<PAGE>
Registration No. 333-13087
As filed with the Securities and Exchange Commission on April 28, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 6
To
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
A. Exact name of trust: Sun Life of Canada (U.S.) Variable Account G
B. Name of depositor: Sun Life Assurance Company of Canada (U.S.)
C. Complete address of depositor's principal executive offices:
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
D. Name and complete address of agent for service:
Ellen B. King
Secretary
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Copies to:
Josephine Cicchetti, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson St., N.W.
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check
appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2000 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1) of Rule 485.
[_] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
E. Title of securities being registered:
Flexible Premium Variable Universal Life Insurance Policies.
F. Approximate date of proposed public offering:
As soon as practicable after the effective date of this
registration statement.
[_] Check box if it is proposed that this filing will become
effective on (date) at (time) pursuant to Rule 487.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
<S> <C>
1 Cover Page
The Variable Account
2 Cover Page
About Who We Are
3 Cover Page
About Who We Are
4 Distribution of Policy.
5 The Variable Account
6 Not Applicable
7 Not Applicable
8 Other Information
Financial Statements
9 Legal Proceedings
10 Summary of Policy
The Variable Account
About the Policy
Premium Payments
Death Benefit
Account Value
Accessing Your Account Value
Cash Surrender Value Payable Upon Maturity
Charges, Deductions and Refunds
Other Policy Provisions
Addition, Deletion or Substitution of Investments
Modification
Voting Rights
Federal Tax Considerations
11 Summary of Policy
The Variable Account
The Funds
12 Summary of Policy
The Funds
13 Summary of Policy
The Funds
Fees and Expenses of the Funds
About the Policy
Charges, Deductions and Refunds
Distribution of Policy
14 About the Policy
Application and Issuance
15 About the Policy
Application and Issuance
Free Look Period
Premium Payments
Account Value
Transfer Privileges
16 About the Policy
Premium Payments
Account Value
Transfer Privileges
Accessing Your Account Value
17 About the Policy
Free Look Period
<PAGE>
Accessing Your Policy's Account Value
18 The Variable Account
About the Policy
Account Value
19 About the Policy
Other Policy Provisions
Reports to Policy owners
20 Not Applicable
21 About the Policy
Death Benefit
Policy Proceeds
Account Value
Account Value in the Loan Account
Accessing Your Account Value
Policy Loans
22 Not Applicable
23 Our Directors and Executive Officers
24 Not Applicable
25 About Who We Are
26 Not Applicable
27 About Who We Are
28 About Who We Are
Our Directors and Executive Officers
29 About Who We Are
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Distribution of Policy
36 Not Applicable
37 Not Applicable
38 Distribution of Policy
39 Distribution of Policy
40 Not Applicable
41 Distribution of Policy
42 Not Applicable
43 Not Applicable
44 About the Policy
Application and Issuance
Free Look Period
Premium Payments
Account Value
Transfer Privileges
Charges, Deductions and Refunds
Reduction of Charges
45 Not Applicable
46 About the Policy
Application and Issuance
Free Look Period
Premium Payments
Account Value
Transfer Privileges
47 Not Applicable
48 About Who We Are
The Variable Account
49 Not Applicable
50 The Variable Account
51 Cover Page
About the Policy
Premium Payments
<PAGE>
Death Benefit
Account Value
Charges, Deductions and Refunds
Accessing Your Account Value
Other Policy Provisions
52 The Variable Account
About the Policy
Other Policy Provisions
Addition, Deletion or Substitution of Investments
Modification
53 Federal Tax Considerations
Our Tax Status
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Other Information
Financial Statements
</TABLE>
<PAGE>
REGISTRATION STATEMENT ON FORM S-6
PART I - PROSPECTUS
Attached hereto and made a part hereof is a Prospectus dated May 1, 2000.
<PAGE>
Sun Life of Canada
PROSPECTUS
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
(800) 432-1102 Ext. 2438
SUN LIFE CORPORATE VUL-SM-
A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
This prospectus describes a variable universal life insurance policy (the
"POLICY") issued by Sun Life Assurance Company of Canada (U.S.) ("WE" or "US")
through Sun Life of Canada (U.S.) Variable Account G (the "VARIABLE ACCOUNT"),
one of our separate accounts. The Policy allows "YOU," the policyowner, within
certain limits, to:
- Choose the life insurance coverage you need and increase or
decrease coverage as your insurance needs change;
- Choose the amount and timing of premium payments;
- Allocate net premium payments among the available investment
options and transfer amounts among these options as your
investment objectives change; and
- Access your Policy's Account Value through policy loans and
partial surrenders or a full surrender.
This prospectus contains important information you should understand before
purchasing a Policy. You should read this prospectus carefully and keep it for
future reference.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
May 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
----- ----
<S> <C>
Summary of Policy........................................... 1
About Who We Are............................................ 7
The Variable Account........................................ 7
The Funds................................................... 8
Discontinued Funds........................................ 10
Fees and Expenses of the Funds............................ 11
Potential Conflicts....................................... 11
About the Policy............................................ 12
Application and Issuance.................................. 12
Death Benefit Compliance Test........................... 13
Initial Premium Payment................................. 13
Effective Date of Coverage.............................. 13
Insurable Interest Requirement.......................... 14
Free Look Period.......................................... 14
Premium Payments.......................................... 15
General Limitations..................................... 15
Guideline Premium Test Limitations...................... 15
Planned Periodic Premiums............................... 15
Allocation of Net Premium............................... 16
Modified Endowment Contracts............................ 16
Additional Protection Benefit Rider (APB Rider)........... 16
Death Benefit............................................. 17
Policy Proceeds......................................... 17
Death Benefit Options................................... 17
Changes in the Death Benefit Option..................... 18
APB Rider Death Benefit................................. 19
Minimum Face Amount..................................... 19
Changes in Face Amount.................................. 19
Increases in Face Amount................................ 19
Decreases in Face Amount................................ 19
Account Value............................................. 20
Account Value in the Sub-Accounts....................... 21
Net Investment Factor................................... 22
Account Value in the Loan Account....................... 22
Insufficient Value...................................... 23
Grace Period............................................ 23
Splitting Units......................................... 23
Transfer Privileges....................................... 23
Accessing Your Account Value.............................. 24
Surrender............................................... 24
</TABLE>
II SUN LIFE CORPORATE VUL-SM-
<PAGE>
<TABLE>
<CAPTION>
TOPIC PAGE
----- ----
<S> <C>
Partial Surrenders...................................... 24
Policy Loans............................................ 25
Deferral of Payment..................................... 25
Cash Surrender Value Payable upon Maturity................ 26
Charges, Deductions and Refunds........................... 26
Expense Charges Applied to Premium...................... 26
Sales Load Refund at Surrender.......................... 27
Mortality and Expense Risk Charge....................... 27
Monthly Expense Charge.................................. 27
Monthly Cost of Insurance............................... 27
Reduction of Charges.................................... 28
Termination of Policy..................................... 28
Other Policy Provisions................................... 28
Alteration.............................................. 28
Assignments............................................. 29
Rights of Owner......................................... 29
Rights of Beneficiary................................... 29
Reports to Policyowners................................. 29
Illustrations........................................... 30
Conversion.............................................. 30
Misstatement of Age or Sex.............................. 30
Suicide................................................. 30
Incontestability........................................ 30
Addition, Deletion or Substitution of Investments....... 31
Nonparticipating........................................ 31
Modification............................................ 31
Entire Contract......................................... 31
Performance Information..................................... 32
Voting Rights............................................... 33
Distribution of Policy...................................... 34
Federal Tax Considerations.................................. 35
Our Tax Status............................................ 35
Taxation of Policy Proceeds............................... 35
Our Directors and Executive Officers........................ 39
Other Information........................................... 44
State Regulation.......................................... 44
Legal Proceedings......................................... 44
Experts................................................... 44
Accountants............................................... 44
Registration Statements................................... 45
Incorporation of Certain Documents by Reference........... 45
Financial Statements........................................ 45
</TABLE>
III SUN LIFE CORPORATE VUL-SM-
<PAGE>
<TABLE>
<CAPTION>
TOPIC PAGE
----- ----
<S> <C>
Appendix A--Glossary of Policy Terms........................ A-1
Appendix B--Hypothetical Illustrations of Cash Surrender
Values, Account Values and Death Benefits................. B-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE
THE OFFERING WOULD NOT BE LAWFUL. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS OR IN THE PROSPECTUS OR STATEMENT OF ADDITIONAL
INFORMATION OF THE UNDERLYING MUTUAL FUNDS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
IV SUN LIFE CORPORATE VUL-SM-
<PAGE>
THIS SUMMARY IS SUMMARY OF POLICY
QUALIFIED BY USE OF POLICY
REFERENCE TO THIS The Policy is designed primarily to provide
PROSPECTUS IN ITS corporations and other entities life insurance coverage
ENTIRETY. on employees or other persons in whose lives they have
an insurable interest, and may be used in connection
Appendix A contains with various types of non- tax-qualified executive
a glossary of policy benefit plans.
terms used in this THE VARIABLE ACCOUNT
prospectus.
- We have established a separate account, the Variable
Account, to fund the variable insurance benefits
under the Policy.
- The assets of the Variable Account are insulated from
the claims of our general creditors.
- The Variable Account is divided into 36 Sub-Accounts,
each of which invests exclusively in shares of a
corresponding mutual fund.
INVESTMENT OPTIONS
- You may allocate your net premium payments among the
available Sub-Accounts.
- You may transfer amounts from one Sub-Account to
another.
FEES AND EXPENSES OF THE UNDERLYING FUNDS
You should read the You will indirectly bear the costs of investment
underlying funds' management fees and other expenses paid from the assets
prospectuses before of the underlying funds you select. The following table
investing. shows the fees and expenses paid by the funds as a
percentage of average net assets based on information
for the year ended December 31, 1999. This information
was provided by the funds and we have not independently
verified it. The funds' fees and expenses are more fully
described in the fund prospectuses which accompany this
prospectus. You should read them before investing.
SUN LIFE CORPORATE VUL-SM-
<PAGE>
ANNUAL FUND EXPENSES
(as a percentage of underlying fund average net assets)
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OTHER FUND OPERATING
FEES EXPENSES EXPENSES
---------- -------- --------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS
- --------------------------------------------------
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73%
AIM V.I. Value Fund 0.61% 0.15% 0.76%
DREYFUS VARIABLE INVESTMENT FUND
- --------------------------------------------------
Dreyfus VIF Appreciation Portfolio 0.75% 0.03% 0.78%
Dreyfus VIF Growth and Income Portfolio 0.75% 0.04% 0.79%
Dreyfus VIF Quality Bond Portfolio 0.65% 0.09% 0.74%
Dreyfus VIF Small Cap Portfolio 0.75% 0.03% 0.78%
DREYFUS STOCK INDEX FUND 0.25% 0.01% 0.26%
- --------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- --------------------------------------------------
VIP Equity-Income Portfolio 0.48% 0.08% 0.56% (1)(a)
VIP Growth Portfolio 0.58% 0.07% 0.65% (1)(a)
VIP High Income Portfolio 0.58% 0.11% 0.69%
VIP Money Market Portfolio 0.18% 0.09% 0.27%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- --------------------------------------------------
VIP II Asset Manager: Growth Portfolio 0.58% 0.12% 0.70% (1)(a)
VIP II Contrafund Portfolio 0.58% 0.07% 0.65% (1)(a)
VIP II Index 500 Portfolio 0.24% 0.04% 0.28% (1)(b)
VIP II Investment Grade Bond Portfolio 0.43% 0.11% 0.54%
J.P. MORGAN SERIES TRUST II
- --------------------------------------------------
J.P. Morgan Bond Portfolio 0.30% 0.45% 0.75% (3)
J.P. Morgan Small Company Portfolio 0.60% 0.55% 1.15% (3)
J.P. Morgan U.S. Disciplined Equity Portfolio 0.35% 0.50% 0.85% (3)
MFS/SUN LIFE SERIES TRUST
- --------------------------------------------------
Capital Appreciation Series 0.71% 0.05% 0.76% (4)
Emerging Growth Series 0.70% 0.05% 0.75% (4)
Global Growth Series 0.90% 0.11% 1.01% (5)
Government Securities Series 0.55% 0.06% 0.61% (4)
Massachusetts Investors Growth Stock Series 0.75% 0.08% 0.83% (4)
Massachusetts Investors Trust Series 0.55% 0.04% 0.59% (5)
Money Market Series 0.50% 0.07% 0.57% (4)
Research Series 0.70% 0.05% 0.75% (4)
Total Return Series 0.65% 0.04% 0.69% (4)
Utilities Series 0.75% 0.07% 0.82% (4)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- --------------------------------------------------
Limited Maturity Bond Portfolio 0.65% 0.11% 0.76%
Mid-Cap Growth Portfolio 0.85% 0.15% 1.00% (2)
Partners Portfolio 0.80% 0.07% 0.87%
SUN CAPITAL ADVISERS TRUST
- --------------------------------------------------
Investment Grade Bond Fund 0.60% 0.15% 0.75% (6)
Real Estate Fund 0.95% 0.30% 1.25% (6)
</TABLE>
2 SUN LIFE CORPORATE VUL-SM-
<PAGE>
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OTHER FUND OPERATING
FEES EXPENSES EXPENSES
---------- -------- --------------
<S> <C> <C> <C>
T. ROWE PRICE EQUITY SERIES, INC.
- --------------------------------------------------
T. Rowe Price Equity Income Portfolio 0.85% 0.00% 0.85% (5)
T. Rowe Price New America Growth Portfolio 0.85% 0.00% 0.85% (5)
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
- --------------------------------------------------
Templeton Growth Securities Fund: Class 1 0.83% (7) 0.05% 0.88% (8)
NOTES
- --------------------------------------------------
</TABLE>
(1) (a) A portion of the brokerage commissions that certain funds pay was used
to reduce fund expenses. In addition, through arrangements with certain funds',
or FMR on behalf of certain funds', custodian credits realized as a result of
uninvested cash balances were used to reduce a portion of each applicable fund's
expenses. Without these reductions, the total operating expenses presented in
the table would have been .57% for Equity-Income Portfolio, .66% for Growth
Portfolio, .67% for Contrafund Portfolio, and .71% for Asset Manager: Growth
Portfolio.
