [ 62 ]

69 Common terms and conditions for payor waiver riders Definition of total disability To qualify for benefits under these riders, we require satisfactory proof of total disability. In addition, the total disability must begin before the policy anniversary nearest the payor s 65th birthday (and before the policy anniversary nearest the child s 25th birthday). During the first 24 months, total disability means the payor is unable to practise his or her regular occupation. After the first 24 months, total disability means the payor is unable to practise any occupation for which the payor is, or may be, reasonably suited by reason of education, training or experience. The payor will also be considered totally disabled if he or she experiences the entire and irrecoverable loss of the sight of both eyes, or of the use of both hands, or of both feet, or of one hand and one foot. Waiting period To qualify for benefits under these riders, payment of the rider premium must continue during a waiting period of at least six months. For the Payor Waiver of Monthly Deductions Rider, any monthly deductions made during this six-month waiting period will be refunded once the claim is approved. For the Payor Waiver of Planned Premiums Rider, the monthly waiver amounts that would have been credited to the policy during the waiting period will be payable once the claim is approved. Exclusions Benefits under these riders will not be paid if the disability results directly or indirectly from: an attempt to commit suicide or any intentional, selfinflicted injury, regardless of whether the life insured is sane or insane an attempt to commit a crime the operation of a motor vehicle while having alcohol in the blood in excess of the legal limit any act or occurrence related to war or insurrection the flight in, or descent from, any aircraft if the insured acted in any capacity other than as a fare paying passenger the use of any drug or substance, including the use of narcotics and sedatives, other than as prescribed and administered in accordance with a physician s instructions the voluntary inhalation or taking of any gas or poison Maximum duration of benefit period The maximum benefit period for the waiver benefits depends on when the disability begins, as follows. Total disability begins Before age 60 Between ages 60 and 65 Earlier of child s age 25 and payor s age 65. Later of: two years earliest of child s age 25 and payor s age 65 Please note that the benefit actually ends at the end of the disability, if earlier. Death benefit under payor waivers If the payor dies, the benefit amount is payable until the policy anniversary nearest the child s 25th birthday. [ 63 ]

70 Waiver Riders Becoming totally disabled may affect your clients ability to maintain the planned growth of their fund value. This may have a serious impact on their retirement strategy or their plans to preserve their estate for future generations. We offer two types of Waiver Riders that can only be added at time of issue, for waiving either monthly deductions or planned premiums. Both riders may be added to one policy. Clients can become eligible for rider benefits following either an occupational total disability or a severe total disability. (Please refer to Common terms and conditions for Waiver Riders ). Waiver of Monthly Deductions Rider Issue ages: 16 to 55 years. This rider may not be added after issue. Available on each life insured with a multiple life policy. Not available with joint life coverages. This rider waives the monthly deductions for the policy should the life insured under this rider be considered totally disabled under the terms of the rider (please refer to Common terms and conditions for Waiver Riders ). Rider cost and minimum premium The cost for this rider is calculated on a monthly basis as a percentage of total monthly deductions, excluding the costs of this rider and any other waiver rider. The applicable percentage used for the calculation of the cost for this rider is: male: 9% female: 12% The percentage used for calculation is shown on the contract s data page. The minimum premium for this rider is calculated as a percentage of total minimum premiums, excluding the minimum premium of this rider and any other waiver rider. The minimum premium is listed on the data page. The maximum benefit period for the waiver benefits depends on when the disability begins, as follows. Total disability begins Before age 60 Continues for life Between ages 60 and 65 Later of: two years age 65 Please note that the benefit actually ends at the end of the disability, if earlier. This rider does not cover any premium payments in excess of the monthly deductions (premium payments can still be made into the plan, even when monthly deductions are being waived). [ 64 ]

