CI GIF and Legacy Segregated Funds Deposit Maturity Date ...

[Pages:3]CI GIF and Legacy Segregated Funds Deposit Maturity Date and Contract Maturity Date Process

This summary outlines the deposit maturity and contract maturity process. This information will assist you in understanding the impact of the deposit maturity and contract maturity on your clients' policies. It is provided as general guide only. For full contract terms and conditions, please consult the actual Annuity Policy issued to your clients.

A. Deposit Maturity Date

The deposit maturity date is the date on which the deposit maturity benefit is calculated. The first deposit maturity date typically occurs on the 10th anniversary of the contract date or reset.

A deposit maturity date is set for each deposit year. Therefore, clients who have made deposits in a different year will have multiple deposit maturity dates, unless a reset was exercised.

The deposit maturity benefit is calculated on the deposit maturity date as the greater of the guarantee value or the market value of the maturing deposit year.

"Top-up Benefit" Payment by Transamerica Life Canada

If the market value of the maturing deposit year account is less than the guarantee value, Transamerica will make up the difference (commonly called the "top-up benefit"). The "top-up" payment will be deposited into the money market segregated fund, under the same guarantee option and at no cost to the policyholder.

Automatic Reinvestment on the Deposit Maturity Date

At the deposit maturity date, unless your client has submitted in writing a surrender request, a new deposit maturity date is automatically set for 10 years from the expired deposit maturity date. If the new deposit maturity date falls within 10 years of the contract maturity date, then the new deposit maturity date will be deemed to be the contract maturity date. The policy continues to be in force.

Important to note: For GIF Class B (75%/100%) policies established on or after September 1, 2003, the reinvestment of the deposit maturity benefit when the market value is less than the deposit maturity guarantee will result in a reduction in the new deposit maturity guarantee and death guarantee. For further details and examples of this scenario please refer to the "Class Deposit Maturity Benefit" section in the applicable GIF Contract.

No action is required by the client if the reinvestment option is chosen.

B. Contract Maturity Date

For RRSP, RRIF and non?registered policies the contract maturity date is on December 31 of the year that the annuitant turns 100 years of age. For locked-in plans, the contract maturity date varies depending on the legislation and contract purchased by the client.

The contract maturity date is the date the segregated fund contract ends and the contract maturity benefit is calculated.

It is equal to the aggregate of all amounts, each of which is determined in respect of a deposit year, and each of which is the greater of the guarantee value and the market value.

"Top-up Benefit" Payment on the contract maturity date by Transamerica Life Canada

If the market value is less than the guarantee value, Transamerica will make up the difference (commonly called the "top-up benefit"). The "top-up" payment will be deposited into the policy at no cost to the client.

Automatic Conversion to a Single Premium Immediate Annuity (SPIA) on the Contract Maturity Date

Unless your client gives us other maturity settlement instructions, the contract maturity benefit will be converted to an SPIA.

If maturity settlement instructions are not received in writing prior to the contract maturity date, your client's contract maturity benefit will automatically be converted into a Transamerica SPIA in accordance with the segregated fund contract. Converting to a SPIA may not be suitable to your clients' financial needs, as a SPIA cannot be cashed out or changed. Please see the other contract maturity settlement options below.

In some cases, the automatic conversion process may differ as a result of certain legal, regulatory or product requirements. These exceptional circumstances include, but are not limited to, assigned policies, locked-in policies, and policies that are below the contract's minimum requirements.

Contract Maturity Settlement Options

At contract maturity, clients may elect to invest in a CI managed product or Transamerica product that they are eligible to purchase*. To complete the transaction, please have your client complete and submit the required application form.

*Example of guidelines: The Owner(s) and the Annuitant(s) must be a Canadian resident at the time of maturity, to purchase a new segregated funds product. Maturing policies subject to an assignment or collateral may require the assignment or collateral to be released prior to purchase a new product.

C. Submitting Maturity Instructions

Submitting Maturity Instructions Manually

In order to comply with your client's request for any of the maturity options, CI must be in receipt of your client's signed instructions, signature guaranteed where required, along with the appropriate application and/or transfer form before the maturity date. All maturity settlement instructions must clearly indicate that the transaction is to be processed on the maturity date.

Prior to submitting maturity instructions, please ensure you contact your distributor to determine if there are any additional requirements.

Submitting Maturity Instructions Electronically via FundSERV

Deposit maturity instructions can be submitted electronically via FundSERV up to 60 days prior to any applicable maturity date. Wire order trade instructions for maturity amounts will remain pending until the maturity date when they will settle on T+1. Please contact your distributor for further information regarding placing wire order transactions for maturity amounts.

Please note that if any maturity instructions are pending, any subsequent FundSERV instructions will assume the next available deposit maturity date if within 60 days. If two wire order maturity redemptions are received, FundSERV will match the first wire order instruction with the closest maturing amount, then the second wire order maturity redemption with the next maturity amount. If no maturing amount is found within the next 60-day period, the wire order maturity redemption will be rejected.

Prior to submitting maturity instructions, please ensure you contact your distributor to determine if there are any additional requirements.

D. Tax Treatment of Maturity Top-up Payments

Non-registered Policies: Any maturity top-up benefit will be treated as capital gains and reported to the policy owner on a T3 slip at the end of the year in which the top-up benefit payment is made. This may be offset by any capital losses realized at the time of a withdrawal.

Registered Policies: Any maturity top-up benefit retained within a registered policy will continue to accrue free of tax until withdrawal. Upon withdrawal, any top-up benefit included as part of the redemption proceeds is reported as income to the policyowner/annuitant on a T4 RSP/RIF slip.

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