Sun Life reduces policy dividends

Dividends at Sun Life Financial for most participating policies will be smaller this spring, the company says.

The company’s board of directors voted in favour of decreasing the dividend scale starting April 1. Sun Life states that despite the low interest rate environment, the decrease will be modest.

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The dividend scale interest rate for Sun Par Protector and Sun Par Accumulator will decrease by 40 basis points to 6.75%. The dividend-on-deposit rate will remain at 3.25%. Enhanced insurance dividend option maximums won’t change, the company says.

Sun Life also says the projected offset point for these products may be delayed by one to three years—meaning clients who had expected dividends to eventually cover their premiums will have to pay out of pocket for one to three years longer.

Other factors, aside from dividend scale interest rate, that affect portfolio yield are mortality, lapsed policies and expenses.

More details will follow in March. Sun Life will update policyholder statements to reflect any changes to the premium offset dates.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.