Investment funds information folder

Transcription

1 Investment funds information folder Great-West Life investment plans Investment funds information folder October 2015 This document is not an insurance contract.

2 This information folder is not an insurance contract. The information in this folder is subject to change from time to time. If there is a difference between this information folder and your contract, your contract will apply. In this information folder, you and your mean the policyowner of a Great-West investment plan. We, us, our and Great- West Life mean The Great-West Life Assurance Company. About Great-West Life The Great-West Life Assurance Company was incorporated on August 28, 1891, by a Special Act of the Parliament of Canada. Great-West Life carries on business under the Insurance Companies Act (Canada). The terms and conditions of the policies issued by Great-West Life and the distribution of the policies are governed by the Insurance Acts of the provinces and territories in Canada where Great-West Life carries on business. Great-West Life s administrative offices are located at: London 255 Dufferin Avenue London, Ontario N6A 4K1 Montreal 2001 Robert-Bourassa Blvd, Suite 540 Montreal, Quebec H3A 1T9 Great-West Life s head office is located at: Winnipeg 100 Osborne Street North Winnipeg, MB R3C 3A5 Certification This information folder contains brief and plain disclosure of all material facts relating to the investment fund option available in the Flexible Accumulation Annuity or Flexible Income Fund investment plans offered under this folder and issued by The Great-West Life Assurance Company. July 16, 2015 J. Dave Johnston Douglas A. Berberich President and Chief Operating Officer, Canada Vice-President and Associate General Counsel, Canada

3 Key facts about the Great-West Life Flexible Accumulation Annuity and Flexible Income Fund investment plans and investment funds offered under this information folder This summary provides a brief description of the basic things you should know before you apply for this individual variable insurance contract. This summary is not your contract. A full description of all the features and how they work is contained in this information folder and your contract. You should review these documents and discuss any questions you have with your financial security advisor. What am I getting? You are getting an insurance contract between you and The Great-West Life Assurance Company. It gives you a choice of investment funds (also known as segregated funds) and provides certain guarantees. You can: Pick a registered or non-registered contract Choose one or more investment funds Name a person to receive the death benefit Withdraw money from your contract Receive regular payments now or later The choices you make may affect your taxes, see the section Your income tax considerations. They could also affect the guarantees, see the section Examples of how redeeming units affects the basic amount and reduces the guaranteed value. Ask your financial security advisor to help you make these choices. The value of your contract can go up or down subject to the guarantees. What guarantees are available? A death benefit guarantee applies and you may get a maturity guarantee. These help protect your fund investments. For details about the guarantees, see the Basic guaranteed benefits section. You pay fees for this protection. The fees are included in the management expense ratio, which is described in the Fees and expenses section. Any withdrawals you make will reduce the guarantees. For full details please see the Basic guaranteed benefits section. Maturity guarantee This protects the value of your investment at a specific date in the future, which is called the maturity date. This date is explained in the When your plan matures section. On this date, you will receive the greater of: The market value of the funds, or 75 per cent of the money you put in the funds Death benefit guarantee This protects the value of your investment if the insured person dies. It is paid to someone you name. The death benefit applies if the insured person dies before the maturity date. It pays the greater of: The market value of the funds, or 75 per cent of the money you put in the funds What investments are available? You can invest in the investment funds described in Fund Facts. Other than any maturity and death benefit guarantees, Great-West Life does not guarantee the performance of the investment funds. Carefully consider your tolerance for risk when you select a fund. How much will this cost? The investment funds you select affect your costs. The investment funds are available on a no-load and back-end load basis. For full details, see the section Sales charge options and the Fund Facts for each investment fund. Fees and expenses are deducted from the investment funds. They are shown as management expense ratios or MERs on the Fund Facts for each fund. If you make certain transactions or other requests, you may be charged separately for them and this includes a short-term trading fee. For full details, see the section Fees and expenses and the Fund Facts for each investment fund. Investment fund information folder October

