Sun Life Financial Launches Variable Annuities Resources in Plain English
WELLESLEY, MA (May 12, 2011) – The Annuities Division of the U.S. business group of Sun Life Financial, Inc. (NYSE: SLF, TSX: SLF) has launched new resources using plain language to help investors understand the features and performance of variable annuities. As a growing number of Americans near retirement, the resources represent a milestone in the Firm’s Get to Know Sun Life brand campaign, which uses straightforward communications to help clients achieve greater financial security.
The materials include a printed kit enabling advisors to educate clients about how Sun Life variable annuities fit into a retirement income plan, and an easy-to-read variable annuity customer statement. An introductory video on variable annuities is also planned.
A recent Sun Life Retirement Income Pulse Poll of Financial Advisors concludes that more clients who could benefit from variable annuities would invest in this asset category if they received better education about it.
“By providing insight into the features and performance of variable annuities, we have a huge opportunity to help people enhance their sense of wellbeing -- not only in retirement, but from the moment they begin retirement planning,” says Terry Mullen, President of Sun Life Distributors, the firm’s wholesaling division. “Aside from the rare defined benefit plan, and income from social security, which may not meet people’s retirement needs, annuities represent the only source of guaranteed lifetime income.”
The new educational kit, Picture Your Retirement Possibilities, describes in plain language three key challenges for retirement income planning:
- Making savings last
- Investing in uncertain markets
- Keeping up with rising costs
Accompanied by simple examples and illustrations void of industry jargon, the written kit outlines prudent steps to address these challenges, using concrete examples through Sun Life Financial’s suite of variable annuities solutions.
To make its Quarterly Variable Annuity Statement an educational resource, Sun Life Financial embarked on a two-year project, enlisting customers, wholesalers, and advisors to help devise a concise, visually engaging report that shows clients the benefits and performance of their investment in plain language. One of the firm’s most visible and frequent customer communications mediums, the Sun Life Quarterly Variable Annuity Statement reaches over 224,500 of the firm’s clients.
“Our goal was simple,” says David Healy Senior Vice President of Sun Life U.S. Operations. “We wanted to make our variable annuity customer statement straight-forward, informative, and easy to read. We regularly evaluate our customer communications to find new ways to make them better – so that every Sun Life customer receives consistently exceptional service.”
Sun Life Wins Plain Language Awards
- Sun Life’s new quarterly variable annuity statement has received a DALBAR Communications Seal, a mark of excellence awarded to financial services organizations that excel in meeting investor needs, design and industry best practices, and regulatory requirements.
- The Employee Benefits Group of Sun Life Financial won a Center for Plain Language ClearMark Award for its voluntary employee benefits booklet. The Center for Plain Language ClearMark Awards annually recognize outstanding documents and web sites.
About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. In the United States and elsewhere, insurance products are offered by members of the Sun Life Financial group that are insurance companies. Sun Life Financial Inc., the holding company for the Sun Life Financial group of companies, is a public company. It is not an insurance company and does not offer insurance products for sale in the United States or elsewhere, and does not guarantee the obligations of its insurance company subsidiaries. Product offerings may not be available in all states and may vary depending on state laws and regulations.
As of December 31, 2010, the Sun Life Financial group of companies had total assets under management of U.S. $484 billion. For more information please visit www.sunlife.com/us
Variable annuities are long term financial vehicles designed for retirement purposes. All withdrawals of taxable amounts, including earnings, are taxable as ordinary income and, if taken prior to age 59½, may be subject to a 10% federal tax penalty. Withdrawals reduce the death benefit and surrender value.
Variable annuity accumulation unit values fluctuate according to underlying economic and market conditions. It is possible to lose up to the entire principal amount invested at redemption.
Guarantees, including optional living benefits, are subject to the claims-paying ability of the issuing insurance company. Guarantees do not apply to the performance or safety of amounts held in the variable investment options.
About Variable Annuities
A Variable Annuity with a living benefit is an agreement in which an insurance carrier guarantees an investor a specified level of lifetime income.
The basis on which the amount of annual income is calculated is the "Benefit Base." Since the Benefit Base is guaranteed to remain stable or rise, the level of income is also guaranteed to remain stable or rise. The investor’s annual income is determined by multiplying the Benefit Base by a withdrawal percentage (typically from 3% - 5%, based on the investor’s age). For example, a $100,000 Benefit Base with a 5% withdrawal rate guarantees annual income of $5,000 for the lifetime of the investor. If the variable annuity has a “bonus” feature, the Benefit Base can rise if the client defers withdrawing income for a set period, typically ten or more years. Deferring income will thus raise income when the client begins taking withdrawals.
Account Value and Step Up
The investment’s "Account Value" is the underlying principal value, and will fluctuate with market performance. Depending on the features of the Variable Annuity, investors can receive various income guarantees, including: 1. A level annual income stream, 2. An income stream that rises each year to maintain purchasing power, and/or 3. Higher income if the Account Value rises due to positive market performance (a “Step Up).” In a Step Up, if market performance boosts the Account Value, annual income can rise every year (typically the contract anniversary) because the Benefit Base will reset to the higher Account Value. Although the Account Value may fall due to market losses, the loss does not lower the Benefit Base, and so does not lower the agreed upon annual income.
When the investor who owns an annuity passes away, the Account Value or the Death Benefit value (if applicable) is paid directly to the beneficiary(s) named on the annuity contract. If no beneficiary is named, then the proceeds pass to the investor’s estate.
Investors should consider the investment objectives, risks, charges, and expenses of a variable annuity. For this and other important information, request a prospectus from the sales desk. Please read both the variable annuity product and the variable investment option prospectuses carefully before investing or sending money.
Sun Life Financial
SLPC 23273 appvd 5/11, exp, 5/13