71 Waiver of Planned Premiums Issue ages: 16 to 55 years. This rider may not be added after issue. Available on the base coverage for multiple life policies. Not available with joint life coverages. This rider waives premiums should the life insured under this rider be considered totally disabled under the terms of the rider. (Please refer to Common terms and conditions for Waiver Riders. ) At time of application, your client must specify the insured annual waiver amount (up to a maximum of $12,000). The monthly rider premium will be based on a percentage of 1/12th of the insured amount: Male: 3% for the first $400 per month and 5% thereafter Female: 5% for the first $400 per month and 7% thereafter When a claim for this rider is approved, the monthly waiver amount will be the lesser of: the insured monthly waiver amount the total amount of premiums paid to the policy 12 months directly before total disability began, divided by 12 The monthly waiver amount payable under this rider will not exceed $1,000. This rider terminates if premiums have been made on a monthly (PAD) basis and premiums are not received for a period of 90 consecutive days prior to a claim for benefits. The maximum benefit period for the waiver benefits depends on when the disability begins, as follows. Total disability begins Before age 60 Age 65 Between ages 60 and 65 Please note that the benefit actually ends at the end of the disability, if earlier. Common terms and conditions for waiver riders Definition of total disability The provision page of planned premiums state: Waiver Benefit Period: a. If Total Disability occurs before Age 60, then the waiver benefit period will be: i. the Waiting Period; and ii. the period of Total Disability continuing after such Waiting Period up to the Rider Life Insured s Age 65. b. If Total Disability begins at or after Age 60 and before Age 65, then the benefit period will be: i. the Waiting Period; and ii. the period of Total Disability continuing after such Waiting Period, until the later of Age 65 and thatdate which is two years after the first monthly date on which a Benefit Amount is waived under this Rider. The rider insured may qualify for waiver or fund value payout benefits providing we receive satisfactory proof that the rider insured meets the definition of total disability, and that the condition causing disability is not an excluded condition and began after rider issue date. It is important to note that these definitions differ from the Living Benefits and Payor Waiver definitions. Total disability is defined as either occupational total disability or severe total disability. [ 65 ]

72 Occupational total disability The disability must begin before the policy anniversary nearest the life insured s 65th birthday, and is defined as follows: During the first 24 months, total disability means the life insured under the rider is unable to practise his or her regular occupation. After the first 24 months, total disability means the life insured under the rider is unable to practise any occupation for which the life insured is, or may be, reasonably suited by reason of education, training or experience. Severe total disability The disability is defined as any one of the following: Total and irrecoverable loss of sight in both eyes, loss of use of both hands, or of both feet, or of one hand and one foot. The rider insured is terminally ill and the condition is expected to result in death within 24 months. The rider insured is unable to perform two or more basic activities of daily living without receiving substantial daily physical assistance from another person. Basic activities of daily living include bathing, dressing, toileting, continence, eating and cognitive functioning. If the rider life insured is able to perform the two basic activities of daily living with modification or adaptive devices, he or she will not be considered disabled under the terms of this rider. Eligibility for benefits: Waiting period To qualify for benefits under these riders, payment of the rider premium must continue for the duration of the waiting period. The waiting period varies by definition of total disability, as follows. Occupational total disability Severe total disability 180 days 90 days Waiver benefits that would have been credited to the policy during the waiting period will be payable once the claim is approved. Exclusions Benefits under these riders will not be paid if the disability results directly or indirectly from: an attempt to commit suicide or any intentional, selfinflicted injury, regardless of whether the life insured is sane or insane an attempt to commit a crime the operation of a motor vehicle while having alcohol in the blood in excess of the legal limit any act or occurrence related to war or insurrection the flight in, or descent from, any aircraft if the insured acted in any capacity other than as a fare-paying passenger the use of any drug or substance, including the use of narcotics and sedatives, other than as prescribed and administered in accordance with a physician s instructions the voluntary inhalation or taking of any gas or poison Key benefits Waiver Riders provide valuable disability protection. After all, when clients becomes disabled and are unable to pay their monthly deductions or planned premiums, this will affect more than their life insurance coverage. It will also affect the growth of their fund value, and that may seriously affect their retirement plans, estate preservation needs, etc. Consider protecting both monthly deductions and planned premiums in situations where fund value growth is critical to your client s plans. Avoiding pitfalls Waiver Riders are only available at time of issue. Many people buy life insurance when they are young, and make the mistake of thinking they ll never need Waiver Riders. At a later time in their life, due to deteriorating health or uncertain employment, they may not qualify for stand-alone disability insurance coverage, or may have to pay very high premiums for this coverage. [ 66 ]