(1) (b) FMR agreed to reimburse a portion of Index 500 Portfolio's expenses
during the period. Without this reimbursement, the Portfolio's management, other
expenses and total expenses would have been .24%, .10%, and .34% respectively.
(2) Expenses reflect expense reimbursement. Neuberger Berman Management, Inc.
(NBMI) has undertaken through May 1, 2001 to reimburse certain operating
expenses, including the compensation of NBMI and excluding taxes, interest,
extraordinary expenses, brokerage commissions and transaction costs, that
exceed, in the aggregate, 1% of the Mid-Cap Growth Portfolio's average daily net
asset value. Absent such reimbursement, Total Annual Expenses for the year ended
December 31, 1999 would have been 1.08% for the Mid-Cap Growth Portfolio.
(3) The information in the foregoing table has been restated to reflect an
agreement by Morgan Guaranty Trust Company of New York, an affiliate of Morgan,
to reimburse the trust to the extent certain expenses exceed in any fiscal year
0.75%, 0.85%, 1.15% of the average daily net assets of the J.P. Morgan Bond
Portfolio, J.P. Morgan U.S. Disciplined Equity Portfolio and J.P. Morgan Small
Company Portfolio, respectively. Without such reimbursements, total fund annual
expenses would have been 0.75% for the J.P. Morgan Bond Portfolio, 0.87% for the
J.P. Morgan U.S. Disciplined Equity Portfolio, 2.57% for the J.P. Morgan Small
Company Portfolio.
(4) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with its
custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the series' expenses). Any such fee reductions are not
reflected under "Other Expenses". Had these fees been taken into account, "Total
Annual Fund Operating Expenses" for certain series would have been lower, as
follows: 0.75% for the Capital Appreciation Series, and 0.81% for the Utilities
Series.
(5) "Management Fees" include other operating expenses.
(6) The investment adviser for the Sun Capital Funds has voluntarily agreed to
waive or reimburse a portion of the management fees and/or operating expenses
resulting in a reduction of the total expenses. For the year ended December 31,
1999, the Adviser waived all investment advisory fees. Absent any such waiver or
reimbursement, "Management Fees", "Other Expenses", and "Total Fund Annual
Expenses" for the year ended December 31, 1999 were 0.60%, 1.38% and 1.98% for
the Sun Capital Investment Grade Bond Fund; and 0.95%, 2.44%, and 3.39% for the
Sun Capital Real Estate Fund. Fee waivers and expense reimbursements for the Sun
Capital Funds may be discontinued any time after May 1, 2001. To the extent that
the expense ratio of any Fund in the Sun Capital Advisers Trust falls below the
Fund's expense limit, the Fund's adviser reserves the right to be reimbursed for
management fees waived and Fund expenses paid by it during the prior two years.
(7) The fund administration fee is paid indirectly through the management fee.
(8) On 2/8/00, a merger and reorganization was approved that combined the fund
with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based in the fund's assets as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.80%, Other Expenses 0.05%, and Total Fund Operating
Expenses 0.85%.
3 SUN LIFE CORPORATE VUL-SM-
<PAGE>
FREE LOOK PERIOD
You may return your Policy to us for any reason and
receive a refund within the later of 45 days after you
sign a policy application or the 20-day period (or a
longer period if required by applicable state law)
beginning when you receive your Policy.
PREMIUM PAYMENTS
- You must make an initial minimum premium payment, the
amount of which will vary based on the amount of life
insurance coverage you request and other factors,
including the insured's age, sex and health.
- Thereafter, you may choose the amount and timing of
premium payments, within certain limits.
- We allocate your net premium payments among the
Policy's investment options in accordance with your
instructions.
ADDITIONAL PROTECTION BENEFIT RIDER
- You may use this rider to obtain additional life
insurance coverage on the insured.
- We deduct the rider's cost from your Account Value on
a monthly basis.
DEATH BENEFIT COMPLIANCE TEST
- To be eligible to receive favorable tax treatment
under applicable federal tax law, your Policy must be
subject to one of the following legal standards--
- the Guideline Premium Test, or
- the Cash Value Accumulation Test
- You choose the applicable test, but once made, you
may not change your election.
DEATH BENEFIT
- If the Guideline Premium Test applies, you have a
choice of two death benefit options--
4 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SPECIFIED FACE - the SPECIFIED FACE AMOUNT (Option A), or
AMOUNT is the amount - the Specified Face Amount plus your Account Value
of life insurance (Option B).
coverage you - You may change your death benefit option on any
request, exclusive Policy Anniversary, subject to our underwriting
of any coverage rules then in effect.
added by rider.
- If the Cash Value Accumulation Test applies, you will
be deemed to have elected Option A, which may not be
changed.
- After the first Policy Year, you may--
- increase the Specified Face Amount
and, if applicable, the APB Rider Face
Amount, subject to satisfactory
evidence of the insured's
insurability; or
- decrease the Specified Face Amount
and, if applicable, the APB Rider Face
Amount, provided that neither the
Specified Face Amount nor the Total
Face Amount after the decrease may be
less than certain minimum amounts, as
specified in your Policy.
ACCOUNT VALUE
- Your Account Value will reflect--
- the premiums you pay;
- the investment performance of the
Sub-Accounts you select;
- any loans, loan repayments and partial
surrenders; and
- the charges we deduct under the
Policy.
ACCESSING YOUR ACCOUNT VALUE
CASH SURRENDER VALUE - You may borrow from us using your Account Value as
is your Account collateral.
Value, less any out- - You may surrender your Policy for its CASH SURRENDER
standing Policy VALUE.
Debt, plus any sales - You may make a partial surrender of only a portion of
load refund due at the Cash Surrender Value once per year after your
surrender. Policy has been in force for one year.
5 SUN LIFE CORPORATE VUL-SM-
<PAGE>
A partial surrender POLICY CHARGES, DEDUCTIONS AND REFUNDS
may cause a decrease - EXPENSE CHARGES APPLIED TO PREMIUM--We deduct
in Total Face Amount from each premium payment--
if the amount of the - a charge to cover applicable premium taxes, which
death benefit minus varies by state but is guaranteed not to exceed 4%
your Account Value for all states except Kentucky for which the
after the partial guaranteed maximum rate is 9%;
surrender exceeds - a 1.25% charge to cover our federal tax
the amount of the obligations with respect to the Policy; and
death benefit minus - a 8.75% sales load up to a specified amount of
your Account Value premium and a 2.25% sales load on amount in excess
before the partial of that target amount for premiums paid during the
surrender. first seven Policy Years, after which there is no
sales load charge.
- SALES LOAD REFUND AT SURRENDER--If you surrender your
Policy during the first three Policy Years, we will
refund 100% of the sales load charged against premium
payments made during the Policy Year in which you
surrendered your Policy.
- MORTALITY AND EXPENSE RISK CHARGES--We deduct a daily
charge from your Account Value for the mortality and
expense risks we assume with respect to the Policy.
The guaranteed maximum daily rate is equivalent to an
annual rate of 0.90% of assets. Our current daily
rates are equivalent to annual rates of--
- 0.60% for Policy Years 1 through 10;
- 0.20% for Policy Years 11 through 20;
and
- 0.10% thereafter.
- MONTHLY DEDUCTIONS--We deduct a charge each month
from your Account Value to cover administrative
expenses relating to your Policy, which is guaranteed
not to exceed $13.75 per month. Our current charges
are $13.75 per month for the first policy year and
$7.50 per month thereafter.
- MONTHLY COST OF INSURANCE--We deduct a monthly charge
from your Account Value to cover our anticipated
costs for providing your insurance coverage.
- REDUCTION OF CHARGES--We reserve the right to reduce
any of our charges and deductions with respect to
sales of the Policy involving certain group
arrangements based on our expectations of cost
savings and our claims experience.
6 SUN LIFE CORPORATE VUL-SM-
<PAGE>
WHAT IF CHARGES AND DEDUCTIONS EXCEED ACCOUNT VALUE?
Your Policy may terminate if your Account Value at
the beginning of any Policy Month is insufficient to pay
all charges and deductions then due. When and if this
occurs, we will send you written notice and allow you a
61 day grace period. If you do not make a premium payment
within the grace period, sufficient to cover all accrued
and unpaid charges and deductions, your Policy will
terminate at the end of the grace period without further
notice.
FEDERAL TAX CONSIDERATIONS
Your purchase of, and transactions under, your Policy
may have tax consequences that you should consider before
purchasing a Policy. You may wish to consult a tax
adviser. In general, the beneficiary will receive Policy
Proceeds without there being taxable income. Increases in
Account Value will not be taxable as earned, although
there may be income tax due on a full or partial
surrender of your Policy.
We are an indirect, ABOUT WHO WE ARE
wholly- owned Sun Life Assurance Company of Canada (U.S.) is a
subsidiary of Sun stock life insurance company incorporated under the laws
Life Assurance of Delaware on January 12, 1970. Our executive office
Company of Canada, mailing address is One Sun Life Executive Park,
("Sun Life Wellesley Hills, Massachusetts 02481. We do business in
(Canada)"). 48 states, the District of Columbia and Puerto Rico, and
we have an insurance company subsidiary that does
business in New York. We issue individual and group life
insurance policies and annuity contracts.
We are an indirect, wholly-owned subsidiary of Sun
Life Assurance Company of Canada ("Sun Life (Canada)").
Sun Life (Canada) completed its demutualization on
March 22, 2000. As a result of the demutualization, a new
holding company, Sun Life Financial Services of Canada
Inc. ("Sun Life Financial"), is now the ultimate parent
of Sun Life (Canada) and the Company. Sun Life Financial,
a corporation organized in Canada, is a reporting company
under the Securities Exchange Act of 1934 with common
shares listed on the Toronto, New York, London and Manila
Stock Exchanges.
THE VARIABLE ACCOUNT
Sun Life of Canada (U.S.) Variable Account G is one
of our separate accounts established in accordance with
Delaware law on July 25, 1996. The Variable Account may
also be used to fund benefits payable under other life
insurance policies we issue.
7 SUN LIFE CORPORATE VUL-SM-
<PAGE>
We own the assets of the Variable Account. The
income, gains or losses, realized or unrealized, from
assets allocated to the Variable Account are credited to
or charged against the Variable Account without regard to
our other income, gains or losses.
The assets of the We will at all times maintain assets in the
Variable Account are Variable Account with a total market value at least
insulated from our equal to the reserves and other liabilities relating to
general liabilities. the variable benefits under all policies participating
in the Variable Account. Those assets may not be charged
with our liabilities from our other business. The
obligations under the Policy are, however, our general
corporate obligations.
The Variable Account The Variable Account is registered with the
is registered with Securities and Exchange Commission under the Investment
the SEC. Company Act of 1940 as a unit investment trust. That
registration does not involve any supervision by the SEC
of the management or investment practices or policies of
the Variable Account.
The Variable Account may be deregistered if
registration is no longer required; however, we may
continue, at our election, to operate the Variable
Account as a unit investment trust or other form of
investment company, subject to any necessary vote by
those having voting rights. In the event of any change in
the registration status of the Variable Account, we may
amend the Policy to reflect the change and take such
other action as may be necessary and appropriate to
effect the change.
The Variable Account The Variable Account is divided into 36
has 36 Sub-Accounts. Sub-Accounts. Each Sub-Account invests exclusively in
Each Sub-Account shares of a corresponding investment portfolio of a
invests exclu- registered investment company (commonly known as a
sively in shares of mutual fund). We may in the future add new or delete
a corresponding existing Sub-Accounts. The income, gains or losses,
mutual fund. realized or unrealized, from assets allocated to each
Sub-Account are credited to or charged against that
Sub-Account without regard to the other income, gains or
losses of the other Sub-Accounts.
THE FUNDS
The Fund The Policy currently offers 32 mutual fund
Prospectuses which options, which are briefly described below. More
accompany this pro- comprehensive information, including a discussion of
spectus contain more potential risks, is found in the current prospectuses
information about for the Funds which accompany this prospectus (the "Fund
the funds. Prospectuses"). You should read the Fund Prospectuses
before investing.
8 SUN LIFE CORPORATE VUL-SM-
<PAGE>
AIM VARIABLE INSURANCE FUNDS--is advised by A I M
Advisors, Inc. The available investment portfolios are--
- AIM V.I. Capital Appreciation Fund
- AIM V.I. Value Fund
DREYFUS STOCK INDEX FUND--is advised by the Dreyfus
Corporation.
DREYFUS VARIABLE INVESTMENT FUND--is advised by the
Dreyfus Corporation. The available investment portfolios
are--
- Dreyfus VIF Appreciation Portfolio
- Dreyfus VIF Growth and Income
Portfolio
- Dreyfus VIF Quality Bond Portfolio
- Dreyfus VIF Small Cap Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND--is advised
by Fidelity Management & Research Company ("FMR");
affiliates of FMR may assist it in the selection of
investments for the Portfolios. The available investment
portfolios are--
- VIP High Income Portfolio
- VIP Equity-Income Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II--is
advised by FMR; affiliates of FMR may assist it in the
selection of investments for the Portfolios. The
available investment portfolios are--
- VIP II Asset Manager: Growth Portfolio
- VIP II Contrafund Portfolio (a growth
portfolio)
FRANKLIN TEMPLETON VARIABLE PRODUCTS INSURANCE
TRUST--The available investment portfolio, which is
advised by Templeton Global Advisors Limited, is--
- Templeton Growth Securities Fund:
Class 1 (a global equity fund)
J.P. MORGAN SERIES TRUST II--is advised by J.P.