4 What can I do after I purchase this contract? If you wish, you can do any of the following: Exchanges You may exchange from one fund to another. See the section How to exchange investment fund units. Withdrawals You can withdraw money from your contract. If you decide to, this will affect your guarantees. You may also need to pay a fee or taxes. See the section How to redeem investment fund units. Premiums You may make lump-sum or regular payments. See the section How to allocate premiums to investment fund units. Regular payments At a certain time, unless you select another option, we will start making payments to you. See the section When your plan matures. Certain restrictions and other conditions may apply. Review the contract for your rights and obligations and discuss any questions with your financial security advisor. What information will I receive about my contract? We will tell you at least once a year the value of your investments and any transactions you have made during the year. You may request more detailed financial statements of the funds. These are updated at certain times during the year. For full details, see the section Administration of the investments funds. Can I change my mind? Yes, you can: Cancel the contract Cancel any additional lump-sum premium you make Cancel the initial automatic monthly premium To do any of these, you must tell us in writing within two business days of the earlier of: The day you receive the confirmation of your transaction, or Five business days after we mail the confirmation to you The amount returned will be the lesser of the amount you invested or the value of the applicable units you acquired on the day we process your request. The amount returned will include a refund or any sales charge or other fees you paid. The transaction may generate a taxable result and you are responsible for any income tax reporting and payment that may be required as result of any transaction. If you change your mind about a specific additional premium, the right to cancel only applies to that transaction. For full details, see the introductory page to the Fund Facts section. Where can I get more information? You may call us at or send us an . To send an , please go to our website and then to the Contact Us section. Information about our company and the products and services we provide is on our website at For information about handling issues you are unable to resolve with us, contact the OmbudService for Life and Health Insurance at or on the Internet at Additionally, if you are a resident of Quebec contact the Information Centre of the Autorité des marchés financiers (AMF) at or at information@lautorite.qc.ca. For information about additional protection available for all life insurance policyowners, contact Assuris, a company established by the Canadian life insurance industry. See for details. For information about how to contact the insurance regulator in your province, visit the Canadian Council of Insurance Regulators website at 2 Investment fund information folder October 2015

5 Table of contents Key facts about the Great-West Life Flexible Accumulation Annuity and Flexible Income Fund investment plans and investment funds offered under this information folder... 1 How Great-West Life investment plans work... 5 Introduction... 5 Non-registered plans... 5 Non-registered plans joint annuitants... 5 RRSPs, LIRAs, locked-in RRSPs and RLSPs... 6 RRIFs, PRIFs, LRIFs, LIFs and RLIFs... 6 Beneficiaries... 7 How our investment funds work... 8 Portfolio funds... 8 Sales charge options... 8 How we value investment fund units... 9 Fundamental changes to the investment funds... 9 Allocating premiums, redeeming and exchanging investment fund units How to allocate your premium to investment fund units How to redeem investment fund units How to exchange investment fund units Short-term trading When the redemption of your units may be delayed When your plan matures Maturity date What happens to your plan on the maturity date Basic guaranteed benefits Basic amount Basic maturity guarantee Basic death benefit guarantee Examples of how redeeming units affects the basic amount and reduces the guaranteed value When the basic guaranteed benefits end Fees and expenses Fees and expenses paid by the investment fund Annual investment management fee by fund Fees and expenses paid directly by you Your income tax considerations Tax status of the investment funds Non-registered plans RRSPs RRIFs Administration of the investment funds Keeping you informed Requests for Fund Facts, financial statements and other documents Material contracts Material transactions Assuris protection Investment policy Investment managers Investment manager review process Fund risks Fund facts Asset allocation funds Conservative Portfolio (PSG) Portfolio (PSG) Balanced Portfolio (PSG) Advanced Portfolio (PSG) Aggressive Portfolio (PSG) Income asset allocation funds Conservative Income Portfolio (PSG) Income Portfolio (PSG) Balanced Income Portfolio (PSG) Advanced Income Portfolio (PSG) Cash and cash equivalent funds Money Market (Portico) Fixed income funds Fixed Income Portfolio (PSG) Core Bond (Portico) Core Plus Bond (Portico) Canadian Bond (Portico) Mortgage (Portico) Government Bond (Portico) International Bond (Brandywine) Investment fund information folder October

6 Balanced funds Income (Portico) Income (Mackenzie) Diversified (GWLIM) Equity/Bond (GWLIM) Growth & Income (Mackenzie) Canadian Balanced (Mackenzie) Growth & Income (AGF) Balanced (Invesco) Balanced (Beutel Goodman) Canadian equity funds Canadian Equity Portfolio (PSG) Canadian Equity (GWLIM) Ethics (GWLIM) Canadian Equity Growth (Mackenzie) Canadian Equity (Bissett) Equity Index (GWLIM) Equity (Mackenzie) Canadian Equity (Beutel Goodman) Canadian Value (Invesco) Dividend (GWLIM) Dividend (Mackenzie) Mid Cap Canada (GWLIM) Growth Equity (AGF) Foreign equity funds Global Equity Portfolio (PSG) Foreign Equity (Mackenzie) Global Equity (Setanta) U.S. Equity (GWLIM) American Growth (AGF) U.S. Value (London Capital) U.S. Mid Cap (GWLIM) International Equity (Putnam) International Equity (JPMorgan) Foreign specialty funds International Growth (Mackenzie) International Opportunity (JPMorgan) European Equity (Setanta) Far East Equity (CLI) Emerging Markets (Mackenzie) Glossary of terms Canadian specialty funds Real Estate (GWLRA) Canadian Resources (GWLIM) North American funds North American Opportunity (Mackenzie) Smaller Company (Mackenzie) Science and Technology (GWLIM) Investment fund information folder October 2015