73 9. Policy administration Monthly deductions Monthly deductions are charged against the total fund value at each monthiversary (the first day of each policy month, which is based on the policy issue date), and include the costs for base coverages, riders and benefits, as well as the $10 guaranteed monthly policy fee. Lapse and reinstatement process Your clients will have the flexibility to increase or decrease premiums, pay at unscheduled dates or stop and restart premiums, providing the policy does not go into shortage. Shortage Essentially, shortage is a warning to your client that their policy is at risk of lapsing A policy is considered to be in shortage when either of the two following shortage conditions is met: The net fund value is less than the then-current monthly deduction. The net fund value less half of the applicable surrender charges is less than 0, and A is less than B, where: A is the sum of all premiums received by Transamerica prior to such time, less any partial surrenders and all principal, accrued interest and other amounts then outstanding in respect of any loans. B is: for the first three policy years, the sum of all monthly minimum premiums calculated from the policy date to such time beginning in the fourth policy year, the sum of all monthly deductions calculated from the policy date to such time When a policy meets either of these two conditions, and providing it is not already in shortage, the owner will receive a shortage notice from Transamerica. A policy will lapse if a premium equal to or greater than the shortage amount (so that the policy no longer meets either of the shortage conditions) is not received during the 31-day grace period. We recommend that at least the equivalent of three additional monthly deductions be paid as a buffer, to reduce the risk of lapsing. In this situation, your clients may also want to increase their planned periodic premium amount. If a primary life insured dies during the grace period, the portion of any overdue monthly deduction applicable to any insurance coverages for that individual will be deducted from the death benefit. Key benefits Another way of interpreting the shortage conditions is that as long as the net fund value is sufficient to cover the monthly deductions, and as long as the minimum premiums have been paid to date (net of withdrawals and outstanding loans), then the policy will remain in force. This is more liberal than the way some other insurers administer their UL plans, where policies lapse if there isn t sufficient cash surrender value to cover the COI. Lapse If a policy is in shortage and a premium equal to or greater than the shortage amount is not received within the 31- day grace period, the policy lapses as of the date that the shortage first occurred. Reinstatements Reinstatements are allowed on lapsed policies, but are not available on policies that have been surrendered or otherwise terminated. Requests for reinstatement must be made in writing within two years of the effective date of lapse, and are subject to Transamerica s underwriting requirements. Any outstanding policy loans at the time of lapse, if any, together with interest at the rate set by Transamerica for such purposes, will have to be repaid. [ 67 ]

74 All monthly deductions between the effective date of the lapse and the date of reinstatement must be paid, plus three months of deductions. Anniversary statements and estatement Library Access your client s universal life estatements today. There is no better source of sales revenue than your existing clients. Transamerica s estatement library is a powerful way to nurture stronger relations and develop more business with your clients. To support you in building your business, Transamerica offers electronic universal life client statements through the secure Transamerica.ca website under My Business/eBusiness tools or the ebusiness Tools links found throughout the site. With estatement access, you no longer need to maintain paper copies of client statements, as the library provides quarterly and annual estatements for the past 18 months. estatements powerful features offer you the flexibility and ease of accessing your clients estatements quickly. You will be able to search by policy number, owner s or insured s name, advisor or date. You have the option to view, download, and print the estatements. The online Help feature provides client statement definitions that will assist you when meeting your clients. The estatement library also provides a series of helpful reports to assist you in managing your in-force business. Imagine a listing of clients with universal life statements in the upcoming month, or a listing of clients from the previous 30 or 90 days. These listings and more are all contained in the estatement Library. If you are not currently registered for Transamerica s secure Transamerica.ca and/or estatements, you may register online. Go to transamerica.ca for access and click Register under Advisor login. Complete and submit the registration form, and an will be sent to you to set your confidential password your address is your username. Access to your client s universal life estatements was never so easy! Claims processing Payment of death claims Unless specified otherwise, we require the claimant to provide the following. Claimant entitlement The claimant s statement, completed by the claimant, and signed by a witness and by either the named beneficiary or the executor of the estate. This form details the beneficiary s name, address, social insurance number, age and reasons for filing the claim. The original WealthAdvantage or EstateAdvantage policy contract. A notarized copy of the probated will (in Quebec, the notarial will) or Letters of Administration required for any claim that is payable to a life insured s estate (not required when the claim is payable to a named beneficiary). Proof of life insured s age A copy of the life insured s birth certificate or driver s licence. Proof of death The death certificate (an original or notarized copy must be supplied). [ 68 ]