Morgan Investment Management Inc. The available
investment portfolios are--
- J.P. Morgan Bond Portfolio
- J.P. Morgan Small Company Portfolio
- J.P. Morgan U.S. Disciplined Equity
Portfolio
9 SUN LIFE CORPORATE VUL-SM-
<PAGE>
MFS/SUN LIFE SERIES TRUST--is advised by MFS
Investment Management ("MFS"), one of our affiliates. The
available investment portfolios are--
- Capital Appreciation Series
- Emerging Growth Series
- Global Growth Series
- Government Securities Series
- Massachusetts Investors Growth Stock
Series
- Massachusetts Investors Trust Series
(a conservative growth series)
- Money Market Series
- Research Series (a growth series)
- Total Return Series
- Utilities Series
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST-- is
advised by Neuberger Berman Management Inc. The available
investment portfolios are--
- Limited Maturity Bond Portfolio
- Mid-Cap Growth Portfolio
- Partners Portfolio (a capital growth
portfolio)
SUN CAPITAL ADVISERS TRUST--is advised by Sun Capital
Advisers, Inc., one of our affiliates. The available
investment portfolios are--
- Investment Grade Bond Fund
- Real Estate Fund
T. ROWE PRICE EQUITY SERIES, INC.--is advised by T.
Rowe Price Associates, Inc. The available investment
portfolios are--
- T. Rowe Price Equity Income Portfolio
- T. Rowe Price New America Growth
Portfolio
DISCONTINUED FUNDS
The following Funds are no longer available under the
Policy, except as described below--
- Fidelity VIP Growth Portfolio
10 SUN LIFE CORPORATE VUL-SM-
<PAGE>
- Fidelity VIP Money Market Portfolio
- Fidelity VIP II Index 500 Portfolio
- Fidelity VIP II Investment Grade Bond
Portfolio
If you had Account Value allocated to a Sub-Account
which invests in the first Fund listed above as of
May 1, 1999, you may maintain your existing allocations
and may continue to allocate additional net premium
payments or make transfers to that Sub-Account.
If you had Account Value allocated to a Sub-Account
which invests in one of the last three Funds listed above
as of May 1, 1999, you may maintain your existing
allocations, but may not allocate any additional net
premium payments or make any future transfers to that
Sub-Account.
Some of the Fund's investment advisers may compensate
us for administering the Funds as investment options
under the Policy. Such compensation is paid from the
adviser's assets.
FEES AND EXPENSES OF THE FUNDS
Fund shares are purchased at net asset value, which
reflects the deduction of investment management fees and
other expenses. The management fees are charged by each
Fund's investment adviser for managing the Fund and
selecting its portfolio securities. Other expenses can
include such items as interest expense on loans and
contracts with transfer agents, custodians, and other
companies that provide services to the Fund, and actual
expenses may vary.
Because they are assessed at the fund level, you will
indirectly bear the fees and expenses of the Funds you
select. The table contained in the front part of this
prospectus shows the fees and expenses paid by the Funds
as a percentage of average net assets. These fees and
expenses are more fully described in the Fund
Prospectuses which accompany this prospectus.
POTENTIAL CONFLICTS
We, as well as other affiliated and unaffiliated
insurance companies, may also purchase shares of the
Funds on behalf of other separate accounts used to fund
variable benefits payable under other variable life
insurance and variable annuity contracts. As a result, it
is possible, though we do not anticipate, that a material
conflict may arise between the interests of our
policyowners with respect to the Variable Account and
those of other variable contractowners with respect to
the other separate accounts that participate in the
Funds. The Funds have agreed to monitor themselves for
the existence of any material conflict
11 SUN LIFE CORPORATE VUL-SM-
<PAGE>
between the interests of variable contractowners. In the
event of such a conflict involving a Fund, we will take
any steps necessary to remedy the conflict including
withdrawing the assets of the Variable Account from the
Fund. If the Variable Account or another separate account
withdraws its assets from a Fund for this reason, the
Fund may be forced to sell its portfolio securities at
disadvantageous prices which would negatively affect the
investment performance of the corresponding Sub-Account.
ABOUT THE POLICY
This prospectus describes the standard features of
the Policy. Your Policy, as issued, may differ in some
respects due to legal requirements of the state where
your Policy is issued.
APPLICATION AND ISSUANCE
To apply for a Policy, you must submit an application
to our Principal Office. We will then follow underwriting
procedures designed to determine the insurability of the
proposed insured. We offer the Policy on a regular (or
medical) underwriting, simplified underwriting, or
guaranteed issue basis. The proposed insured generally
must be less than 81 years old for a Policy to be issued
on a medical underwriting basis, less than 76 years old
for issuance on a simplified underwriting basis, and less
than 71 years old for issuance on a guaranteed issue
basis. For Policies underwritten on a medical or
simplified basis, we may require that the proposed
insured undergo one or more medical examinations and that
you provide us with such additional information as we may
deem necessary, before an application is approved. We
will issue Policies on a guaranteed basis with respect to
certain groups of insureds. Policies issued on a
guaranteed basis must be pre-approved based on
information you provide to us on a master application and
on certain other underwriting requirements which all
members of a proposed group of insureds must meet.
Proposed insureds must be acceptable risks based on our
underwriting limits and standards. We will not issue a
Policy until the underwriting process has been completed
to our satisfaction. In addition, we reserve the right to
reject any application that does not meet our
underwriting requirements or to "rate" an insured as a
substandard risk, which will result in increased Monthly
Cost of Insurance charges.
12 SUN LIFE CORPORATE VUL-SM-
<PAGE>
There are two DEATH BENEFIT COMPLIANCE TEST. Your Policy
tax-law compliance must, at all times, satisfy one of two legal standards
tests. You select for it to qualify as life insurance and thus be entitled
which applies to to receive favorable tax treatment under applicable
your Policy. federal tax law. We will refer to these standards as the
"Cash Value Accumulation Test" and the "Guideline
Premium Test." Under both tests, the Death Benefit must
effectively always equal or exceed your Account Value
multiplied by a certain percentage (the "Death Benefit
Percentage"). The Death Benefit Percentages for the
Guideline Premium Test vary by age, whereas those for
the Cash Value Accumulation Test vary by age and sex.
The Death Benefit Percentages for the Cash Value
Accumulation Test, in general, are greater than those
for the Guideline Premium Test. The Guideline Premium
Test imposes limits on the amount of premium you may pay
under your Policy, whereas the Cash Value Accumulation
Test does not.
You must specify in your policy application which of
these tests will apply to your Policy. You may not change
your selection once your Policy has been issued. In
general, if your primary objective is maximum
accumulation of Account Value during the initial Policy
Years, then the Cash Value Accumulation Test would be the
more appropriate choice. If your primary objective is the
most economically efficient method of obtaining a
specified amount of coverage, then the Guideline Premium
Test is generally more appropriate. Because your choice
of tests depends on complex factors and may not be
changed, you should consult with a qualified tax adviser
before deciding.
INITIAL PREMIUM PAYMENT. A Minimum Premium, as
specified in your Policy, will be due and payable as of
the Issue Date. The Minimum Premium will vary based on
the insured's Class, Issue Age, and sex and on the amount
of insurance coverage. Pending approval of your
application, we will allocate any premium payments you
make to our General Account. If your application is not
approved, we will promptly return your premium payments.
EFFECTIVE DATE OF COVERAGE. Upon approval of your
application, we will issue to you a Policy on the life of
the insured which will set forth your rights and our
obligations. The Effective Date of Coverage for the
Policy will be the latest of--
The ISSUE DATE is - the ISSUE DATE,
the date specified - the date we approve the application for your
as such in your Policy, or
Policy, from which - the date you pay a premium equal to or in excess
Policy of the Minimum Premium.
Anniversaries,
Policy Years and
Policy Months are
measured.
13 SUN LIFE CORPORATE VUL-SM-
<PAGE>
INSURABLE INTEREST REQUIREMENT. You must have an
insurable interest in the life of the insured up to the
full amount of insurance coverage. Otherwise, your Policy
will not qualify as life insurance under applicable state
insurance and federal tax law. You should consult with a
qualified adviser when determining the amount of coverage
and before taking any action to increase the amount of
existing coverage to ensure that you have an insurable
interest for the full amount of coverage.
FREE LOOK PERIOD
If you are not satisfied with your Policy, you may
return it by delivering or mailing it to Our Principal
Office or to the sales representative through whom you
purchased the Policy within 20 days from the date of
receipt (unless a different period is applicable under
state law) or within 45 days after your application is
signed, whichever period ends later (the "Free Look
Period").
If you return your Policy during the Free Look
Period, your Policy will be deemed void and you will
receive a refund equal to the sum of--
- the difference between any premium
payments made, including fees and
charges, and the amounts allocated to
the Variable Account;
- the value of the amounts allocated to
the Variable Account on the date the
cancellation request is received by us
or the sales representative through
whom you purchased the Policy, and
- any fees or charges imposed on amounts
allocated to the Variable Account.
If required by applicable state insurance law,
however, you will receive instead a refund equal to the
sum of all premium payments made, without regard to the
investment experience of the Variable Account. Unless you
are entitled to receive a full refund of premium, you
bear all of the investment risks with respect to the
amount of any net premiums allocated to the Variable
Account during the Free Look Period with respect to your
Policy.
If you are entitled under applicable state law to
receive a full refund during the Free Look Period, we
will allocate net premium payments to the MFS/Sun Life
Series Trust Money Market Series Sub-Account during that
period beginning on the Investment Start Date. Upon
expiration of the Free-Look Period, we will reallocate
your Account Value and allocate future net premium
payments in accordance with your instructions.
14 SUN LIFE CORPORATE VUL-SM-
<PAGE>
PREMIUM PAYMENTS
The frequency and In general, you may choose the frequency and
amount of your amount of any additional premium payments subject to the
premium payments may limits described below. You will be required, however,
have tax to make an initial minimum premium payment, as described
consequences. above. All premium payments should be made payable to
"Sun Life Assurance Company of Canada (U.S.)" and mailed
to our Principal Office.
GENERAL LIMITATIONS. We reserve the right to limit
the number of premium payments we accept on an annual
basis. No premium payment may be less than $100 without
our consent, although we will accept a smaller premium
payment if it is necessary to keep your Policy in force.
We reserve the right not to accept a premium payment that
causes the Death Benefit to increase by an amount that
exceeds the premium received and we may require
satisfactory evidence of insurability before we accept
such a premium.
GUIDELINE PREMIUM TEST LIMITATIONS. The Guideline
Premium Test limits the amount of premium you may pay per
year. We will not accept premium payments that would, in
our opinion, exceed these limits, if you have chosen this
test as the applicable Death Benefit Compliance Test. If
you make a premium payment in excess of these limits, we
will accept only that portion of the premium within those
limits and refund the remainder to you. We will inform
you of the applicable maximum premium limitations for the
coming years in our annual report to you. In contrast,
the Cash Value Accumulation Test does not impose any
additional limitations on the amount of premium you may
pay.
PLANNED PERIODIC PREMIUMS. While you are not
required to make premium payments according to a fixed
schedule, you may select a planned periodic premium
schedule and corresponding billing period, subject to our
premium limits. In general, the billing period must be
annual or semiannual. We will send reminder notices for
the planned periodic premium at the beginning of each
billing period unless reminder notices have been
suspended as described below. You are not required,
however, to pay the planned periodic premium; you may
increase or decrease premium payments, subject to our
limits, and you may skip a planned payment or make
unscheduled payments. You may change your planned payment
schedule or the billing period, subject to our approval.
Depending on the investment performance of the
Sub-Accounts you select, the planned periodic premium may
not be sufficient to keep your Policy in force, and you
may need to change your planned payment schedule or make
additional payments in order to prevent termination of
your Policy. We reserve the right to suspend reminder
notices if premiums are not being paid (except for
notices in connection with the grace period). We will
notify you prior to suspending reminder notices. We will
also suspend reminder notices at your written request.
15 SUN LIFE CORPORATE VUL-SM-
<PAGE>
NET PREMIUM is the ALLOCATION OF NET PREMIUM. We will allocate NET
amount you pay as PREMIUM among the Sub-Accounts in accordance with your
premium minus allocation instructions, except during the Free Look
Expense Charges Period as described above. You will be required to
Applied to Premium. specify initial allocation percentages in your policy
application. You must allocate at least five percent of
Net Premium to each Sub-Account you select. All
percentages must be in whole numbers.
You may change the allocation of future Net Premium
at any time by telephoning or writing to our Service
Center. Telephone requests will be honored only if we
have a properly completed telephone authorization form
for you on file. We, our affiliates and the
representative from whom you purchased your Policy will
not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. We
will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. You
will be required, for example, to identify yourself by
name and a personal identification number. In addition,
telephone requests may be recorded. An allocation change
will be effective as of the date our Service Center
receives your request for that change.
MODIFIED ENDOWMENT CONTRACTS. Less favorable federal
tax rules apply to life insurance policies that are
defined as "Modified Endowment Contracts." One way your
Policy could become a Modified Endowment Contract is if
you pay premiums in excess of applicable tax-law
limitations.
We will notify you if we receive a premium that
would, in our opinion, cause your Policy to become a
Modified Endowment Contract. We will not credit the
premium unless we receive specific instructions from you
to do so. If we have not received instructions within 24
hours of the date we sent notice to you, we will
immediately return the premium.
ADDITIONAL PROTECTION BENEFIT RIDER (APB RIDER)
The Policy may be issued with an APB Rider. This
rider provides life insurance coverage, annually
renewable to Attained Age 100, on the life of the insured
equal to the amount of the APB Rider Death Benefit. You
will be required to specify the initial APB Rider Face
Amount in your policy application.
The cost of the APB Rider will be included in the
Monthly Cost of Insurance deduction. The applicable
guaranteed maximum Monthly Cost of Insurance Rates for
the APB Rider Death Benefit exceed those for the Base
Death Benefit.
16 SUN LIFE CORPORATE VUL-SM-
<PAGE>
TARGET PREMIUM is Two otherwise identical Policies with the same
the amount of Total Face Amount will have different TARGET PREMIUMS
premium specified as depending on how much of the TOTAL FACE AMOUNT is
such in your Policy, attributable to the Specified Face Amount versus the APB
used to determine Rider Face Amount. Target Premium will be lower for the
our sales load Policy which has the greater APB Rider Face Amount,
charges. which will result in lower sales load deductions for
TOTAL FACE AMOUNT is that Policy.
the sum of the If you convert your Policy to a flexible premium
Specified Face universal life insurance policy, any related APB Rider
Amount and the APB will terminate automatically. An APB Rider will also
Rider Face Amount. terminate ON THE EARLIEST OF--
- our receipt of your written request
for termination,
- the lapse of your Policy because of
insufficient value, or
- the termination of the Policy.