7 How Great-West Life investment plans work Introduction The Great-West Life Flexible Accumulation Annuity or Flexible Income Fund plan is an individual variable insurance contract based on the life of the insured person, also known as the annuitant that you name on the application form. There are three types of plans available: Non-registered plans Registered retirement savings plans (RRSPs) Registered retirement income funds (RRIFs) Locked-in RRSPs, locked-in retirement accounts (LIRAs), restricted locked-in savings plans (RLSPs) are three specific types of RRSPs. You can only open locked-in RRSPs, LIRAs and RLSPs with money transferred directly from pension plans, if allowed by federal or provincial pension laws; pension laws place certain restrictions on them. Since otherwise all RRSPs work the same way, whether or not they are locked-in RRSPs, LIRAs or RLSPs, we ll simply refer to them as RRSPs throughout the rest of this information folder. Prescribed retirement income fund (PRIF), locked-in retirement income funds (LRIFs), life income funds (LIFs) and restricted life income funds are four specific types of RRIFs. Unless, we say otherwise, when we refer to features of a RRIF, they also apply to a PRIF, LIF, LRIF and RLIF. Each type of plan allows you, as the policyowner, to allocate premiums to a daily interest account, guaranteed interest options and investment funds. When you pay premiums to your plan, it automatically goes first into your daily interest account. From there you can transfer it to a guaranteed interest option or to an investment fund. This information folder describes the investment funds available and the maturity and death benefit guarantees that come with them. For more information about guaranteed interest options, please contact your Great-West Life financial security advisor. Your plan is a deferred annuity, which means at maturity, annuity payments will commence, unless you choose otherwise. For more information, see When your plan matures. This document is divided into two parts. The first part contains general information that applies to all investment plans. The second part provides specific information about the investment funds. A glossary of terms is located at the back of this information folder and provides an explanation of some of the terms used in the folder. Non-registered plans A non-registered plan can be owned by a single individual or jointly by several individuals. Normally, there will only be one annuitant, who can be the policyowner or someone else. You may be subject to early redemption fees under your plan. For more information about these fees, see Early redemption fees for back-end load units. For information about tax implications, see Your income tax considerations. Non-registered plans joint annuitants Joint annuitants are the persons upon whose life the policy is based. Joint annuitants must be either married, civil union spouses or in a common-law relationship with each other at the time of the application. The joint annuitants must also be joint policyowners with rights of survivorship (where Quebec law applies, rights of survivorship means accretion). When joint annuitants apply for a joint policy on the application, the word policyowner and you in this folder will mean both joint policyowners. These plans will be subject to the same rules as non-registered plans unless noted. Upon the death of a joint annuitant, the surviving annuitant will become the sole annuitant and policyowner. The death benefit will only be paid on the death of the last annuitant while the policy is in force. When we refer to the age of an annuitant, we mean the age of the younger of the two joint annuitants. The maturity date will be based on the age of the youngest annuitant. The maturity date will not change if the younger annuitant dies first. Following the maturity date, if an annuitant is living and has not previously indicated an alternative preference, annuity payments will commence. If both annuitants are living, the annuity will be based on and be guaranteed for the life of both annuitants. Otherwise, the annuity will be based on and be guaranteed for the life of the surviving annuitant. Investment fund information folder October

8 RRSPs, LIRAs, locked-in RRSPs and RLSPs An RRSP is an investment plan registered under the Income Tax Act (Canada). The contributions you make to your RRSP are tax deductible and there is a maximum amount you can contribute each year under the Income Tax Act (Canada). You can also transfer money directly from an RRSP at another financial institution or from a pension plan, if federal or provincial pension laws allow it. There are no limits on the amount of transfers from RRSPs. There are limits under the Income Tax Act (Canada) for transfers from defined benefit pension plans. Only one person, who must also be the annuitant, can own an RRSP. For information about tax implications, see Your income tax considerations. Features of non-registered, RRSPs, LIRAs, locked-in RRSPs, RLSPs and systematic redemption plan policies are summarized in the following table: Product feature Maximum issue age Nonregistered RRSPs, LIRAs, locked-in RRSPs and RLSPs Minimum initial premium Minimum automatic monthly transfer Minimum lump sum premium Minimum systematic redemption Non-registered, RRSPs, LIRAs, locked-in RRSPs and RLSPs No-load option Back-end load option Systematic redemption plan (nonregistered only) N/A $300 lump sum or $50 automatic monthly premium $50 unless following DISCOVERY TM strategic asset allocation automatic monthly transfer must be an average of no less than $25 per fund $50 $50 $50 N/A N/A $50 Product feature Minimum partial redemption Redemption subject to possible early redemption fee Non-registered, RRSPs, LIRAs, locked-in RRSPs and RLSPs No-load option Back-end load option Systematic redemption plan (nonregistered only) $250 $250 $250 No Yes Current as of the date of the information folder subject to change Yes, if backend load option selected RRIFs, PRIFs, LRIFs, LIFs and RLIFs A RRIF is a plan that gives you regular income payments and is registered under the Income Tax Act (Canada). You can only open a RRIF with money transferred directly from an RRSP or another RRIF. You can only open PRIFs, LRIFs, LIFs and RLIFs with money transferred directly from a pension plan, from a locked-in RRSP, LIRA and RLSP, or from another PRIF, LRIF, LIF or RLIF, where federal or provincial pension laws allow you to. We currently offer RRIFs and LIFs across Canada, LRIFs in Manitoba and PRIFs in Saskatchewan and Manitoba. RLIFs are only available where the money is administered under federal pension legislation. Under the Income Tax Act (Canada), you must redeem a minimum amount each year as an income payment from these plans. For LRIFs, LIFs and RLIFs there is also a maximum amount you may redeem each year. Only one person, who must also be the annuitant, can own a RRIF, PRIF, LRIF, LIF or RLIF. You may be subject to early redemption fees under your plan. For more information about these fees, see Early redemption fees for back-end load units. You can schedule periodic income payments from your RRIF. During the first calendar year, you may receive up to 20 per cent of the original premiums in payments without paying an early redemption fee. In subsequent years, you may receive up to 20 per cent of the Jan. 1 market value of the funds in the policy without paying an early redemption fee. Amounts received in excess of 20 per cent may be subject to an early redemption fee. For more information about fees to change the amount or frequency of your payments, please see Charge for changing the amount or frequency of your scheduled periodic income payments. 6 Investment fund information folder October 2015