75 The physician s statement, completed by the attending physician documenting the medical condition causing death. It also outlines the details of the diagnosis, the date when the condition was first diagnosed and whether the death was accidental or resulted from suicide or homicide. Disclosing the reason for death is important, because it could affect the amount of the claim, depending on the contract s benefits or riders. For example, the Accidental Death and Dismemberment Rider provides an additional benefit amount to the named beneficiary for a death that is the direct result of an accident. Suicide limitation The death benefit is not payable if within two years from the later of the effective date of the policy or the last reinstatement or change of the policy, the life insured dies by suicide or an attempt to commit suicide. This is regardless of whether the life insured is sane or insane. Instead, Transamerica s liability will be limited to refunding the lesser of: the amount by which the total fund value exceeds any outstanding policy loans (including accrued interest) the total of all premiums received for the life insured, less any withdrawals or premium refunds Placing an order for marketing material or forms informco is responsible for warehousing most of our promotional materials and forms. All materials requested through informco can be ordered directly from informco. Simply place your order online through icanorder, which is conveniently located on the Transamerica.ca website. Before having the order placed, make sure to have the form numbers and proper address. Special note about edition dates If you order the item from informco, you should receive the most recent version. Because there is a constant flow of materials being developed throughout the year, additional materials will become available, while others will become discontinued. To address this, the Transamerica.ca website and LifeView will be updated constantly to reflect any changes. Other sources for marketing materials LifeView is another great source for information, and can be updated through downloads from the Transamerica.ca website (see the marketing materials directories for more information). Illustration systems (LifeView) LifeView is a versatile interactive system that is a fully integrated sales tool, enabling you to collect client information, identify the client s most pressing insurance needs and run the appropriate illustration. Once installed, LifeView will automatically, and continuously, check for updates to the program through an auto check feature when connected to the Internet. In the future, we will be producing only limited quantities of CDs, as Transamerica.ca allows you to update your software quickly and regularly online. Want to make sure you have the latest solves, sales concepts, enhancements and pricing changes for our products? LifeView will now automatically check for updates each time you open the LifeView software when you are connected to the internet. If an update is found, you will be prompted to download the latest version. For your own personal CD copy, you can still request a copy through informco, our distribution warehouse. Some materials may only be available in PDF format. [ 69 ]

76 10. How to structure UL insurance for the market you are in Guaranteed UL: Is it possible? How do you structure our universal life products to be fully guaranteed? With EstateAdvantage and WealthAdvantage, you can structure Transamerica s universal life plans to be fully guaranteed using a number of guaranteed features, including: Guaranteed COI: The COI rates per $1,000 of face amount are fully guaranteed and stated in the policy contract. Built-in premium tax: Premium taxes are not deducted from each premium payment, even with excess funds. Premium taxes are built into the annual COI rates per $1,000 of face amount and are guaranteed not to increase, even if provinces increase the premium tax. This is a unique feature in the industry. Using UL as an investment vehicle UL promises guaranteed insurance coverage as long as monthly insurance costs are funded by the client, and as an investment vehicle, it is extremely effective for the clients who have already maximized their RRSP contributions. Why use the investment side of universal life insurance? UL permits tax-deferred investing. Annual investment income is not subject to tax as long as it remains within the policy during the lifetime of the life insured. This makes UL a powerful wealth-building tool. Investing a significant lump sum in a UL plan also allows clients to prepay future COI using pre-tax investment dollars. In other words, to pay annual COI of $500 using taxable income such as a salary would require $750 to $1,000 of a client s pre-tax income. However, those same clients could invest $8,333 in a UL plan, and if they earned a 6% return, they would realize $560 per year in investment income with which to pay their COI. How do I maximize the investment inside UL insurance? Determine the client s long-term insurance need. Determine the amount and time frame for premiums. Select a level death benefit option with ART COI. Select the Optimizer Option (to start after the premium payment period). Specify the minimum face amount in conjunction with the Optimizer to be equal to the long-term insurance need. Use LifeView to solve for the minimum face amount that will shelter the premium. Which sales concepts leverage UL insurance as an investment vehicle? There are several sales concepts that emphasize the investment benefits of UL insurance, including: Family Wealth Transfer Plan Corporate Estate Transfer Strategy Transamerica s Insured Retirement Strategy Comparing and illustrating UL plans Here are a few things to remember when illustrating different universal life plans. [ 70 ]