DEATH BENEFIT
POLICY PROCEEDS. If your Policy is in force at the
time of the insured's death and we have received Due
Proof of the insured's death, we will pay your designated
beneficiary an amount equal to--
- the amount of the Base Death Benefit,
MINUS
- the amount of any outstanding Policy
Debt, PLUS
- the amount of any APB Rider Death
Benefit, PLUS
- the amount of any other supplemental
benefits.
The Amount of the Base Death Benefit depends upon the
death benefit option in effect at the time of the
insured's death.
DEATH BENEFIT OPTIONS. The Policy has two death
benefit options. You will be required to select one of
them in your policy application.
OPTION A--SPECIFIED FACE AMOUNT. Under this option,
the Base Death Benefit is THE GREATER OF--
- your Policy's Specified Face Amount,
or
- the Account Value multiplied by the
applicable Death Benefit Percentage.
OPTION B--SPECIFIED FACE AMOUNT PLUS ACCOUNT
VALUE. Under this option, the Base Death Benefit is THE
GREATER OF--
- the Specified Face Amount plus the
Account Value, or
17 SUN LIFE CORPORATE VUL-SM-
<PAGE>
- the Account Value multiplied by the
applicable Death Benefit Percentage.
Option B is not available, however, and you will be
deemed to have elected Option A, if you have chosen the
Cash Value Accumulation Test as the applicable Death
Benefit Compliance Test.
At any time the Base Death Benefit is defined as the
Account Value multiplied by the applicable Death Benefit
Percentage, and the Base Death Benefit minus Account
Value exceeds your Policy's Total Face Amount, we reserve
the right to distribute Account Value to you as a partial
surrender to the extent necessary so that the Base Death
Benefit minus Account Value will equal the Total Face
Amount. You will not have the option of providing
evidence of insurability to maintain a higher level of
Base Death Benefit.
We will notify you in writing if we exercise our
right to distribute Account Value to you as a partial
surrender as described above. You may allocate the
partial surrender among the Sub-Accounts of the Variable
Account. If you do not specify the allocation, then we
will allocate the partial surrender among the
Sub-Accounts in the same proportion that the Account
Value of each Sub-Account bears to the aggregate Account
Value of all Sub-Accounts on the date of partial
surrender.
CHANGES IN THE DEATH BENEFIT OPTION. If you have
chosen the Guideline Premium Test as the applicable Death
Benefit Compliance Test, then you may change the death
benefit option, subject to our underwriting rules in
effect at the time of the change. Requests for a change
must be made in writing to our Service Center. The
effective date of the change will be the Policy
Anniversary on or next following the date of receipt of
your request.
If you change from Option B to Option A, we will
increase the Specified Face Amount by the Account Value.
If you change from Option A to Option B, we will reduce
the Specified Face Amount by the Account Value. In either
case, the amount of the Base Death Benefit at the time of
change will not be altered, but the change will affect
the determination of the Base Death Benefit going
forward.
A change in the death benefit option could cause
total premiums paid prior to the change to exceed the
applicable maximum premium limitations under the
Guideline Premium Test. The change could also reduce
these limitations for future premium payments. If the
requested change causes total premiums paid to exceed the
applicable maximum premium limitations, you will be
required to make a partial surrender of your Policy. You
should consult a qualified tax adviser before changing
the death benefit option.
18 SUN LIFE CORPORATE VUL-SM-
<PAGE>
APB RIDER DEATH BENEFIT. The APB Rider Death Benefit
is THE GREATER OF ZERO OR THE RESULT OF the APB Rider
Face Amount minus the excess, if any, of the Base Death
Benefit over--
- the Specified Face Amount, if the
applicable death benefit option is
Option A, or
- the Specified Face Amount plus the
Account Value, if the applicable death
benefit option is Option B.
MINIMUM FACE AMOUNT. Total Face Amount is the sum of
the Specified Face Amount and the APB Rider Face Amount.
In general, the Total Face Amount must be at least
$50,000, of which the Specified Face Amount must be at
least $5,000. We reserve the right to waive these
minimums and to offer your Policy only in conjunction
with an APB Rider with a specified APB Rider Face Amount.
CHANGES IN FACE AMOUNT. After the end of the first
Policy Year, you may change the Specified Face Amount
and, if applicable, the APB Rider Face Amount, subject to
our underwriting rules in effect at the time of the
change. Unless you specify otherwise, we will first apply
a change to the APB Rider Face Amount to the extent
possible. You must send your request for a change to our
Service Center in writing. The Effective Date of Coverage
for changes will be--
- for any increase in coverage, the
Monthly Anniversary Day that falls on
or next follows the date we approve
the supplemental application for the
increase; and
- for any decrease in coverage, the
Monthly Anniversary Day that falls on
or next follows the date we receive
your request.
INCREASES IN FACE AMOUNT. An increase in the
Specified Face Amount and, if applicable, the APB Rider
Face Amount, is subject to our underwriting rules in
effect at the time of the increase. You may be required
to submit satisfactory evidence of the insured's
insurability.
DECREASES IN FACE AMOUNT. The Specified Face Amount
may not decrease to less than the Minimum Specified Face
Amount specified in your Policy. Similarly, a decrease in
Specified Face Amount or APB Rider Face Amount may not
decrease the Total Face Amount to an amount less than the
Minimum Total Face Amount specified in your Policy. A
decrease in face amount will be applied--
- first, to the most recent increase;
- second, to the next most recent
increases in reverse chronological
order; and
19 SUN LIFE CORPORATE VUL-SM-
<PAGE>
- finally, to the initial face amount.
A decrease in the Specified Face Amount or APB Rider
Face Amount could cause total premiums paid prior to the
change to exceed the applicable maximum premium
limitations under the Guideline Premium Test. The change
could also reduce these limitations for future premium
payments. If the requested change causes total premiums
paid to exceed the applicable maximum premium
limitations, you will be required to make a partial
surrender of your Policy. You should consult a qualified
tax adviser before decreasing the Specified Face Amount
or APB Rider Face Amount.
ACCOUNT VALUE
Your Account Value is the sum of the amounts in each
Sub-Account of the Variable Account with respect to your
Policy, plus the amount of the Loan Account.
We measure the amounts in the Sub-Accounts in terms
of Units and Unit Values. On any given day, the amount
you have in a Sub-Account is equal to the Unit Value
multiplied by the number of Units credited to you in that
Sub-Account. The Units for each Sub-Account will have
different Unit Values.
A VALUATION DATE is Amounts allocated to a Sub-Account will be used
any day on which we, to purchase Units of the Sub-Account. Units are redeemed
the applicable Fund, when you make partial surrenders, undertake policy loans
and the New York or transfer amounts from a Sub-Account, and for payment
Stock Exchange are of the Mortality and Expense Risk Charge, the Monthly
open for business. Expense Charge, and the Monthly Cost of Insurance
The VALUATION PERIOD Charge. The number of Units of each Sub-Account
is the period of purchased or redeemed is determined by dividing the
time from one dollar amount of the transaction by the Unit Value for
determination of the Sub-Account. The Unit Value for each Sub-Account is
Unit Values to the set at $10.00 for its first VALUATION DATE. The Unit
next. Value for any subsequent Valuation Date is equal to the
Unit Value for the preceding Valuation Date multiplied
by the Net Investment Factor. The Unit Value of a Sub-
Account for any Valuation Date is determined as of the
close of the VALUATION PERIOD ending on that Valuation
Date.
Transactions are normally processed on the date we
receive a premium at our Principal Office or any
acceptable written or telephonic request is received at
our Service Center. If your premium or request is
received on a date that is not a Valuation Date, or after
the close of the New York Stock Exchange on a Valuation
Date, the transaction will be processed on the next
Valuation Date.
20 SUN LIFE CORPORATE VUL-SM-
<PAGE>
The INVESTMENT START ACCOUNT VALUE IN THE SUB-ACCOUNTS. The Account
DATE is the date we Value attributable to each Sub-Account of the Variable
apply your first Account on the INVESTMENT START DATE equals--
premium payment, - that portion of Net Premium received and allocated to
which will be THE the
LATER OF the Issue Sub-Account, MINUS
Date, the Business - the Monthly Expense Charges due on the Issue Date and
Day we approve your subsequent Monthly Anniversary Days through the
policy application, Investment Start Date, MINUS
or the Business Day - the Monthly Cost of Insurance deductions due from the
we receive a premium Issue Date through the Investment Start Date.
equal to or in
excess of the
Minimum Premium.
The Account Value attributable to each Sub-Account of
the Variable Account on subsequent Valuation Dates is
equal to--
- the Account Value attributable to the
Sub-Account on the preceding Valuation
Date multiplied by that Sub-Account's
Net Investment Factor, MINUS
- the Daily Risk Percentage multiplied
by the number of days in the Valuation
Period multiplied by the Account Value
in the Sub-Account, PLUS
- that portion of Net Premium received
and allocated to the Sub-Account
during the current Valuation Period,
PLUS
- any amounts transferred by you to the
Sub-Account from another Sub-Account
during the current Valuation Period,
PLUS
- that portion of any loan repayment
allocated to the Sub-Account during
the current Valuation Period, PLUS
- that portion of any interest credited
on the Loan Account which is allocated
to the Sub-Account during the current
Valuation Period, MINUS
- any amounts transferred by you from
the Sub-Account to another Sub-Account
during the current Valuation Period,
MINUS
- that portion of any partial surrenders
deducted from the Sub-Account during
the current Valuation Period, MINUS
- that portion of any Policy loan
transferred from the Sub-Account to
the Loan Account during the current
Valuation Period, MINUS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Expense
21 SUN LIFE CORPORATE VUL-SM-
<PAGE>
Charge for the Policy month just
beginning charged to the Sub-Account,
MINUS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Cost of
Insurance for the Policy month just
ending charged to the Sub-Account,
MINUS
- if you surrender during the current
Valuation Period, that portion of the
pro-rata Monthly Cost of Insurance for
the Policy month charged to the
Sub-Account.
A Sub-Account's Unit NET INVESTMENT FACTOR. The Net Investment
Value on any Factor is used to measure the Sub-Account's investment
Valuation Date is performance from one Valuation Period to the next. This
equal to the Unit factor will be greater or less than or equal to one,
Value for the corresponding to a positive or negative or to a lack of
preceding Valuation change in the Sub-Account's investment performance for
Date multiplied by the preceding Valuation Period.
the Net Investment The Net Investment Factor for each Sub-Account for
Factor. any Valuation Period is determined by dividing the net
result of--
- the net asset value of a mutual fund
share held in the Sub-Account
determined as of the end of the
Valuation Period, PLUS
- the per share amount of any dividend
or other distribution declared on fund
shares held in the Sub-Account if the
"ex-dividend" date occurs during the
Valuation Period, PLUS OR MINUS
Although we do not - a per share credit or charge with respect to any
currently take any taxes reserved for by us, or paid by us if not
federal, state or previously reserved for, during the Valuation
local taxes into Period which are determined by us to be
account when attributable to the operation of the
determining the Net Sub-Account,
Investment Factor,
we reserve the right
to do so.
--by the net asset value of a fund share held in the
Sub-Account determined as of the end of the preceding
Valuation Period.
ACCOUNT VALUE IN THE LOAN ACCOUNT. The Account Value
in the Loan Account is zero on the Investment Start Date.
The Account Value in the Loan Account on any day
after the Investment Start Date equals--
- the Account Value in the Loan Account
on the preceding day credited with
interest at the rate specified in the
Policy as the "interest credited on
Loan Account rate" of 4%, PLUS
- any amount transferred from
Sub-Accounts to the Loan Account for
Policy loans requested on that day,
MINUS
22 SUN LIFE CORPORATE VUL-SM-
<PAGE>
- any loan repayments made on that day,
MINUS
- if that day is a Policy Anniversary,
any amount transferred to the
Sub-Accounts by which the Loan Account
Value exceeds the outstanding Policy
loan.
Your Policy may INSUFFICIENT VALUE. If the Account Value minus
terminate if your the outstanding Policy Debt is less than or equal to
Account Value minus zero on a Valuation Date, then your Policy will
any outstanding terminate for no value, subject to a grace period
Policy Debt drops to described below.
zero.
You will have 61 GRACE PERIOD. If, on a Valuation Date, your
days to pay enough Policy will terminate by reason of insufficient value,
premium to prevent we will allow a grace period. This grace period will
termination. allow 61 calendar days from that Valuation Date for the
payment of a Net Premium sufficient to cover the
deductions from the Account Value. Notice of premium due
will be mailed to your last known address or the last
known address of any assignee of record. We will assume
that your last known address is the address shown on
your policy application (or notice of assignment),
unless we have received satisfactory written notice of a
change in address. If the premium due is not paid during
the grace period, then the Policy will terminate without
value at the end of the 61 day period without further
notice. The Policy will continue to remain in force
during this grace period. If the Policy Proceeds become
payable during the grace period, then we will deduct any
overdue Monthly Cost of Insurance and Monthly Expense
Charge from the amount payable.
SPLITTING UNITS. We reserve the right to split or
combine the value of Units. In effecting any such change,
strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of
the Policy.
TRANSFER PRIVILEGES
You normally may at any time transfer all or a
portion of your Account Value among Sub-Accounts. We will
make transfers pursuant to an authorized written or
telephone request to our Service Center. We will honor
telephone requests if we have a properly completed
telephone authorization form for you on file. We, our
affiliates and the representative from whom you purchase
your Policy will not be responsible for losses resulting
from acting upon telephone requests reasonably believed
to be genuine. We will use reasonable procedures to
confirm that instructions communicated by telephone are
genuine. Our procedures require that you identify
yourself by name and a personal identification number.
Other procedures may also apply. In addition, telephone
requests may be recorded.
23 SUN LIFE CORPORATE VUL-SM-
<PAGE>
You may transfer a specified dollar amount or a
specified percentage of a Sub-Account's value.
Your transfer privileges are subject to our consent.
We reserve the right to impose limitations on transfers,
including, but not limited to--
- the minimum amount that may be
transferred; and
- the minimum amount that may remain in
a Sub-Account following a transfer
from that Sub-Account.
The Policy is not designed for professional market
timing orgainzations or other entities using programmed
and frequent transfers. If you wish to employ such
strategies, you should not purchase a Policy.