9 For information about tax implications, see Your income tax considerations. Features of these policies are summarized in the following table: Product feature Maximum issue age for RRIFs, PRIFs, LRIFs, RLIFs and currently LIFs issued under Ontario, Alberta, Federal Pension Benefits Standards Act (PBSA), British Columbia, Quebec, Nova Scotia and Manitoba pension legislation Maximum issue age for LIFs issued under New Brunswick pension legislation Maximum issue age LIFs issued under Newfoundland and Labrador pension legislation Minimum initial premium existing client of Great-West Life Minimum initial premium new client to Great-West Life Minimum lump sum premium Minimum automatic transfer to an investment fund Minimum automatic scheduled income payments Minimum partial or unscheduled redemption Minimum exchange to another fund RRIF/PRIF/LRIF/ LIF/RLIF $10,000 $20,000 $50 per fund $50 unless following DISCOVERY TM strategic asset allocation automatic monthly transfer must be an average of no less than $25 per fund Legislative minimum $250 - A maximum free redemption percentage of 20 per cent is allowed for partial redemptions in each calendar year. (Automatic income payments are included in the 20 per cent free redemption per year.) $50 Current as of the date of the information folder subject to change Beneficiaries You may designate one or more beneficiaries to receive any death benefit payable under the policy. You may revoke or change the designation prior to the maturity date, subject to applicable law. If the designation is irrevocable, you cannot revoke or change it or exercise certain other specific rights without the written consent of the irrevocable beneficiary in accordance with applicable law. If the policy is a LIRA, LRSP, RLSP, PRIF, LIF, RLIF or LRIF, the interest of your spouse, civil union spouse or common-law partner can take priority over a beneficiary designated by you, depending on applicable pension legislation. Investment fund information folder October

10 How our investment funds work Each of our investment funds is a segregated fund, which is a pool of investments kept separate, or segregated, from the general assets of Great-West Life. Each investment fund is divided into different classes with each class having an unlimited number of notional units of equal value. For more information about unit value, see How we value investment fund units. When you transfer money from your daily interest account to investment funds, units are allocated to your plan, but you do not actually own, buy or sell any part of the investment funds or any units. Instead, we hold the assets of the investment funds. This also means that you don t have any voting rights associated with the investment funds. We calculate the value and the benefits to which you are entitled based on the value of the units allocated to your plan on a particular date less any applicable fees and charges. Neither your plan nor your units give you an ownership interest in Great-West Life or voting rights in connection with Great-West Life. When you select an investment fund that invests in units of a mutual fund, you will not be a unitholder of the mutual fund. We have the right to subdivide or consolidate the units of an investment fund. If we subdivide the units of a fund, there will be a decrease in the unit value. If we consolidate the units of a fund, there will be an increase in the unit value. If we subdivide or consolidate the units of an investment fund, the market value of the investment fund and the market value of your plan will not change. We will give you advance written notice if we have decided to do so. We have the right to add, restrict the allocation of premiums or exchanges, close and terminate an existing investment fund. If we do close an investment fund, you cannot allocate a premium or exchange to the investment fund. If we do close an investment fund, it may be reopened for investment at our discretion. We will notify you in writing 60 days before we terminate an investment fund or make a material change to the fundamental investment objectives of an investment fund. For more information, see Fundamental changes to the investment funds. It s important to diversify your investments, which means investing in funds which have a variety of assets and investment styles. For more information about diversification and other risks involved in investment funds, see Fund risks. You can choose from different investment funds and this broad choice provides a good opportunity for you to diversify your investments. In addition, there are asset allocation funds that are specially designed to increase diversification. We refer to our asset allocation funds as Great-West Life portfolio funds. They are explained in more detail below. All the investment funds currently available are described in detail later in this information folder, see the Fund Facts section. Portfolio funds Each portfolio fund invests in a variety of other funds. They offer you an easy way to diversify your investments by investing in a single fund. A portfolio fund may offer you diversification among: Types of assets, such as shares, bonds, mortgages and real estate The entities that issue the assets, such as shares in large, small or resource-based companies, and bonds issued by governments or companies Assets in different countries Investment advisors with different investment styles We may review the composition of the portfolio funds from time to time. When required, we may change the: Funds the portfolio fund holds Percentages of each fund the portfolio fund intends to hold Number of funds the portfolio fund holds Sales charge options No-load and back-end load units We currently offer two different classes of investment fund units: no-load units and back-end load units. You can hold either no-load units or back-end load units in your plan, but not both in one plan. No-load units With no-load units, you don t pay any fees when you allocate a premium to a fund, redeem or exchange units, subject to a short-term trading fee. For more information, see Short-term trading. However, investment management fees are higher for no-load units than for back-end load units. For more information, see Fees and expenses. Back-end load units With back-end load units, you don t pay any fees when you allocate a premium to a fund or exchange units. However, you may have to pay a fee if you redeem units within seven years of allocating a premium to a fund. For more information, see Early redemption fees for back-end load units. You may also be subject to a short-term trading fee. For more information, see Short-term trading. 8 Investment fund information folder October 2015