77 Don t forget to deduct all investment fees when choosing an illustration interest rate! The interest rate assumption is usually the most powerful assumption in an illustration, due to the effects of compounding over many years. A small difference in this assumption can change results dramatically. Remember to look at the following criteria when selecting an interest rate: Extra costs such as management fees, investment income tax and/or administration fees must be deducted. Make sure to deduct a fee that matches the investment mix. Here are some general tips: Canadian bonds and fixed-income management/ administration fees tend to be the lowest generally between 2% and 3%. Canadian equity index-linked funds (such as the TSX) tend to have higher management fees. U.S. and international index-linked funds usually have the highest management fees. When recommending investment options indexed to managed funds (e.g., mutual funds), make sure to account for both the UL investment fees and the underlying mutual fund MERs. This is just a guide: each company will disclose its particular fees (Transamerica s can be found in Section 3, Investment choices ). But because of variations in fees, two different companies offering the same indexlinked funds and the same interest rate can actually yield completely different results! The following table shows how various management fees will change the illustration rate of return, based on a gross return of 8%. Balanced portfolio 25% Canadian equity, 25% U.S. equity, 10% international equity, 40% bond TLC Company B Company C Company D Company E Company F Adjusted management fee 3.00% 3.04% 3.05% 3.25% 3.30% 3.20% Rate-adjusted interest 5.00% 4.96% 4.95% 4.75% 4.70% 4.80% [ 71 ]

78 Other considerations when illustrating competing UL insurance How is the premium tax paid? Unless premium tax is part of the guaranteed COI or guaranteed at a certain level, changes in tax legislation could cut into your clients investment capital, distorting initial illustrations. Further, funds kicked out of the policy due to exempttesting, and then transferred back in at a later date, may be subject to premium tax a second time. How are MERs calculated? Beware of daily compounded MERs that are actually higher than the published (estimated) numbers on an annual basis. Are bonuses conditional? Watch out for policies that reduce or eliminate the investment bonuses on certain options or in certain market environments. Do bonuses change based on investment option selected? Make sure you illustrate the clients moving to fixed rates as they get older. How are bonuses invested? If bonuses are invested somewhere other than the clients chosen investment option, and this is not factored into the illustration, actual long-term investment results could be reduced by up to 20%, unless the advisor or the clients are prepared to request a fund transfer every year. Conclusion Despite our extensive guarantees, it s important to differentiate Transamerica s UL plans from those of other issuers who offer guaranteed UL. Most of these guaranteed plans only provide an increasing death benefit, Fixed-Rate Interest Options with no bonus, and no benefits or riders and some of these plans don t guarantee the premium tax! What if you sold your client a minimum-premium level COI policy so that you could safely tell them that you ve guaranteed both their death benefit and their premium? What would happen if the premium tax was raised? Your client s next bill would include that increase and you would get a call asking for an explanation of why the guaranteed premium had gone up! This won t happen with Transamerica, because we have built the premium tax into the guaranteed COI. Transamerica is one of the few companies that can truly guarantee both the death benefit and the premium. WealthAdvantage and EstateAdvantage can offer the same guarantees, accountability and long-term peace of mind, without sacrificing the valuable features and flexibility that your clients may need in the future. Does the product charge MVAs when insurance charges are drawn from Fixed-Rate Interest Options? If so, you will need to ensure that there are sufficient funds invested in other investment options that potentially earn lower investment returns. [ 72 ]