Accordingly, such transfers may be subject to special
restrictions.
In addition, transfer privileges are subject to any
restrictions that may be imposed by the Funds.
ACCESSING YOUR ACCOUNT VALUE
SALES LOAD REFUND AT SURRENDER. You may surrender your Policy for
SURRENDER is that its Cash Surrender Value at any time. If you do, the
portion of any insurance coverage and all other benefits under the
premium paid in the Policy will terminate. The Cash Surrender Value is--
Policy Year of - the Account Value, MINUS
surrender that we - the outstanding balance of any outstanding Policy
will refund if you Debt, PLUS
surrender your - the SALES LOAD REFUND AT SURRENDER, if any.
Policy in the first
three Policy Years.
Partial surrenders PARTIAL SURRENDERS. You may make a partial
reduce your Policy's surrender of your Policy once each Policy Year after the
Total Face Amount first Policy Year by written request to our Service
and may have tax Center. The amount of any partial surrender may not
consequences. exceed the Account Value minus any outstanding Policy
Debt. Unless you provide us satisfactory evidence that
the insured remains an acceptable risk based on our
underwriting limits and standards, the Total Face Amount
will be reduced to the extent necessary so that
- the death benefit minus the Account Value immediately
after the Partial Surrender DOES NOT EXCEED
- the death benefit minus the Account Value immediately
before the Partial Surrender.
If you provide satisfactory evidence of insurability,
the death benefit will be equal to what it was
immediately prior to the partial surrender. After the
partial
24 SUN LIFE CORPORATE VUL-SM-
<PAGE>
surrender, the Specified Face Amount may not be lower
than the minimum Specified Face Amount and the Total Face
Amount may not be lower than the minimum Total Face
Amount.
You may allocate a partial surrender among the
Sub-Accounts of the Variable Account. If you do not
specify the allocation, then we will allocate the partial
surrender among the Sub-Accounts in the same proportion
that the Account Value of each Sub-Account bears to the
aggregate Account Value of all Sub-Accounts on the date
of partial surrender.
You may borrow from POLICY LOANS. You may request a policy loan of
us using your Policy up to 90% of your Account Value, decreased by the
as collateral. balance of any outstanding Policy Debt on the date the
policy loan is made. We will transfer Account Value
equal to the amount of the policy loan from the
Sub-Accounts to the Loan Account on the date the policy
loan is made. You may allocate the policy loan among the
Sub- Accounts. If you do not specify the allocation,
then we will allocate the policy loan among the
Sub-Accounts in the same proportion that the Account
Value of each Sub-Account bears to the aggregate Account
Value of all Sub-Accounts immediately prior to the loan.
Interest on the policy loan will accrue daily at an
annual rate of 5% in Policy Years one through ten and
4.25% thereafter. This interest will be due and payable
to us in arrears on each Policy Anniversary. Any unpaid
interest will be added to the principal amount as an
additional policy loan and will bear interest at the same
rate and in the same manner as the prior policy loan.
All funds we receive from you will be credited to
your Policy as premium unless we have received
satisfactory written notice that the funds are to be
applied to repay a policy loan. It is generally
advantageous to repay a loan rather than to make a
premium payment, because premium payments incur expense
charges but loan repayments do not. Loan repayments will
first reduce the outstanding balance of the policy loan
and then accrued but unpaid interest on such loans. We
will accept repayment of any policy loan at any time
before Maturity. The amount of the loan repayment up to
the outstanding balance of the policy loan will be
transferred from the Loan Account to the Sub-Accounts.
You may allocate the loan repayment among the
Sub-Accounts. If you do not specify the allocation, then
we will allocate the loan repayment among the Sub-
Accounts in the same proportion that the Account Value of
each Sub-Account bears to the total Account Value minus
the Loan Account immediately prior to the loan repayment.
DEFERRAL OF PAYMENT. We will usually pay any amount
due from the Variable Account within seven days after the
Valuation Date following our receipt of written notice
for payment or, in the case of death of the insured,
25 SUN LIFE CORPORATE VUL-SM-
<PAGE>
Due Proof of such death. Payment of any amount payable
from the Variable Account on death, surrender, partial
surrender, or policy loan may be postponed whenever--
- the New York Stock Exchange is closed,
other than customary weekend and
holiday closing, or trading on that
exchange is otherwise restricted;
- the SEC, by order, permits
postponement for the protection of
policyowners; or
- an emergency exists as determined by
the SEC, as a result of which disposal
of securities is not reasonably
practicable, or it is not reasonably
practicable to determine the value of
the assets of the Variable Account.
CASH SURRENDER VALUE PAYABLE UPON MATURITY
If the insured is living and your Policy is in force
on the date of Maturity, the Cash Surrender Value is
payable to you.
CHARGES, DEDUCTIONS AND REFUNDS
EXPENSE CHARGES APPLIED TO PREMIUM. We deduct
charges from each premium payment for premium taxes and
our federal tax obligations and as a sales load.
States and a few cities and municipalities may impose
taxes on premiums paid for life insurance, which
generally range from 2% to 4% of premium but may exceed
4% in some states (for example, Kentucky). We will from
time to time determine the applicable premium tax rate
based on the rate we expect to pay in your state of
residence. The premium tax rate is guaranteed not to
exceed 4% for all states except Kentucky, in which case
it is guaranteed not to exceed 9%. If you change your
state of residence, we will adjust the premium tax rate
to reflect the rate for the new state of residence.
We deduct a 1.25% charge from each premium payment
for our federal tax obligations. This charge is
guaranteed not to exceed 1.25%.
TARGET PREMIUM We also charge a 8.75% sales load on each
varies based on the premium payment up to an amount of Target Premium
Specified Face specified in your Policy and a 2.25% sales load on
Amount and the premiums paid in excess of TARGET PREMIUM for each of
insured's Issue Age the first seven Policy Years. Sales load rates are
and sex. guaranteed not to exceed these amounts. There are no
sales load charges after the seventh Policy Year. We may
reduce or waive the sales load for certain group or
sponsored arrangements and corporate purchasers.
26 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SALES LOAD REFUND AT SURRENDER. If you surrender
your Policy during the first three Policy Years, we will
refund 100% of the sales load charged against premium
payments MADE DURING THE POLICY YEAR IN WHICH YOU
SURRENDERED YOUR POLICY.
MORTALITY AND EXPENSE RISK CHARGE. We deduct a daily
charge from the assets of the Variable Account for the
mortality and expense risks we assume with respect to the
Policy. This charge is based on the applicable Daily Risk
Percentage, which we will from time to time determine
based on our expectations of future interest, mortality
experience, persistency, expenses and taxes. Expressed as
an equivalent annual rate, the Daily Risk Percentage is
guaranteed not to exceed 0.90% (0.0024548% daily) of
assets. Our current effective annual rates as a
percentage of assets are--
- 0.60% (0.0016389% daily) for Policy
Years 1 through 10;
- 0.20% (0.0005474% daily) for Policy
Years 11 through 20; and
- 0.10% (0.0002738% daily) thereafter.
The mortality risk we assume is that the group of
lives insured under the Policies may, on average, live
for shorter periods of time than we estimated. The
expense risk we assume is that the costs of issuing and
administering Policies may be more than we estimated.
MONTHLY EXPENSE CHARGE. We deduct a flat charge at
the beginning of each month to cover administrative and
other expenses actually incurred. We will from time to
time determine the applicable Monthly Expense Charge
based on our expectations of future expenses, which will
not exceed $13.75 in any Policy Month. We will allocate
the Monthly Expense Charge among the Sub-Accounts in the
same proportion that the Account Value of each
Sub-Account bears to the aggregate Account Value of all
Sub-Accounts immediately prior to the deduction.
Currently, the Monthly Expense Charge is $13.75 per month
for the first Policy Year and $7.50 per month thereafter.
MONTHLY COST OF INSURANCE. We deduct a Monthly Cost
of Insurance charge from your Account Value to cover
anticipated costs of providing insurance coverage. This
charge is made, in arrears, at the end of each Policy
Month. If you surrender your Policy on any day other than
a Monthly Anniversary Day, we will deduct a cost of
insurance charge on a pro-rata basis. We will allocate
the Monthly Cost of Insurance deduction among
Sub-Accounts in the same proportion that the Account
Value of each Sub-Account bears to the aggregate Account
Value of all Sub-Accounts immediately prior to the
deduction.
27 SUN LIFE CORPORATE VUL-SM-
<PAGE>
Monthly cost of insurance rates are based on the
length of time the Policy has been in force and on the
insured's sex (except for unisex Policies), Issue Age,
Class and table rating, if any. We will from time to time
determine the applicable rates based on our expectations
of future experience with respect to mortality,
persistency, interest rates, expenses and taxes. Our cost
of insurance rates for coverage under the Policy are
guaranteed not to exceed the applicable maximum monthly
rates shown in your Policy which are based on the 1980
Commissioner's Standard Ordinary Mortality Table A (for
males and unisex Policies) or Table G (for females),
unless the insured has been rated a substandard risk. Our
cost of insurance rates for coverage under the APB Rider
are guaranteed not to exceed the applicable maximum
monthly rates shown in your Policy. In general, the
maximum monthly rates for coverage under the APB Rider
will not exceed 125% of the monthly rates based on the
1980 CSO Mortality Table A (for males and unisex
Policies) or G (for females), unless the insured has been
rated a substandard risk. Monthly cost of insurance rates
for classes of insureds with substandard risk ratings are
based on multiples of the CSO Mortality Tables described
above.
REDUCTION OF CHARGES. We reserve the right to reduce
any of our charges and deductions in connection with the
sale of the Policy if we expect that the sale may result
in cost savings, subject to any requirements we may from
time to time impose. We may change our requirements based
on experience. We will determine the propriety and amount
of any reduction. No reduction will be unfairly
discriminatory against the interests of any class of
policyowner.
TERMINATION OF POLICY
Your Policy will terminate on the earliest of--
- the date we receive your request to
surrender,
- the expiration date of the grace
period,
- the date of insured's death, or
- the date of Maturity.
OTHER POLICY PROVISIONS
ALTERATION. Our sales representatives do not have
the authority to either alter or modify your Policy or to
waive any of its provisions. The only persons with this
authority are our president, actuary, secretary, or one
of our vice presidents.
28 SUN LIFE CORPORATE VUL-SM-
<PAGE>
ASSIGNMENTS. During the lifetime of the insured, you
may assign all or some of your rights under the Policy.
All assignments must be filed at our Service Center and
must be in satisfactory written form. The assignment will
then be effective as of the date you signed the form,
subject to any action taken before we receive it at our
Service Center. We are not responsible for the validity
or legal effect of any assignment.
RIGHTS OF OWNER. While the insured is alive, unless
you have assigned any of these rights, you may--
- transfer ownership to a new owner;
- name a contingent owner who will
automatically become the owner of the
Policy if you die before the insured;
- change or revoke a contingent owner;
- change or revoke a beneficiary; and
- exercise all other rights in the
Policy.
When you transfer your rights to a new owner, you
automatically revoke any prior contingent owner
designation. You do not affect a prior beneficiary when
you merely transfer ownership, or change or revoke a
contingent owner designation. When you want to change or
revoke a prior beneficiary designation, you have to
specify that action.
You do not need the consent of a beneficiary or a
contingent owner in order to exercise any of your rights.
However, you must give us written notice of the requested
action. The request must be filed at our Service Center
and must be in satisfactory written form. Your request
will then, except as otherwise specified in the Policy,
be effective as of the date you signed the form, subject
to any action taken before we receive it at our Service
Center.
RIGHTS OF BENEFICIARY. The beneficiary has no rights
in the Policy until the death of the insured. If a
beneficiary is alive at that time, the beneficiary will
be entitled to payment of the Policy Proceeds as they
become due.
REPORTS TO POLICYOWNERS. We will send you a report
at least once each Policy Year. The report will show
current policy values, premiums paid, and deductions made
since the last report. It will also show the balance of
any outstanding policy loans and accrued interest on
those loans.
29 SUN LIFE CORPORATE VUL-SM-
<PAGE>
ILLUSTRATIONS. Upon request, we will provide you
with a hypothetical illustration of future Account Value
and Death Benefits. This illustration will be furnished
to you for a fee not to exceed $25.
CONVERSION. You may convert your Policy into a
flexible premium universal life policy offered by an
affiliate, Sun Life Assurance Company of Canada, during
the first 24 months after the Issue Date while the Policy
is in force. Choice of a new policy is subject to our
approval and will be restricted to those policies that
offer the same Class and rating as your Policy. Our
affiliate will issue the new policy with the same
Class and rating as the Policy without new evidence of
the insured's insurability. This provision does not apply
to the APB Rider, if any, or to any other supplemental
benefits that may be attached to the Policy. Any riders
or supplemental benefits will terminate automatically
when the Policy is converted.
MISSTATEMENT OF AGE OR SEX. If the age or sex
(unless a unisex Policy) of the insured is stated
incorrectly in your policy application, the amounts
payable by us will be adjusted.
MISSTATEMENT DISCOVERED AT DEATH--The Death Benefit
will be recalculated to that which would be purchased by
the most recently charged Monthly Cost of Insurance rate
for the correct age or sex.
MISSTATEMENT DISCOVERED PRIOR TO DEATH--The Account
Value will be recalculated from the Issue Date using the
Monthly Cost of Insurance rates based on the correct age
or sex.
SUICIDE. Unless state law otherwise requires, if the
insured, whether sane or insane, commits suicide within
two years after the Issue Date, we will not pay any part
of the Policy Proceeds. We will refund to you the
premiums paid, minus the amount of any Policy Debt and
any partial surrenders.
INCONTESTABILITY. All statements made in an
application or in a supplemental application are
representations and not warranties. We will rely on these
statements when approving the issuance, increase in face
amount, increase in Base Death Benefit over premium paid,
or change in death benefit option of the Policy. We can
use no statement in defense of a claim unless the
statement was made in the application or in a
supplemental application. In the absence of fraud, after
a Policy has been in force during the lifetime of the
insured for a period of two years from its Issue Date, we
cannot contest it except for non-payment of premiums.