11 Back-end load units have lower investment management fees than no-load units. For more information, see Fees and expenses. How we value investment fund units Generally, we value our units at the close of business on each day the Toronto Stock Exchange is open for business. We have the right to change how often we value our units. We refer to any day that we value units as a valuation day. We ll tell you in writing 60 days before we change the frequency that we value the units. For more information, see Fundamental changes to the investment funds. When we value units, we calculate the unit value by dividing the total market value of that class of the fund by the number of units in that class of the fund. The market value of a class of a fund is the total market value of the assets in that class of the fund, less investment management fees and other expenses attributed to that class. For more information, see Fees and expenses. When we calculate the market value of an asset held in an investment fund, we use the closing price of that asset. If a closing price is not available, we ll determine the fair market value of the asset. The value of investment fund units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. A similar fund is a fund within the same investment fund category that has a comparable investment objective and the same or lower investment management fee. The exchange of your units from one investment fund to another in a non-registered policy may produce a taxable capital gain or loss. For information about tax implications, see Income tax considerations. If we do not offer a similar investment fund, you may have the right to redeem the investment fund units without incurring a redemption charge or similar fee provided you advise us at least five business days prior to the change happening. We will advise you if this applies to you. Any redemption of units from a nonregistered policy may produce a taxable capital gain or loss. For information about tax implications, see Income tax considerations. During the transition period between the announcement and the effective date of the fundamental change, you will not be permitted to allocate premiums to or exchange into the affected fund unless you agree to waive your rights under the fundamental change provision for that particular fundamental change. When an investment fund invests in an underlying mutual fund, an increase in the investment management fee of the underlying mutual fund that also results in an increase in the investment management fee of the investment fund would be treated as a fundamental change. Fundamental changes to the investment funds If we make any of the following changes to an investment fund, we will notify you in writing 60 days before the change occurs. The notice will be sent by regular mail to the most recent address we have for you in our records. Increase the investment management fee Material change to the investment objective Decrease the frequency with which the fund is valued During the notice period, you will have the right to exchange the value of your units from the affected investment fund to a similar investment fund that is not subject to the fundamental change without charge provided you advise us at least five business days prior to the change happening. We will advise you of similar investment funds that are available to you at that time. Investment fund information folder October