79 Glossary of common terms ACB or Adjusted Cost Basis is the policyowner s net cost of the policy as defined by the Canada Revenue Agency. This amount is used to determine whether monies surrendered from a policy are subject to tax, and it also affects the amount of CDA credit for corporate-owned policies. Age means the age of a life insured on his or her nearest birthday. Attained age is the insured s current age (attained) age, as opposed to his or her original age (the age of the person when the policy took effect). Base universal life coverage is usually Life 1 on the Life Insurance Application or Base Coverage on LifeView. There are certain privileges attributed to the base universal life coverage. For example, on a multiple life policy, the Optimizer Option will reduce the face amount for the base universal life coverage only. Cash surrender value is the amount of cash accessible to the policyowner, excluding any applicable MVA adjustment. Should the policyowner choose to make a withdrawal from the policy during the surrender charge period, the cash surrender value amount will reflect the fund value net of applicable surrender charges and any outstanding loans. control, such obligations shall be postponed until such time as the cause ceases to preclude or make impractical Transamerica s performance of such obligations. The Cost of Insurance (COI) period is the period of time during which a charge is payable for an applicable coverage. Currency-neutral Index Interest Options deliver the performance of a foreign index in Canadian dollars. As the term currency-neutral implies, the unique structure of these options means they minimize exposure to international currency fluctuations. Whatever happens to the foreign index will most likely be reflected in the return of the currency-neutral Index Interest Option. The exempt-test face increase is the amount by which a face amount is increased, subject to legislative maximums and other conditions, as part of the policy anniversary exempt-test processing to keep a policy tax-exempt. This increased amount may be removed ( clawed back ) in subsequent years. The face amount is the face amount of a coverage, as increased or decreased from time to time; it does not include the face amount or the amount of insurance payable under a rider. The catastrophic events provision of the UL contracts addresses situations in which we are prevented from carrying on regular business functions due to events beyond our control. It is intended to provide Transamerica with additional time to discharge its obligations during extenuating circumstances. The provision is as follows: If Transamerica s performance of any of its obligations under the contract is delayed or otherwise made impractical by reason of any flood, riot, fire, acts of nature, labour unrest or any other causes beyond its Market Value Adjustment (MVA) applies to funds that are withdrawn from the Fixed-Rate Interest Options, including transfers, cash withdrawals and policy surrenders, if the interest rate at the time of withdrawal is greater than or equal to the guaranteed rate at the time of deposit. MVAs do not apply to monthly deductions or the payment of a death benefit. [ 73 ]

80 Monthly deductions include the monthly COI, rider costs and the policy fee, all of which are deducted monthly from the fund value. Net Amount at Risk (NAAR) is the amount of insurance for which the COI is charged. The NAAR for a coverage is calculated by subtracting the proportionate fund value from the death benefit. Net cash surrender value is the cash surrender value, less any applicable MVA. Policy date is the date used to determine the monthly dates, policy anniversaries and policy years with respect to the policy. A primary life insured is someone who is insured under a universal life coverage. There may be several primary life insureds under a policy having multiple life coverages. Quick pay means maximizing premium payments in early policy years. The Side Account is a separate, taxable, deferred annuity contract that is automatically issued with every EstateAdvantage and WealthAdvantage policy. The Side Account is used to hold monies that exceed the maximum amount that can be deposited in the tax-exempt Interest Options of the universal policy. Single/joint Equivalent Age (SEA) is the insurance age at which premium rates are based for joint coverage. It reflects the combined life expectancy of all the individuals on the joint coverage. Sum insured means the face amount, plus any exempt-test face increase. Proportionate fund value is the amount obtained when the total fund value is multiplied by a fraction, the numerator of which is the face amount for the primary life insured, and the denominator of which is the sum of the face amounts for all primary life insureds. [ 74 ]

81 Index A Accumulation Bonus... 2, 36, 37, 38, 39 Bonus design Guaranteed calculation Minimum... 1, 36 Comparing the bonus rates Features Years Credited Accumulation Market Additional Death Benefit... 1, 22 AEGON Capital Management Adjusted cost basis (ACB)... 51, 51, 73 Asset allocation B Bonuses (See Accumulation Bonus, Performance Bonus, Low-Fee Deferred Bonus) Benefit Riders Accidental Death and Dismemberment (AD&D)... 3, 59 Children s Insurance Rider... 3, 60, 61 Paid-up term insurance... 3, 61 Conversion Option Payor waiver riders... 3, 62, 63 Rider cost and minimum premium... 62, 64 C Cost of Insurance... 1, 2, 5, 7, 73 Annual renewable term... 7, 8 ART , 45, 70 Cost of insurance band structure... 2, 8 Combined banding... 2, 8 Conversions Children s Insurance Rider Coverages Multiple life coverages Joint first-to-die... 1, 18, Joint last-to-die... 1, 7, 18-21, 23 Joint life coverages...1, Single life... 1, 12, 18, Additional coverage riders... 8, 14, 41 Claims processing...68, 69 Payment of death claims Claimant entitlement Proof of death Suicide limitation Combined banding...2, 8 Collateral loans...45 Creditor protection...44 Corporate-owned policies... 17, 73 Currency exposed...25, 28 Contingent events...21, 23 Currency neutral...2, 25, 28, 29, 73 Client statements...50, 68 Currency exchange...29, 33 Critical condition... 3, Children s Insurance Rider D Death Benefit , 5, 6, 12, 35, 41, 45-46, 52, 54, 56, 58, 63, 68, 69, 70, 72 Level death benefit... 6 Increasing death benefit... 5 Death benefit option changes... 5, 6 Deposit loads (See premium tax) Deferred annuity contract...44, 74 Disability Dow Jones EURO STOXX...29 E Edition dates...69 Other sources for marketing materials Excess funds...41, 43, 53, 70 estatements...68 Exempt test face increase... 41, 42 Exchange Traded Funds (ETFs)...29 F Face amount... 1, 4-6, 8, 9, 11, 14-18, 20, 21, 23, 41-44, 47-50, 54, 56, 59, 70, 73, 74 Minimum issue amounts... 1, 4 Increasing the face amount...54 Decreasing the face amount...54 Fees...24, 32-35, 37, 51, 71 Fund transfers...35, 51 Fund Value Payout... 1, 5, 15, 16, 17, 20, 65 Flat extras...13, 62 Fixed rate bonus...72 [ 75 ]