However, any increase in the Total Face Amount which is
effective after the Issue Date will be incontestable only
after the increase has been in force during the lifetime
of the insured for two years from the effective date of
coverage of the increase. Any increase in Base Death
Benefit over
30 SUN LIFE CORPORATE VUL-SM-
<PAGE>
premium paid or increase in Base Death Benefit due to a
death benefit option change will be incontestable only
after such increase has been in force during the lifetime
of the insured for two years from the date of the
increase.
ADDITION, DELETION OR SUBSTITUTION OF
INVESTMENTS. Subject to our obtaining any necessary
regulatory approvals, shares of other registered open-end
investment companies or unit investment trusts may be
substituted both for fund shares already purchased by the
Variable Account and/or as the security to be purchased
in the future. In addition, the investment policies of
the Sub-Accounts will not be changed without the approval
of the Insurance Commissioner of the State of Delaware.
We also reserve the right to eliminate or combine
existing Sub-Accounts or to transfer assets between
Sub-Accounts. In the event of any substitution or other
act described above, we may make appropriate amendment to
the Policy to reflect the substitution.
NONPARTICIPATING. The Policy does not pay dividends.
The Policy does not share in our profits or surplus
earnings.
MODIFICATION. Upon notice to you, we may modify the
Policy if that modification--
- is necessary to make the Policy or the
Variable Account comply with any law
or regulation issued by a governmental
agency to which we are or the Variable
Account is subject;
- is necessary to assure continued
qualification of the Policy under the
Internal Revenue Code or other federal
or state laws as a life insurance
policy;
- is necessary to reflect a change in
the operation of the Variable Account
or the Sub-Accounts; or
- adds, deletes or otherwise changes
Sub-Account options.
We also reserve the right to modify certain
provisions of the Policy as stated in those provisions.
In the event of any such modification, we may make
appropriate amendment to the Policy to reflect the
modification.
ENTIRE CONTRACT. Your entire contract with us
consists of the Policy, including your policy application
and any attached copies of supplemental applications for
increases in the face amount. Any hypothetical
illustrations prepared in connection with the Policy do
not form a part of our contract with you and are intended
solely to provide information about how policy values may
be affected by different investment returns and other
factors.
31 SUN LIFE CORPORATE VUL-SM-
<PAGE>
PERFORMANCE INFORMATION
We may present the From time to time, we may advertise TOTAL RETURN
performance of the and AVERAGE ANNUAL TOTAL RETURN of the Funds. This
underlying fund performance information is based on historical earnings
options in sales and is not intended to indicate future performance.
literature.
Total return for a Fund refers to the total of the
income generated by the Fund net of total operating
expenses plus capital gains and losses, realized or
unrealized, for the Fund. Total return for the
Sub-Accounts refers to the total of the income generated
by the Fund net of total operating expenses plus capital
gains and losses, realized or unrealized, for the Fund
and net of the mortality and expense risk charge. Average
annual total return reflects the hypothetical annually
compounded return that would have produced the same
cumulative return if the Fund's or Sub-Account's
performance had been constant over the entire period.
Because average annual total returns tend to smooth out
variations in the return of the Fund or Sub-Account, they
are not the same as actual year-by-year results.
We may compare performance information in reports and
promotional literature to--
- the S&P 500, Dow Jones Industrial
Average, Lehman Brothers Aggregate
Bond Index or other unmanaged indices
so that investors may compare the
Sub-Account results with those of a
group of unmanaged securities widely
regarded by investors as
representative of the securities
markets in general;
- other groups of variable life separate
accounts or other investment products
tracked by Lipper Analytical Services,
a widely used independent research
firm which ranks mutual funds and
other investment products by overall
performance, investment objectives,
and assets, or tracked by other
services, companies, publications, or
persons, such as Morningstar, Inc.,
who rank such investment products on
overall performance or other criteria;
or
- the Consumer Price Index (a measure
for inflation) to assess the real rate
of return from an investment in the
Sub-Account.
Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for
administrative and management costs and expenses.
32 SUN LIFE CORPORATE VUL-SM-
<PAGE>
We may provide in advertising, sales literature,
periodic publications or other materials information on
various topics of interest to policyowners and
prospective policyowners. Topics may include--
- the relationship between sectors of
the economy and the economy as a whole
and its effect on various securities
markets, investment strategies and
techniques (such as value investing,
market timing, dollar cost averaging,
asset allocation, constant ratio
transfer and account rebalancing);
- the advantages and disadvantages of
investing in tax-deferred and taxable
investments;
- customer profiles and hypothetical
purchase and investment scenarios;
- financial management and tax and
retirement planning; and
- investment alternatives to
certificates of deposit and other
financial instruments, including
comparisons between the Policy and the
characteristics of and market for such
financial instruments.
The Policy was first offered to the public in 1997.
We may, however, advertise total return data based on the
period of time that the Funds have been in existence. The
results for any period prior to the time the Policy was
first publicly offered will be calculated as if the
Policy had been offered during that period of time.
VOTING RIGHTS
We will vote shares of the Funds held in the Variable
Account in accordance with instructions received from
policyowners having a voting interest in the
corresponding Sub-Accounts, to the extent required by
law. We will provide each policyowner who has a voting
interest a Sub-Account with the proxy materials of the
corresponding Fund, together with an appropriate form for
the policyowner to submit its voting instructions to us.
We will vote shares for which we receive no timely
instructions, together with shares not attributable to
any Policy, in the same proportion as those shares held
by the Sub-Account for which we receive instructions.
We will determine the number of shares for which you
are entitled to provide voting instructions as of the
record date established for the applicable Fund. This
number is determined by dividing your Account Value in
the Sub-Account, if any, by the net asset value of one
share in the corresponding Fund.
33 SUN LIFE CORPORATE VUL-SM-
<PAGE>
We may, if required by state insurance regulators,
disregard voting instructions if the instructions require
shares to be voted to cause a change in the
subclassification or investment objective of one or more
of the Funds, or to approve or disapprove an investment
advisory contract for a Fund. In addition, we may
disregard voting instructions in favor of any change in
the investment policies or in any investment adviser or
principal underwriter of a Fund. Our disapproval of any
such change must be reasonable and, in the case of a
change in investment policies or investment adviser,
based on a good faith determination that the change would
be contrary to state law or otherwise inappropriate in
light of the objectives and purposes of the Fund. If we
disregard voting instructions, we will include a summary
of and the reasons for that action in our next periodic
report to policyowners.
We reserve the right to vote shares held in the
Variable Account in our own right, if permitted by
applicable law.
DISTRIBUTION OF POLICY
We will offer the Policy only in jurisdictions where
the Policy may be lawfully sold. The Policy may be sold
only by persons who are licensed insurance agents under
applicable state law and who are licensed by the National
Associated of Securities Dealers, Inc. (the "NASD") to
sell variable insurance contracts as a registered
representative of a broker-dealer which has entered into
a distribution agreement with us and our general
distributor, Clarendon Insurance Agency, Inc., one of our
wholly-owned subsidiaries. Clarendon is a registered
broker-dealer and member of the NASD. Clarendon's
principal business offices are located at One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481.
We pay registered We may pay commissions in connection with sales
broker- dealers to of the Policy, and we may pay bonuses, as well as
sell the Policy. expense and training allowances. The maximum commission
payable will be 15% of premium paid in the first Policy
Year and 9% of premium paid in Policy Years two through
seven. We may also pay a commission of--
- up to 0.10% of Account Value for
Policy Years one through seven;
- up to 0.20% of Account Value for
Policy Years eight through twenty; and
- up to 0.10% of Account Value
thereafter.
34 SUN LIFE CORPORATE VUL-SM-
<PAGE>
FEDERAL TAX CONSIDERATIONS
The following is a summary of our understanding of
current federal income tax laws and is not intended as
tax advice. You should be aware that Congress has the
power to enact legislation affecting the tax treatment of
life insurance contracts which could be applied
retroactively. New judicial or administrative
interpretation of federal income tax law may also affect
the tax treatment of life insurance contracts. The
Internal Revenue Code of 1986, as amended (the "Code"),
is not in force in the Commonwealth of Puerto Rico.
Accordingly, some references in this summary will not
apply to Policies issued in Puerto Rico. Any person
contemplating the purchase of a Policy or any transaction
involving a Policy should consult a qualified tax
adviser. WE DO NOT MAKE ANY REPRESENTATION OR PROVIDE ANY
GUARANTEE REGARDING THE FEDERAL, STATE OR LOCAL TAX
TREATMENT OF ANY POLICY OR ANY TRANSACTION INVOLVING A
POLICY.
OUR TAX STATUS
We are taxed as a life insurance company under
Subchapter L of the Code. Although we account for the
operations of the Variable Account separately from our
other operations for purposes of federal income taxation,
the Variable Account currently is not separately taxable
as a regulated investment company or other taxable
entity.
Taxes we pay, or reserve for, that are attributable
to the earnings of the Variable Account could affect the
Net Investment Factor, which in turn affects your Account
Value. Under existing federal income tax law, however,
the income (consisting primarily of interest, dividends
and net capital gains) of the Variable Account, to the
extent applied to increase reserves under the Policy, is
not taxable to us. Similarly, no state or local income
taxes are currently attributable to the earnings of the
Variable Account. Therefore, we do not take any federal,
state or local taxes into account when determining the
Net Investment Factor. We may take taxes into account
when determining the Net Investment Factor in future
years if, due to a change in law, our tax status or
otherwise, such taxes are attributable to the earnings of
the Variable Account.
TAXATION OF POLICY PROCEEDS
Section 7702 of the Code provides certain tests for
whether a policy will be treated as a "life insurance
contract" for tax purposes. Provided that the owner of a
Policy has an insurable interest in the insured, we
believe that the Policy meets these tests, and thus
should receive the same federal income tax treatment as a
fixed life insurance contract. As such, the death benefit
under the Policy will be eligible for exclusion from the
gross income of the beneficiary under Section 101 of the
Code, and the owner will not be deemed to be in
35 SUN LIFE CORPORATE VUL-SM-
<PAGE>
constructive receipt of the increases in Cash Surrender
Values, including additions attributable to interest,
dividends, appreciation or gains realized upon transfers
among the Sub-Accounts, until actual receipt thereof.
CORPORATE OWNERS, HOWEVER, MAY BE SUBJECT TO ALTERNATIVE
MINIMUM TAX ON THE ANNUAL INCREASES IN CASH SURRENDER
VALUES AND ON THE DEATH BENEFIT.
To qualify as a life insurance contract under Section
7702, the Policy must satisfy certain actuarial
requirements. Section 7702 requires that actuarial
calculations be based on mortality charges that meet the
"reasonable mortality charge" requirements set forth in
the Code, and other charges reasonably expected to be
actually paid. The law relating to reasonableness
standards for mortality and other charges is based on
statutory language and certain IRS pronouncements that do
not address all relevant issues. Accordingly, although we
believe that the mortality and other charges that are
used in the calculations (including those used with
respect to Policies issued to so-called "sub-standard
risks") meet the applicable requirements, we cannot be
certain. It is possible that future regulations will
contain standards that would require us to modify the
mortality and other charges used in the calculations, and
we reserve the right to make any such modifications.
For a variable contract like the Policy to qualify as
life insurance for federal income tax purposes, it also
must comply with the investment diversification
rules found in Section 817 of the Code. We believe that
the Variable Account complies with the diversification
requirements prescribed by Section 1.817-5 of the
Treasury Regulations. We also believe that the owner does
not have excessive control over the assets underlying the
Policy that would cause the owner to be treated as owning
the investments underlying the Policy for federal income
tax purposes. If guidelines are adopted which would treat
the owner as having excessive control over the
investments underlying the Policy, we will take any
action (including modification of the Policy or the
Variable Account) necessary to comply with the
guidelines.
Upon the complete surrender or lapse of a Policy, the
amount by which the sum of the Policy's Cash Surrender
Value and any unpaid Policy Debt exceeds the owner's
"Investment in the Policy" (as defined below) is treated
as ordinary income subject to tax. Any loss incurred upon
surrender generally is not deductible.
The term "Investment in the Policy" means--
- the aggregate amount of any premiums
or other consideration paid for a
Policy, MINUS
- the aggregate amount received under a
Policy which is excluded from the
owner's gross income (other than loan
amounts), PLUS
36 SUN LIFE CORPORATE VUL-SM-
<PAGE>
- the amount of any loan from, or
secured by, a Policy that is a
Modified Endowment Contract (as
defined below) to the extent that such
amount is included in the owner's
gross income.
The repayment of a policy loan (or the payment of
interest on a loan) does not affect the Investment in the
Policy.
The tax consequences of distributions from, and loans
taken from or secured by, a Policy depend on whether the
Policy is classified as a Modified Endowment Contract
under Section 7702A of the Code. Due to the flexibility
of the payment of premiums and other rights you have
under the Policy, classification of the Policy as a
Modified Endowment Contract will depend upon the
individual operation of each Policy. A Policy is a
Modified Endowment Contract if the aggregate amount paid
under the Policy at any time during the first seven
Policy Years exceeds the sum of the net level premiums
that would have been paid on or before such time if the
Policy provided for paid up future benefits after the
payment of seven level annual premiums. If there is a
reduction in benefits during the first seven Policy
Years, the foregoing computation is made as if the Policy
originally had been issued at the reduced benefit level.
If there is a "material change" to the Policy, the seven
year testing period for Modified Endowment Contract
status is restarted. A life insurance contract received
in exchange for a Modified Endowment Contract also will
be treated as a Modified Endowment Contract.
We have undertaken measures to prevent payment of a
premium from inadvertently causing the Policy to become a
Modified Endowment Contract. In general, you should
consult a qualified tax adviser before undertaking any
transaction involving your Policy to determine whether
such a transaction would cause the Policy to become a
Modified Endowment Contract.
If a Policy is not a Modified Endowment Contract,
cash distributions from the Policy are treated first as a
nontaxable return of the owner's Investment in the Policy
and then as a distribution of the income earned under the
Policy, which is subject to tax. (An exception to this
general rule occurs when a cash distribution is made in
connection with certain reductions in the death benefit
under the Policy in the first fifteen contract years.
Such a cash distribution is taxed in whole or in part as
ordinary income.) Loans from, or secured by, a Policy
that is not a Modified Endowment Contract generally are
treated as bona fide indebtedness, and thus are not
included in the owner's gross income.