12 Allocating premiums, redeeming and exchanging investment fund units You can make a request to allocate your premium to a fund, redeem or exchange units at any time. However, we only process allocations, redemptions or exchanges on valuation days. If we receive your request to allocate your premium to a fund, redeem or exchange units at our administrative office in London, Ontario or Montreal, Quebec before 3:58 p.m. eastern time or before the Toronto Stock Exchange closes, whichever is earlier, on a valuation day, we ll process the request on that day using that day s unit value. If we receive your request after that time, we ll process it on the next valuation day using that day s unit value. For more information, see How we value investment fund units. When you ask us to allocate your premium to a fund, redeem or exchange units, your instructions must be complete and in a manner acceptable to us, otherwise we will not be able to complete the transaction for you. We have the right to refuse any premium allocated to your plan. We also have the right to change any minimum amounts that are given in this information folder without notice. If you choose to make a redemption, this will reduce the amount available for annuity payments. For more information, see When your policy matures. How to allocate your premium to investment fund units You can allocate your premium to a fund by transferring all or part of the value of the daily interest account to investment funds. You can also set up an automatic monthly transfer of money from your daily interest account to investment funds. In both cases, the minimum amount you can currently transfer is $50. When you transfer money from the daily interest account to investment funds, we allocate units to your plan. We determine the number of units to allocate by dividing the amount of money you transfer by the unit value of the class of the fund at the time of the transfer. For more information, please see How we value investment fund units. We have the right to limit purchases of investment funds. We may also refuse to accept requests to allocate premiums to investment funds. How to redeem investment fund units When you request money from your plan it must come from the daily interest account, which means you may first have to redeem units and transfer the proceeds to the daily interest account. Upon request and subject to our administration rules you can redeem investment funds on any valuation day. You can also set up an automatic monthly transfer from one or more investment funds to your daily interest account. You must keep a minimum of $300 in units. If you have less than $300 in units, we may require that you redeem them and transfer the money to the daily interest account. When you redeem investment fund units, the value of those units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. We will charge a short-term trading fee on an redemption when the units to be redeemed have not been held in the investment fund for the applicable period of time. For more information, see Short-term trading. There may be income tax consequences if you redeem units in a non-registered plan. For more information, please see Your income tax considerations. You will have to pay early redemption fees when you redeem back-end load units. Back-end load units older than seven years may be redeemed without an early redemption fee. For more information, see Early redemption fees for back-end load units. The value of your guarantee will be reduced when you redeem units. For more information, see Examples of how redeeming units affects the basic amount and reduces the guaranteed value. How to exchange investment fund units Upon request and subject to our administrative rules you can exchange units of one fund in your plan for units of another investment fund. You can also set up an automatic monthly exchange. In both cases, the minimum amount you can currently exchange is $50. When you exchange units, you re redeeming units of one or more funds and allocating their value to units of other funds. If you set up an automatic exchange between investment funds and an automatic exchange between other investment options in your plan, we process the automatic exchange between investment funds first. We will charge a short-term trading fee on an exchange when the units to be exchanged have not been held in the investment fund for the applicable period of time. For more information, see Short-term trading. 10 Investment fund information folder October 2015

13 When you exchange investment fund units, the value of those units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. There may be income tax consequences if you exchange units within a non-registered plan. For more information, please see Your income tax considerations. There are no early redemption fees when you exchange units. Under unusual circumstances, we may have to delay your exchange of units if we ve had to delay the redemption of any units. For more information, please see When the redemption of your units may be delayed. The value of your guarantee will not be reduced when you exchange units. Short-term trading Using investment funds to time the market or trading on a frequent basis is not consistent with a long-term investment approach based on financial planning principles. In order to limit such activities, we will charge a short-term trading fee as outlined below. The short-term trading fee is retained in the investment fund as compensation for the costs associated with the switch or redemption request. We may take additional actions as we consider appropriate to prevent further similar activity by you. These actions may include the delivery of a warning, placing you on a watch list to monitor activity, declining to accept allocations to, and exchange and redemption requests from, the investment funds, delay trades by one valuation day and suspend trading under the policy. We reserve the right to change our administrative practices or introduce new ones when we determine it is appropriate. We will charge a short-term trading fee of up to two per cent of the amount exchanged or redeemed if you allocate premiums to an investment fund for less than 90 consecutive days. The fee is subject to change. This right is not affected by the fact that we may have waived it at any time previously. We reserve the right to increase the period of time a premium must remain in an investment fund from 90 consecutive days to up to 365 consecutive days. We will give you written notice of our intent to increase the time period at least 60 days in advance. Our notice to you will specify the affected investment fund(s) and the new period of time. We will send the notice to your most recent address on our records for this policy. When the redemption of your units may be delayed Under unusual circumstances, we may have to delay your redemption of units or postpone the date of a transfer or payment. This may happen if: Normal trading is suspended on a stock exchange on which the investment fund has a significant percentage of its assets, or We believe it s not practical to dispose of investments held in an investment fund or that it would be unfair to other unitholders During such a delay, we ll administer the redemption of units according to the applicable rules and laws and in a manner that we consider fair. We may have to wait until there are enough assets in the fund that can be easily converted to cash. If there are more requests to redeem units than we can accommodate, we ll redeem as many units as we think is appropriate and allocate the proceeds proportionally among the investors who asked to redeem units. We ll redeem any remaining units as soon as we can. Investment fund information folder October