82 Financial Times Stock Exchange (FTSE) 100 Share Index...29 G Guarantees...36 Cost of insurance rates...6, 42, 52, 53, 70 Policy fees...1, 8, 15, 21, 24, 53, 67 Interest option fees , 37 Client Bonuses... 2, Number of market index options...2, 28 Minimum returns for fixed-rate interest options... 2, 27, 37, 72 Premium tax... 1, 8, 41, 70, 71 Interest rates for policy loans...2, 46 I Interest Option Fees , 37 Guarantees , 33, 34, 37 Fees , 37 Transfers...51 Calculations...52 Illustration software...12, 15, 25, 32, 69 LifeView...4, 8, 12, 15, 18, 19, 25, 32, 41, 43, 46, 47, 61, 69, 73 How to order...69 Comparing and illustrating UL plans Index interest options...2, 25, 26, 28-34, 46, 50, 73 Guarantees...27, Fund transfers...35 Calculations...28 Passive Index Interest Option...29 Managed Index Interest Option imaxxfunds... 25, 26, 30, 34 imaxx TOP Portfolios... 25, 26, 32, 34 Fixed-Rate Interest Options...2, 6, 26,... 27, 32, 35, 37, 45, 46, 50-52, 72, 73 Index Allocation interest option J Juveniles...1, 4, 8 Joint life coverages... 12, 18-23, 59, 62, 64, 65 L Lapse...67 Shortage...67 Reinstatement...67 Grace period...67 LifeView... 4, 8, 12, 15, 18, 19, 25, 32, 41, 43, 46, 47, 61, 69, 73 How to order...69 Downloading the illustration software...69 Low-Fee, Deferred Bonus...2, 36, 37 Bonus design...36 Guaranteed calculation...38 Minimum...2 Maximum...2 Comparing the bonus rates...39 Features...38 Years Credited...38 Living Benefits Qualification...55 benefit amount...56 Payment Options...56 Claims...56 Continuous Disability or Critical Condition...57 Loans...2, 45 Level rider...4, 14, 24, 54 Loan repayment...2, 46 M Multiple extras or table ratings (See underwriting) Maximum premium estimate Maximum Taxation Actuarial Reserve (MTAR)...24, 40, 41 Monthly Deduction Interest Option...2, 27, 50 How to apply...50 Monthly deductions , 3, 8, 15, 16, 19-21, 27, 45-50, 52-53, 56, 62-64, 67, 74 Minimum issue amounts...1, 4 Multiple coverages Minimum premiums...7, 53, 56, 62, 64, 67 Maximum premiums...53 Mercer Investment Consulting...34 Market fluctuation... 42, 44, 53 N Non-smoker... 1, 10, 11, 13, 18, 40, 45, 55 Net amount at risk...5, 6, 8, 14, 21-23, 54, 56, 74 Nikkei 225 Stock Average...29 Net cash surrender value... 5, 32, 45, 47-49, 74 NASDAQ O Optimizer...3, 40-44, 48, 54, 70, 73 Optimizer minimum face amount...42 [ 76 ]