If a Policy is a Modified Endowment Contract,
distributions from the Policy are treated as ordinary
income subject to tax up to the amount equal to the
excess of the Account Value (which includes unpaid policy
loans) immediately
37 SUN LIFE CORPORATE VUL-SM-
<PAGE>
before the distribution over the Investment in the
Policy. Loans taken from, or secured by, such a Policy,
as well as due but unpaid interest thereon, are taxed in
the same manner as distributions from the Policy. A
10 percent additional tax is imposed on the portion of
any distribution from, or loan taken from or secured by,
a Modified Endowment Contract that is included in income
except when the distribution or loan is made on or after
the owner attains age 59 1/2, is attributable to the
owner's becoming disabled, or is part of a series of
substantially equal periodic payments for the life (or
life expectancy) of the owner or the joint lives (or
joint life expectancies) of the owner and the owner's
Beneficiary. These exceptions are not likely to apply
where the Policy is not owned by an individual (or held
in trust for an individual). For purposes of the
computations described in this paragraph, all Modified
Endowment Contracts issued by us (or our affiliates) to
the same owner during any calendar year are treated as
one Modified Endowment Contract.
There are limits on the deductibility of policy loan
interest. You should consult a qualified tax adviser
regarding such deductions.
An owner generally will not recognize gain upon the
exchange of the Policy for another life insurance policy
issued by us or another insurance company, except to the
extent that the owner receives cash in the exchange or is
relieved of policy indebtedness as a result of the
exchange. In no event will the gain recognized exceed the
amount by which the Policy's Account Value (which
includes unpaid policy loans) exceeds the owner's
Investment in the Policy.
A transfer of the Policy, a change in the owner, a
change in the beneficiary, certain other changes to the
Policy and particular uses of the Policy (including use
in a so called "split-dollar" arrangement) may have tax
consequences depending upon the particular circumstances
and should not be undertaken prior to consulting with a
qualified tax adviser. For instance, if you transfer your
Policy or designate a new owner in return for valuable
consideration (or, in some cases, if the transferor is
relieved of a liability as a result of the transfer),
then the death benefit payable upon the death of the
insured may in certain circumstances be includible in
your taxable income to the extent that the death benefit
exceeds the prior consideration paid for the transfer and
any premiums and other amounts paid later by the
transferee. Further, in such a case, if the consideration
received exceeds your Investment in the Policy, the
difference will be taxed to you as ordinary income.
Federal, as well as state and local, estate,
inheritance and other tax consequences of ownership or
receipt of Policy Proceeds will depend on your individual
circumstances and those of the beneficiary.
38 SUN LIFE CORPORATE VUL-SM-
<PAGE>
OUR DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers are listed
below, together with information as to their ages, dates
of election, and principal business occupations during
the last five years (if other than their present business
occupations). Except as otherwise indicated, those
directors and officers who are associated with Sun Life
Assurance Company of Canada and/or its subsidiaries have
been associated with Sun Life Assurance Company of Canada
for more than five years either in the position shown or
in other positions. The asterisks below denote the year
that the indicated director was elected to our board of
directors.
DONALD A. STEWART, 53, Chairman and Director (1996*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Chairman and Chief Executive Officer and a
Director of Sun Life Financial Services of Canada Inc.
and Sun Life Assurance Company of Canada; Chairman and a
Director of Sun Life Insurance and Annuity Company of New
York; and a Director of Massachusetts Financial Services
Company.
C. JAMES PRIEUR, 48, Vice Chairman and Director (1998*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is President and Chief Operating Officer of Sun
Life Financial Services of Canada Inc. and Sun Life
Assurance Company of Canada; Vice Chairman and a Director
of Sun Life Insurance and Annuity Company of New York;
Chairman and a Director of Sun Capital Advisers, Inc.;
Chairman of the Board and Executive Vice President, Sun
Capital Advisers Trust; President and a Director of Sun
Life of Canada (U.S.) Holdings, Inc., Sun Life of Canada
(U.S.) Financial Services Holdings, Inc., and Sun Life
Assurance Company of Canada - U.S. Operations
Holdings, Inc.; and a Director of Sun Life Information
Services Ireland Limited and Massachusetts Financial
Services Company.
JAMES A. MCNULTY, III, 57, President and Director (1999*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Executive Vice President, U.S. Operations for
Sun Life Financial Services of Canada Inc. and Sun Life
Assurance Company of Canada; President and Director of
Sun Life Insurance and Annuity Company of New York; and
Chairman and Director of Sun Life of Canada (U.S.)
Distributors, Inc. He is President and a Director of Sun
Life of Canada (U.S.) SPE 97-I, Inc., Sun Benefit
Services Company, Inc., Sun Life of Canada (U.S.)
Holdings General
39 SUN LIFE CORPORATE VUL-SM-
<PAGE>
Partner, Inc., Sun Life Financial Services Limited, and
Sun Canada Financial Co.; Senior Vice President and a
Director of Sun Life Assurance Company of Canada - U.S.
Operations Holdings, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., and Sun Life of Canada (U.S.) Financial
Services Holdings, Inc.; and a Director of Clarendon
Insurance Agency, Inc., Sunesco Insurance Agency, Inc.,
and the Support Committee for Battered Women.
RICHARD B. BAILEY, 73, Director (1983*)
63 Atlantic Avenue 11D
Boston, Massachusetts 02110
He is a Director of Sun Life Insurance and Annuity
Company of New York, and a Director/Trustee of certain
funds in the MFS Family of Funds. He is a Director of
Cambridge Bancorp.
GREGORY W. GEE, 51, Director (1999*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Vice Chairman of Sun Life Financial Services of
Canada Inc. and Sun Life Assurance Company of Canada and
a Director of Sun Life Insurance and Annuity Company of
New York.
DAVID D. HORN, 58, Director (1985*)
Strong Road
P.O. Box 24
New Vineyard, Maine 04956
He was formerly Senior Vice President and General
Manager for the United States of Sun Life Assurance
Company of Canada, retiring in December 1997. He is a
Director of Sun Life Insurance and Annuity Company of New
York; a Trustee of MFS/Sun Life Series Trust; and a
Member of the Boards of Managers of Money Market Variable
Account, High Yield Variable Account, Capital
Appreciation Variable Account, Government Securities
Variable Account, Global Governments Variable Account,
Total Return Variable Account, and Managed Sectors
Variable Account.
40 SUN LIFE CORPORATE VUL-SM-
<PAGE>
ANGUS A. MACNAUGHTON, 68, Director (1985*)
Genstar Investment Corporation
555 California Street
Suite 4850
San Francisco, California 94104
He is President and Director of Genstar Investment
L.L.C. and a Director of Sun Life Financial Services of
Canada Inc., Sun Life Assurance Company of Canada, Sun
Life Insurance and Annuity Company of New York, Canadian
Pacific, Ltd., Varian Semiconductor Equipment Associates,
Genstar Capital Corporation, San Francisco Opera, and
Diversified Collection Services, Inc.; Vice Chairman and
a Director of Barrick Gold Corporation; and Trustee of
the Board of Governors (Lakefield College School) and
World Affairs Council of Northern California.
S. CAESAR RABOY, 63, Director (1997*)
220 Boylston Street
Boston, Massachusetts 02110
He is a former Senior Vice President and Deputy
General Manager for the United States of Sun Life
Assurance Company of Canada; a Director of Sun Life
Insurance and Annuity Company of New York; and a Director
of Fleet International Bank.
WILLIAM W. STINSON, 66, Director (2000*)
Canadian Pacific Limited
1800 Bankers Hall, East Tower
855 - 2nd Street S.W.
Calgary, Alberta T2P 4Z5
He is Lead Director of Sun Life Assurance Company of
Canada, and a Director of Sun Life Financial Services of
Canada Inc. and Sun Life Insurance and Annuity Company of
New York. In addition, he is a Director of Pan Canadian
Petroleum, Massachusetts Financial Services Company,
United Dominion Industries, Western Star Trucks, and
Westshore Terminals Income Fund. In May 1996,
Mr. Stinson retired as Chairman and Chief Executive
Officer of Canadian Pacific Limited after a 45-year
career.
41 SUN LIFE CORPORATE VUL-SM-
<PAGE>
JAMES M.A. ANDERSON, 50, Vice President, Investments
(1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President, Investments of Sun Life
Assurance Company of Canada and Sun Life Insurance and
Annuity Company of New York; President and Chief
Executive Officer of Sun Capital Advisers Trust;
President and Director of Sun Capital Advisers, Inc.;
Vice President and a Director of Sun Life of Canada
(U.S.) Holdings, Inc., Sun Life of Canada (U.S.)
Financial Services Holdings, Inc., Sun Life Assurance
Company of Canada - U.S. Operations Holdings, Inc., Sun
Life of Canada (U.S.) Holdings General Partner, Inc., and
Sun Canada Financial Co.; Vice President, Investments and
Director of Sun Life of Canada (U.S.)
Distributors, Inc.; and a Director of Clarendon Insurance
Agency, Inc., Sunesco Insurance Agency, Inc., and Sun
Benefit Services Company, Inc.
DAVEY SCOON, 53, Vice President, Finance and Treasurer
(1999)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President and Chief Financial Officer of
U.S. Operations for Sun Life Assurance Company of Canada;
Vice President, Finance, Controller, and Treasurer of Sun
Life Insurance and Annuity Company of New York; Vice
President and Treasurer and Director of Sun Benefit
Services Company, Inc., Sun Life of Canada (U.S.)
Distributors, Inc., and Sun Life of Canada (U.S.) SPE
97-I, Inc.; Vice President and Director of Sun Life
Assurance Company of Canada - U.S. Operations
Holdings, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., Sun Life of Canada (U.S.)
Holdings General Partner, Inc., Sun Life Financial
Services Limited, and Sun Canada Financial Co.; Director
and Treasurer of Clarendon Insurance Agency, Inc. and
Sunesco Insurance Agency, Inc.; Regular Trustee of Sun
Life of Canada (U.S.) Capital Trust I; and Chairman and
Director of Tufts Associated Health Plan, Lead Director
of Tufts Associated Health Maintenance Organization, and
Board Chairman of Managed Comp. Prior to October 1999, he
was Executive Vice President and Chief Operating Officer
of Liberty Funds Group.
ROBERT P. VROLYK, 46, Vice President and Actuary (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President and Chief Actuary of Sun Life
Assurance Company of Canada; Vice President and Actuary
of Sun Life Insurance and Annuity Company of New York;
Vice President and Director of Sun Life of Canada - U.S.
42 SUN LIFE CORPORATE VUL-SM-
<PAGE>
Operations Holdings, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., Sun Canada Financial Co., and
Sun Life of Canada (U.S.) Holdings General
Partner, Inc.; Vice President and Director of Sun Life of
Canada (U.S.) SPE 97-I, Inc.; a Director of Sun Benefit
Services Company, Inc., and Sun Life Information Services
Ireland Limited; and a Regular Trustee of Sun Life of
Canada (U.S.) Capital Trust I.
PETER F. DEMUTH, 41, Vice President and Chief Counsel and
Assistant Secretary (1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President and Chief Counsel of U.S.
Operations for Sun Life Assurance Company of Canada; Vice
President and Chief Counsel and Assistant Secretary for
Sun Life Insurance and Annuity Company of New York; a
Director of Sun Life of Canada (U.S.) Holdings, Inc., Sun
Life of Canada (U.S.) Financial Services Holdings, Inc.,
and Sun Life Assurance Company of Canada - U.S.
Operations Holdings, Inc.; Assistant Secretary for Sun
Capital Advisers Trust; and a Regular Trustee of Sun Life
of Canada (U.S.) Capital Trust I. Prior to February 1998,
he was a partner at the firm of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.
ELLEN B. KING, 43, Counsel and Secretary (1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
She is Counsel of Sun Life Assurance Company of
Canada; Counsel and Secretary of Sun Life Insurance and
Annuity Company of New York; and Secretary of Sun Life of
Canada (U.S.) Holdings, Inc., Sun Life of Canada (U.S.)
Financial Services Holdings, Inc., Sun Life Assurance
Company of Canada - U.S. Operations Holdings, Inc., Sun
Benefit Services Company, Inc., Sun Life of Canada (U.S.)
SPE 97-I, Inc., Sun Canada Financial Co., and Sun Life of
Canada (U.S.) Holdings General Partner, Inc.
RONALD J. FERNANDES, 42, Vice President, Retirement
Products and Services (1999)
One Copley Place
Boston, Massachusetts 02116
He is Vice President, Retirement Products and
Services of Sun Life Insurance and Annuity Company of New
York. He is also a Director of Clarendon Insurance
Agency, Inc., Sunesco Insurance Agency, Inc., and Sun
Life of Canada (U.S.) Distributors, Inc. Prior to
October 1999, Mr. Fernandes was Senior Vice
43 SUN LIFE CORPORATE VUL-SM-
<PAGE>
President and Director, Retirement Products and Services
of Wheat First Union in Richmond, Virginia.
Our directors, officers, and employees are covered
under a commercial blanket bond and a liability policy.
The directors, officers, and employees of Clarendon
Insurance Agency, Inc. are covered under a fidelity bond.
OTHER INFORMATION
STATE REGULATION
We are subject to the laws of Delaware governing life
insurance companies and to regulation by Delaware's
Commissioner of Insurance, whose agents periodically
conduct an examination of our financial condition and
business operations. We are also subject to the insurance
laws and regulations of the jurisdictions in which we are
authorized to do business.
We are required to file an annual statement with the
insurance regulatory authority of those jurisdictions
where we are authorized to do business relating to our
business operations and financial condition as of
December 31st of the preceding year.
LEGAL PROCEEDINGS
There are no pending legal proceedings which would
have an adverse material effect on the Variable Account.
We are engaged in various kinds of routine litigation
which, in our judgment, is not material to the Variable
Account.
EXPERTS
Actuarial matters concerning the policy have been
examined by John E. Coleman, FSA, MAAA, Product Officer
for Corporate Markets of Sun Life Assurance Company of
Canada.
