Filling the gap and guaranteeing income for life – Case Study

issued by Sun Life Assurance Company of Canadamanaged by CI Investments Inc.

Filling the gap and guaranteeing income for life – Case Study

Laura and Jeff: The situation

Laura and Jeff are both 50 and planning to retire in 15 years. Neither has a company pension, but they have saved $200,000 for retirement. The money is invested in conservative mutual funds and GICs. Once they retire, they estimate they will need about $50,000 a year to cover their expenses and maintain their current lifestyle.

They will each receive the maximum from Canada Pension Plan and Old Age Security. This will give them a combined income of about $35,000 a year, which is still less than their estimated expenses – but it’s guaranteed and indexed for inflation.

The challenge

Laura and Jeff want their retirement savings to serve as another source of guaranteed income – one that will fill the gap between their government benefits and anticipated expenses.

Laura and Jeff need to find a solution that can:

y provide a guaranteed predictable and sustainable income that will last for both their lives

y ensure that their savings grow before they plan to retire

y protect their assets from market volatility, but still provide potential for growth, and

y help their income keep pace with inflation.

To fill the gap

OAS$12,408

Total guaranteed income = $34,828*

CPP $22,420

An additional $15,172 needed

Requiredretirement

income$50,000

* All amounts have been rounded. Based on 2010 maximum benefits at age 65, Canadian Pension Plan is $11,210 a year or $934 per month per person and Old Age Security is $6,204 a year or $517 per month per person.

The strategy

Laura and Jeff transfer their savings to SunWise Essential Series Income Class. With Income Class, they will receive an annual 5% Bonus which increases their guaranteed income for every year they do not make a withdrawal, for up to 15 years, plus a prorated amount for the initial year.† This will increase their income for life by $45,000. They choose the Two-Life Income Stream option because it ensures that the guaranteed income for life for the surviving spouse continues when the first spouse dies. If they had chosen the one-life income option, their initial annual income would be slightly higher, but there would be no guarantee that the surviving spouse would receive the same level of income in the future.

Since they have a long-term investment horizon and because SunWise Essential Series Income Class insulates their income from market risk, they change their asset mix to 70% equities and 30% income to take advantage of the greater growth potential of equities. This means they are more likely to benefit from market resets that can increase their income and help them keep pace with inflation.

† The 5% Bonus does not impact contractural maturity/death benefits or the market value of Income Class units.

The result

At age 65, Laura and Jeff retire. Their investments have performed well and they have received several resets. Income Class provides them with a guaranteed income for life equal to 4.5% of the value of their LWA Base, or $27,654 annually.**

Over the next 10 years, resets continue to increase their guaranteed income. Jeff dies at age 75, after enjoying his retirement for a decade. But since they chose the two-life option, Laura’s income will continue at the same amount – $41,213 a year. If they had chosen the one-life option, the guaranteed annual income would be recalculated based on the market value of $458,060 and a LWA Rate of 5.5% and would be reduced to $25,193 annually.

Laura and Jeff benefit from 5% Bonuses and market resets

And see their income for life rise

** Based on non-registered plans. Illustration assumes 70% equity/30% fixed-income asset mix (Equity is one-third each S&P/TSX Composite Index, S&P 500 Index, and MSCI World Index; income is DEX Universe Bond Total Return) based on historical rates of return, gaining on average 6.9% per year. Annual withdrawals are assumed to be 4.5% of the LWA Base at age 65 and 4.75% at age 71 and beyond. Subject to legislated minimums and maximums and certain conditions. Exceeding the LWA withdrawal rate will have a negative impact on future payments. For One-Life Income Stream, a guaranteed income for life or Guaranteed Life Withdrawal Benefit (GWLB of 5.0% (LWA Rate) is available at January 1 of the year the Annuitant turns 65. For Two-Life Income Stream, a GLWB of 4.5% (LWA Rate) is available at January 1 of the year the younger spouse turns 65. Payments can continue until the death of the Annuitant (or the Annuitant and Second Life for Two-Life Income Stream) or termination of the contract.

Initial Investment $200,000 LWA Base Market Value (Income Class) 5% Bonus Resets

50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79

Income for Life

LWA Base = $867,645 LWA rate at 4.75% = $41,213 LWA

LWA Base = $614,538 LWA rate at 4.5% = $27,654 LWA

LWA Base = $762,344 LWA rate at 4.5% = $34,305 LWA

LWA Resets

50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79

Income for Life

LWA $34,305

LWA $41,213

LWA $27,654

Sun Life Assurance Company of Canada

227 King Street SouthP.O. Box 1601 STN WaterlooWaterloo, Ontario N2J 4C5

03828_E (09/10)

2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I www.ci.comHead Office / Toronto416-364-1145 1-800-268-9374

Calgary 403-205-43961-800-776-9027

Montreal 514-875-0090 1-800-268-1602

Vancouver 604-681-3346 1-800-665-6994

Client Services English: 1-800-563-5181 French: 1-800-668-3528

For more information about the innovative features

and benefits of SunWise Essential Series,

please visit www.sunwiseessentialseries.com.

All charts and illustrations in this guide are for illustrative purposes only. They are not intended to predict or project investment results. To the extent of any inconsistencies between this guide and the September 2010 SunWise Essential Series Information Folder and Individual Variable Annuity Contract, the terms of the Information Folder and Contract prevail. For full product details and disclosure, refer to the Information Folder and Contract.

Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies, is the sole issuer of the individual variable annuity contract providing for investment in SunWise Essential Series segregated funds. A description of the key features of the applicable individual variable annuity contract is contained in the Information Folder. ANY AMOUNT THAT IS ALLOCATED TO A SEGREGATED FUND IS INVESTED AT THE RISK OF THE CONTRACT HOLDER AND MAY INCREASE OR DECREASE IN VALUE. ®CI Investments, the CI Investments design, Synergy Mutual Funds, Harbour Advisors, Harbour Funds, and Signature Global Advisors are registered trademarks of CI Investments Inc. ™Cambridge, Portfolio Series and Signature Funds are trademarks of CI Investments Inc. ®SunWise is a registered trademark of Sun Life Assurance Company of Canada. ®Fidelity Investments and the Fidelity design are registered trademarks of FMR Corp. ®RBC Asset Management is a registered trademark of Royal Bank of Canada. ™TD Asset Management is a trademark of The Toronto-Dominion Bank, used under licence. Franklin Templeton Investments, Franklin Templeton Investments Quotential Program and/or Franklin Templeton Investments and design are registered trademarks of Franklin Templeton Investment Corp. Dynamic Funds™ is a division of Goodman & Company, Investment Counsel Ltd. (“GCICL”). GCICL does not warrant or make any representations regarding the use or the results of the information contained herein in terms of its correctness, accuracy, timeliness, reliability, or otherwise.