83 P Tax-exempt testing...42 Side account...42 Maximum premium estimate... 41, % rule Termination...43 Illustrating Optimizer on LifeView...43 Performance Bonus... 2, Bonus design...36 Guaranteed calculation...38 Minimum...38 Maximum...38 Comparing the bonus rates...39 Features...38 Years Credited...38 Preferred underwriting (See underwriting) Premium allocation Instructions...46 Policy loans Interest rate charged...46 Interest rate credited...46 The mechanics Repayment Premiums... 51, Planned periodic premiums...53 Minimum premiums...53 Maximum premiums...53 Policy fee... 1, 8, 14, 15, 18, 19, 21, 24, 53, 67 Premium tax... 1, 8, 41, 70, 72 Probate...68 Policy Change Application...19 Planned periodic premiums...53, 67 Payor waiver riders...3, 62, 63 Payor Waiver of Planned Premiums...3, 62, 63 Payor Waiver of Monthly Deductions...3, 62, 63 Policy date... 67, 74 Primary life insured...1, 14, 15, 17, 67, 74 Proportionate fund value... 6, 15, 16, 17, 20, 22, 23, 74 R Ratings (See underwriting) Riders... 1, 2, 4, 12, 24, 41, 53, 54, Term riders... 1, 2, 4, 12, 24, 41, 53, 61 Level and increasing term riders...4, 5 Children s Insurance Rider...60, 61 Relative risk rating...26 Reinstatement... 28, S Side Account , 74 Taxation Application and ownership...44 Side Account interest rates...44 Deferred annuity contract...44 Sum insured (See face amount) Surrenders (See withdarawals) Shortage...67 Net Fund Value...67 Lapse...67 Reinstatements...67 Statements...68 estatement Library...68 Quarterly statements...68 Annual statements...68 Smoker... 1, 10, 11, 42, 55 Surrender charges... 3, 14, 17,... 20, 22, 24, 41, 44, 45, 47, 48-50, 54, 67, 73 Severance Option Single Life Insurance Option...1, 18, Substandard risk...19, 21, 22, 61 Single equivalent age... 18, 19, 23, 74 S&P/TSX , 29 Standard & Poor s , 29 Scotia Capital Markets Universe Bond Index...29 T Taxation...50, 51 Policy loans...50 Withdrawals...51 Side account Term Insurance TermSelect... 1, 2, 4, 8, 12, 24 Tax-deferred... 8, 25, 36, 42, 44, 45, 70 Table ratings U Underwriting...1, 8-14 Cover letter...10 [ 77 ]

84 Combined banding...2, 8 Underwriting requirements... 9, 12 Preferred underwriting Elite underwriting Ratings Multiple extras or table ratings Unconditional bonuses...36 Universal life statements...68 W Withdrawals Cash surrender value... 40, 41, 45-51, 67, 73, 74 Policy loans Policy and coverage surrenders Partial surrenders , 54 Surrender charges...3, 14, 17,... 20, 22, 24, 41, 44, 45, 47, 48-50, 54, 67, 73 Withdrawal order...2, 46, 47, 50, 56 Monthly Deduction Interest Option... 2, 27, 50 Market value adjustments (MVAs)...52 Weightings...28, 33, 35 Withdrawal order...2, 46, 47, 50, 56 Waiting period...55, 57, 63, 66 Waiver of Monthly Deductions... 3, 62, 63, 64 Waiver of Planned Premiums... 3, 62, 63, 65 [ 78 ]

85

86 Transamerica Life Canada is a leading life insurance company in Canada. Through a number of distribution channels, resulting in a national network of thousands of independent advisors, Transamerica provides a full spectrum of individual life insurance and protection products designed to help Canadians take responsibility for their financial future. For over 100 years, we ve stood by a simple idea: deliver on our promises so we can keep making the things that make tomorrow better. Transamerica Life Canada is an AEGON company. AEGON is an international life insurance, pension and asset management company. With headquarters in The Hague, the Netherlands, AEGON has businesses in over twenty markets in the Americas, Europe and Asia. AEGON companies employ approximately 27,000 people and serve over 40 million customers. Understanding the health and wellness issues affecting Canadians, Transamerica Life Canada commits funds annually to our in the spirit of hope charitable giving program, which supports our neighbours and communities through donations to numerous non-profit organizations Yonge Street Toronto, Ontario M2N 7J8 TM Trademarks of AEGON Canada ULC and/or its affiliated companies. AEGON and the AEGON logo are registered trademarks of AEGON N.V. AEGON Canada ULC and its affiliated companies are licensed to use such marks. Transamerica and the pyramid design are registered Trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks. NorthStar and Disciplined Equity are registered Trademarks of FMR Corp. LP660 11/11