14 When your plan matures Maturity date Most plans end or mature at a certain time. The maturity date varies depending on the type of plan you have. In some cases, you can select an earlier maturity date. For a non-registered plan, the automatic maturity date is Dec. 31 of the year the annuitant turns 100. You may also select an earlier maturity date as long as the date is: After the annuitant turns 70 Before Dec. 31 of the year the annuitant turns 100 At least 15 years after the later of: The date you first held investment funds in your plan The date you asked to change the maturity date For an RRSP, the automatic maturity date is Dec. 31 of the year the annuitant turns the age stipulated by the Income Tax Act (Canada), currently age 71. You may also select an earlier maturity date between Sept. 1 and Dec. 31 of the year the annuitant turns 71. The maturity date for a LIF depends on the jurisdiction that governs your LIF. Some jurisdictions require that your LIF be converted to a life annuity. If your LIF requires you to receive payments from a life annuity, the maturity date will be Dec. 31 of the year stipulated in the regulations governing the LIF. For RRIFs, PRIFs, LRIFs, RLIFs or LIFs, which are not required to be annuitized under applicable pension legislation, there is no maturity date. For RRIF policies issued to Quebec residents, the maturity date is Dec. 31 of the year the annuitant turns age 100. Currently Newfoundland and Labrador pension legislation requires a LIF to mature in the year you attain age 80 and annuity payments to start. Currently LIFs administered under New Brunswick pension legislation are not required to annuitize, however, funds must be fully redeemed and the policy closed by Dec. 28 of the year the annuitant attains 90. Over time, regulators may change the rules that govern LIFs. We will change the terms of your LIF in accordance with any change in the regulations. What happens to your plan on the maturity date On the maturity date of your plan, we will redeem all units and transfer the value to the daily interest account. If your plan was a non-registered plan, you may have to pay tax as a result. For RRSP plans (except RRSPs for which you first allocated a premium to the investment funds when the annuitant is age 60 or older), non-registered plans and RRIFs issued to residents of Quebec, if you do not indicate a preference, following the maturity date we will commence life annuity payments. The annuity payments are conditional on the annuitant being alive and will be in equal annual or more frequent periodic amounts. We may require evidence that the person is living when the payment becomes due. Premiums will not be accepted under the policy after the annuity payments commence. We will make payments for as long as the annuitant lives. If the annuitant dies within 10 years of when the annuity payments commenced, the remaining guaranteed payments will go to the beneficiary. If there is no beneficiary, we ll make the payments to you (as the policyowner) or to your estate. You may have to pay tax on the annuity payments. Payments are not commutable during the annuitant s lifetime. If you first allocated a premium to an investment fund in an RRSP when the annuitant is age 60 or older and you do not indicate a preference for another type of annuity then offered by us, we ll commence payments on a RRIF basis. If on the issue date of the RRSP or non-registered plan, the policyowner is not a resident of Quebec, the amount of the annuity payments will be determined using the annuity rate in effect when the annuity payments commence. If on the issue date of the RRSP, RRIF or non-registered plan, the policyowner is a resident of Quebec, the amount of the annuity payments will be determined by the greater of the annuity rate in effect when the annuity payments commence and the rate established in the policy. 12 Investment fund information folder October 2015

15 Basic guaranteed benefits All plans have two types of basic guaranteed benefits: the basic maturity guarantee and the basic death benefit guarantee. Both basic guaranteed benefits are included at no additional cost and apply to the investment funds you hold in your plan, regardless of the type of plan you own. However, these basic guaranteed benefits only apply if you first held investment funds in your plan after Oct. 25, If you held investment funds in your plan before Oct. 25, 1999, please refer to your contract for more information about your guaranteed benefits. Before the maturity date or the death of the insured person, the value of investment fund units is not guaranteed because it fluctuates with the market value of the assets in the investment fund. Basic amount The basic amount is used to calculate the value of both basic guaranteed benefits. In general, the basic amount is: The total of all amounts allocated to units Minus a proportional reduction for any units redeemed To calculate the proportional reduction for any units redeemed, we use the following formula: A x B C = reduction in the basic amount when: A is the basic amount before the redemption B is the value of the units redeemed C is the market value of the investment funds before the redemption If early redemption fees, short-term trading fees or other charges apply, they are included as part of the amount of units redeemed. For more information, see Fees and expenses paid directly by you. The basic amount does not include exchanges between funds. For the following plans, the basic maturity guarantee is guaranteed to be not less than 75 per cent of the basic amount: Non-registered plans if you first allocated premiums to the investment funds 15 years or more before the maturity of the plan RRSPs if you first allocate a premium to the investment fund option prior to the annuitant attaining age 60 RRIFs issued to a Quebec resident LIFs (which have a maturity date) if you first allocated premiums to the investment funds 10 years or more before the maturity date of the LIF There is no basic maturity guarantee for any RRIF, PRIF, LRIF, RLIF or LIF, which does not have a maturity date. If you first allocated premiums to the investment funds in an RRSP when the annuitant is age 60 or older, there is no maturity guarantee unless the value of the units of the investment funds are paid out on a RRIF basis following the maturity date of the RRSP. The automatic maturity date of the RRSP is Dec. 31 in the year you attain age 71. If the value of the units of the investments funds are paid out on a RRIF basis, the maturity guarantee applies on Dec. 31 of the year you attain age 80. For such a RRIF, the basic maturity value is guaranteed to be not less than 75 per cent of: The total of all premiums allocated to the investment funds in the RRSP Minus a proportional reduction for any units redeemed from both the RRSP and the RRIF We calculate this proportional reduction the same way we calculate the proportional reduction for the basic amount. Basic maturity guarantee On the maturity date, we ll pay you the greater of: The market value of all your units less any early redemption fees (for more information, see Early redemption fees for back-end load units), or The basic maturity guarantee of your plan based on the basic amount Investment fund information folder October

16 Basic death benefit guarantee We make a one-time, lump-sum payment of the basic death benefit if the last annuitant dies before your plan matures. If we receive satisfactory proof of the last annuitant s death at our administrative office in London, Ontario or Montreal, Quebec before 3:58 p.m. eastern time on a valuation day, we ll calculate and process the payment on and as of that day. If we receive the proof after that time, we ll calculate and process it on and as of the valuation day after we receive the proof. For more information about valuation days, see How we value investment fund units. Also, see When the redemption of your units may be delayed. We make this payment to the beneficiary of the plan. If there is no beneficiary, we make the payment to you (as the policyowner) or to your estate. The basic death benefit is the greater of: The market value of all units allocated to investment funds, or The basic death benefit guarantee, which is 75 per cent of the basic amount and is determined for each plan We do not deduct early redemption fees from the basic death benefit. If you have a RRIF and your spouse or common-law partner is the beneficiary, instead of receiving a one-time, lump-sum payment, you may choose to have your spouse or common-law partner become the policyowner and annuitant of the plan and continue to receive the regular income payments. In this case, we will pay the death benefit on the death of the spouse or common-law partner, even if, on the death of the first annuitant, we increased the value of the plan to equal the death benefit guarantee applicable on the death of the first annuitant. Once your plan matures, the basic death benefit guarantee no longer applies. Examples of how redeeming units affects the basic amount and reduces the guaranteed value Let s assume you allocated the following premiums to the investment fund: Date July 1, 2015 July 1, 2016 Investment Fund Canadian Equity (GWLIM) Canadian Equity (GWLIM) Amount you allocated to the investment fund $10,000 $10,000 After the second premium allocation, your policy will have the following values: Basic amount: $20,000 Basic maturity guarantee: $20,000 x 75% = $15,000 Basic death benefit guarantee: $20,000 x 75% = $15,000 Let s also assume that on July 1, 2017, you redeem units of the Canadian Equity (GWLIM) for $4,950. If the market value is greater than the basic amount. Let s assume that on July 1, 2017, before you redeem the units, the market value of your Canadian Equity (GWLIM) units is $22,000. Your basic amount would be reduced according to the formula: A x B C = reduction in the basic amount when: A is the basic amount before the redemption ($20,000) B is the value of the units redeemed ($4,950) C is the market value of the investment funds before the redemption ($22,000) $20,000 x $4,950 $22,000 = $4,500 Your plan would now have the following values: Basic amount: $20,000 $4,500 = $15,500 Basic maturity guarantee: $15,500 x 75% = $11,625 Basic death benefit guarantee: $15,500 x 75% = $11, Investment fund information folder October 2015

17 If the market value is less than the basic amount. Let s assume that on July 1, 2017, before you redeem the units, the market value of your Canadian Equity (GWLIM) units is $18,000. Your basic amount would be reduced according to the formula: A x B C = reduction in the basic amount when: A is the basic amount before the redemption ($20,000) B is the value of the units redeemed ($4,950) C is the market value of the investment funds before the redemption ($18,000) $20,000 x $4,950 $18,000 = $5,500 Your plan would now have the following values: Basic amount: $20,000 $5,500 = $14,500 Basic maturity guarantee: $14,500 x 75% = $10,875 Basic death benefit guarantee: $14,500 x 75% = $10,875 When the basic guaranteed benefits end These benefits end on the earlier of one of the following dates: The maturity date, once we ve paid the basic maturity benefit, or The date the last annuitant dies, once we ve paid the basic death benefit Fees and expenses This section explains the fees and expenses you pay to us for managing the investment fund and paying for the guarantees (see Fees and expenses paid directly by the investment fund). The total cost of investing in an investment fund (known as the management expense ratio or MER) is the sum of the investment management fee and the expenses to operate the investment fund. This is further explained below, but in order to find out how much each investment fund will cost you to hold in your policy, you want to look at the MER. For the MERs of each investment fund available under the policy, see each of the Fund Facts. For example, if you selected to hold no-load units of an investment fund with a MER of 2.90 per cent you would pay a MER of 2.90 per cent. You may also have to pay other fees and expenses as described under Fees and expenses paid directly by you, but these are generally costs that depend on actions taken by you, and will not be imposed unless you do something specific (for example, redeeming your units prematurely), or request a specific additional service (for example, extra copies of annual statements). Fees and expenses paid by the investment fund Management expense ratio (MER) The MER is made up of the investment management fee and operating expenses (see below), expressed as an annualized percentage of the investment fund s average net assets for the year. You do not directly pay the MER. The investment management fee and operating expenses are paid from the investment fund before the unit value of an investment fund is calculated. The MER of an investment fund is subject to change without notice. The current MER is found on each of the Fund Facts. The updated MER is published each year in the audited financial statements, which are available on or about April 30 of each year. For more information on how to obtain these statements, see Requests for Fund Facts, financial statements and other documents. Investment fund information folder October