ACCOUNTANTS
The financial statements of the Variable Account for
the year ended December 31, 1999 and the statutory
financial statements of Sun Life Assurance Company of
Canada (U.S.) for the years ended December 31, 1999, 1998
and 1997 included in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in
their reports appearing herein, and are included in
reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
44 SUN LIFE CORPORATE VUL-SM-
<PAGE>
REGISTRATION STATEMENTS
This prospectus is part of a registration statement
that has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended,
with respect to the Policy. It does not contain all of
the information set forth in the registration statement
and the exhibits filed as part of the registration
statement. You may refer to the registration statement
for additional information about us, the Variable
Account, the underlying Funds and the Policy.
In addition, the Company is subject to the
informational requirements of the Securities Exchange Act
of 1934. We file reports and other information with the
SEC to meet these requirements. You can inspect and copy
this information and our registration statements at the
SEC's public reference facilities at the following
locations: Washington, D.C. - 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; Chicago, Illinois -
500 West Madison Street, Chicago, IL 60661; New York, New
York - World Trade Center, 13th Floor, New York, NY
10048. The Washington, D.C. office will also provide
copies by mail for a fee. You may also find these
materials on the SEC's Website (http:// www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year
ended December 31, 1999 filed with the SEC is
incorporated by reference in this Prospectus. Any
statement contained in a document we incorporate by
reference is deemed modified or superceded to the extent
that a later filed document, including this Prospectus,
shall modify or supercede that statement. Any statement
so modified or superceded shall not be deemed, except as
so modified or superceded, to constitute part of this
Prospectus.
The Company will furnish, without charge, to each
person to whom a copy of this Prospectus is delivered,
upon the written or oral request of each person, a copy
of the document referred to above which has been
incorporated by reference in this Prospectus, other than
exhibits to such document (unless such exhibits are
specifically incorporated by reference in this
Prospectus).
FINANCIAL STATEMENTS
Our financial statements, which are included in this
prospectus, should be considered only as bearing on our
ability to meet our obligations with respect to the death
benefit and our assumption of the mortality and expense
risks. They should not be considered as bearing on the
investment performance of the shares of any Fund held in
the Variable Account.
45 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CONDITION
-- December 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C> <C>
Investments in Mutual Funds: SHARES COST VALUE
----------- ----------- -----------
Investments in MFS/Sun Life
Series Trust:
Capital Appreciation
Series ("CAS").................... 6,678 $ 276,456 $ 361,418
Emerging Growth Series ("EGS")...... 12,841 331,342 517,223
Government Securities
Series ("GSS").................... 51,831 660,774 646,852
Massachusetts Investors Growth Stock
Series ("MIS").................... 14,550 191,684 234,686
Money Market Series ("MMS")......... 1,160,850 1,160,850 1,160,850
Research Series ("RES")............. 502 12,298 13,868
Total Return Series ("TRS")......... 85,790 1,760,321 1,609,419
Utilities Series ("UTS")............ 2,505 45,465 49,695
Global Growth Series ("WGO")........ 97,200 1,536,316 2,445,542
Investments in Fidelity Variable
Insurance Products Fund:
VIP Equity Income Portfolio
("FEI")........................... 122,532 2,975,765 3,150,302
VIP Growth Portfolio ("FGP")........ 114,130 4,599,646 6,269,166
VIP High Income Portfolio ("FHI")... 12,719 140,897 143,849
VIP Money Market Portfolio
("FMM")........................... 498,795 498,795 498,795
Investments in Fidelity Variable
Insurance Products Fund II:
VIP II Asset Manager: Growth
Portfolio ("FAM")................. 812 14,635 14,923
VIP II Contrafund Portfolio
("FCN")........................... 33,270 749,225 969,813
VIP II Investment Grade Bond
Portfolio ("FIG")................. 35,917 438,909 436,754
VIP II Index 500 Portfolio
("FIP")........................... 47,672 6,305,826 7,980,799
Investments in Neuberger Berman
Advisers Management Trust:
Limited Maturity Bond Portfolio
("NLM")........................... -- -- --
Mid-Cap Growth Portfolio ("NMC").... 1,676 32,969 40,732
Partners Portfolio ("NPP").......... 72,113 1,390,772 1,416,309
Investments in J.P. Morgan
Series Trust II
J.P. Morgan Bond Portfolio
("JBP")........................... 140,380 1,623,008 1,577,873
J.P. Morgan Equity Portfolio
("JEP")........................... 19,933 325,572 345,830
J.P. Morgan Small Company Portfolio
("JSC")........................... 22,651 269,755 378,950
Investments in Templeton Variable
Products Series Fund:
Templeton Stock Fund: Class 1
("TSF")........................... 33,168 703,061 808,958
Investments in Dreyfus Variable
Investment Fund
Capital Appreciation Portfolio
("DCA")........................... 1,896 75,773 75,596
Small Cap Portfolio ("DSC")......... 807 47,445 53,526
Quality Bond Portfolio ("DQB")...... 3,688 40,359 40,162
Investments in Dreyfus Stock Index
Fund ("DSI")........................ 67,700 2,386,167 2,603,064
Investments in T. Rowe Price Equity
Series, Inc.
T. Rowe Price Equity Income
Portfolio ("REI")................. 4,456 94,621 83,470
T. Rowe Price New America Growth
Portfolio ("RNA")................. 1,019 25,169 26,690
Investments in AIM Variable Insurance
Funds, Inc.
AIM V.I. Value Fund ("AVF")......... 1,867 59,417 62,537
Investments in Sun Capital Advisers
Trust
Real Estate Fund ("SRE")............ 499 4,615 4,458
----------- -----------
NET ASSETS..................................... $28,777,907 $34,022,109
=========== ===========
</TABLE>
See notes to financial statements
46 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CONDITION
-- December 31, 1999 -- continued
<TABLE>
<CAPTION>
UNITS UNIT VALUE VALUE
-------- ---------- -----------
<S> <C> <C> <C>
NET ASSETS APPLICABLE TO CONTRACT OWNERS:
CAS..................................................... 21,325 $16.9479 $ 361,418
EGS..................................................... 19,972 25.8976 517,223
GSS..................................................... 57,382 11.2728 646,852
MIS..................................................... 18,354 12.7854 234,686
MMS..................................................... 112,538 10.3154 1,160,850
RES..................................................... 1,061 13.0662 13,868
TRS..................................................... 133,786 12.0298 1,609,419
UTS..................................................... 3,595 13.8242 49,695
WGO..................................................... 120,770 20.2495 2,445,542
FEI..................................................... 243,225 12.9522 3,150,302
FGP..................................................... 319,434 19.6258 6,269,166
FHI..................................................... 13,073 11.0037 143,849
FMM..................................................... 32,578 11.7164 381,662
FAM..................................................... 1,243 11.9859 14,923
FCN..................................................... 54,448 17.8118 969,813
FIG..................................................... 41,448 10.5374 436,754
FIP..................................................... 446,730 17.8649 7,980,799
NLM..................................................... -- 10.9661 --
NMC..................................................... 2,337 17.4307 40,732
NPP..................................................... 119,392 11.8626 1,416,309
JBP..................................................... 139,098 11.3436 1,577,873
JEP..................................................... 23,144 14.9425 345,830
JSC..................................................... 25,442 14.8946 378,950
TSF..................................................... 64,260 12.5888 808,958
DCA..................................................... 6,135 12.3214 75,596
DSC..................................................... 5,073 10.5506 53,526
DQB..................................................... 3,920 10.2460 40,162
DSI..................................................... 238,427 10.9176 2,603,064
REI..................................................... 8,149 10.2471 83,470
RNA..................................................... 2,301 11.6010 26,690
AVF..................................................... 5,311 11.7742 62,537
SRE..................................................... 481 9.2632 4,458
-----------
Net Assets Applicable to Contract Owners.............. 33,904,976
-----------
Net Assets Applicable to Sponsor...................... 10,000 11.7164 117,133
-----------
Total Net Assets........................................................... $34,022,109
===========
</TABLE>
See notes to financial statements
47 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENT OF OPERATIONS
-- Year Ended December 31, 1999
<TABLE>
<CAPTION>
CAS EGS GSS MIS(C) MMS(E)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.............. $16,738 $ 739 $ 16,132 $ -- $12,356
------- -------- -------- -------- -------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $35,475 $ 29,864 $ 29,361 $ 28,582 $74,769
Cost of investments sold............ 34,739 20,182 30,498 28,218 74,769
------- -------- -------- -------- -------
Net realized gains (losses)......... $ 736 $ 9,682 $ (1,137) $ 364 $--
------- -------- -------- -------- -------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $84,962 $185,881 $(13,922) $ 43,002 $--
Beginning of year................... 15,085 6,747 6,736 -- --
------- -------- -------- -------- -------
Change in unrealized appreciation
(depreciation) $69,877 $179,134 $(20,658) $ 43,002 $--
------- -------- -------- -------- -------
Realized and unrealized gains
(losses) $70,613 $188,816 $(21,795) $ 43,366 $--
------- -------- -------- -------- -------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $87,351 $189,555 $ (5,663) $ 43,366 $12,356
======= ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
RES(G) TRS UTS(G) WGO FEI FGP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.............. $-- $ 195,833 $-- $ 53,421 $ 84,128 $ 289,893
------- --------- ------- -------- -------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 3,043 $ 96,777 $10,696 $ 57,407 $213,255 $ 299,001
Cost of investments sold............ 3,005 108,533 10,308 44,321 191,639 235,065
------- --------- ------- -------- -------- ----------
Net realized gains (losses)......... $ 38 $ (11,756) $ 388 $ 13,086 $ 21,616 $ 63,936
------- --------- ------- -------- -------- ----------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 1,570 $(150,902) $ 4,230 $909,226 $174,537 $1,669,520
Beginning of year................... -- (6,224) -- 27,953 124,054 530,726
------- --------- ------- -------- -------- ----------
Change in unrealized appreciation
(depreciation).................. $ 1,570 $(144,678) $ 4,230 $881,273 $ 50,483 $1,138,794
------- --------- ------- -------- -------- ----------
Realized and unrealized gains
(losses).......................... $ 1,608 $(156,434) $ 4,618 $894,359 $ 72,099 $1,202,730
------- --------- ------- -------- -------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 1,608 $ 39,399 $ 4,618 $947,780 $156,227 $1,492,623
======= ========= ======= ======== ======== ==========
</TABLE>
(c) For the period June 25, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(e) For the period July 9, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
48 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENT OF OPERATIONS
-- Year Ended December 31, 1999 -- continued
<TABLE>
<CAPTION>
FHI FMM FAM(F) FCN FIG(A) FIP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.............. $ 16,590 $25,843 $-- $ 21,709 $-- $ 77,078
--------- ------- ------- -------- ------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:.......................
Proceeds from sales................. $ 135,012 $85,735 $ 1,478 $127,378 $10,746 $ 857,484
Cost of investments sold............ 138,997 85,735 1,507 110,032 10,811 614,816
--------- ------- ------- -------- ------- ----------
Net realized gains (losses)......... $ (3,985) $-- $ (29) $ 17,346 $ (65) $ 242,668
--------- ------- ------- -------- ------- ----------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 2,952 $-- $ 288 $220,588 $(2,155) $1,674,973
Beginning of year................... 1,576 -- -- 97,673 -- 698,312
--------- ------- ------- -------- ------- ----------
Change in unrealized appreciation
(depreciation).................. $ 1,376 $-- $ 288 $122,915 $(2,155) $ 976,661
--------- ------- ------- -------- ------- ----------
Realized and unrealized gains
(losses).......................... $ (2,609) $-- $ 259 $140,261 $(2,220) $1,219,329
--------- ------- ------- -------- ------- ----------
Increase (Decrease) in net assets from
operations............................. $ 13,981 $25,843 $ 259 $161,970 $(2,220) $1,296,407
========= ======= ======= ======== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
NLM NMC(G) NPP JBP JEP JSC
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.............. $ 1,845 $-- $ 33,511 $ 38,128 $24,316 $ 8,658
------- ------- -------- -------- ------- --------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $35,367 $18,887 $206,506 $145,174 $62,763 $269,500
Cost of investments sold............ 36,650 18,760 230,390 148,386 59,834 272,546
------- ------- -------- -------- ------- --------
Net realized gains (losses)......... $(1,283) $ 127 $(23,884) $ (3,212) $ 2,929 $ (3,046)
------- ------- -------- -------- ------- --------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $-- $ 7,763 $ 25,537 $(45,135) $20,258 $109,195
Beginning of year................... 489 -- (48,732) 6,550 4,990 (11,212)
------- ------- -------- -------- ------- --------
Change in unrealized appreciation
(depreciation).................. $ (489) $ 7,763 $ 74,269 $(51,685) $15,268 $120,407
------- ------- -------- -------- ------- --------
Realized and unrealized gains
(losses).......................... $(1,772) $ 7,890 $ 50,385 $(54,897) $18,197 $117,361
------- ------- -------- -------- ------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 73 $ 7,890 $ 83,896 $(16,769) $42,513 $126,019
======= ======= ======== ======== ======= ========
</TABLE>
(a) For the period March 16, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(f) For the period July 22, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
49 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENT OF OPERATIONS
-- Year Ended December 31, 1999 -- continued
<TABLE>
<CAPTION>
TSF DCA(H) DSC(C) DQB(C) DSI(B) REI(D)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.............. $ 49,240 $ 716 $-- $ 1,154 $ 27,435 $ 3,752
--------- ------ ------- ------- -------- --------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 145,459 $7,016 $19,465 $ 968 $ 59,634 $ 13,282
Cost of investments sold............ 160,884 6,981 20,444 967 60,615 14,314
--------- ------ ------- ------- -------- --------
Net realized gains (losses)......... $ (15,425) $ 35 $ (979) $ 1 $ (981) $ (1,032)
--------- ------ ------- ------- -------- --------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 105,897 $ (177) $ 6,081 $ (197) $216,897 $(11,151)
Beginning of year................... (22,684) -- -- -- -- --
--------- ------ ------- ------- -------- --------
Change in unrealized appreciation
(depreciation).................. $ 128,581 $ (177) $ 6,081 $ (197) $216,897 $(11,151)
--------- ------ ------- ------- -------- --------
Realized and unrealized gains
(losses).......................... $ 113,156 $ (142) $ 5,102 $ (196) $215,916 $(12,183)
--------- ------ ------- ------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 162,396 $ 574 $ 5,102 $ 958 $243,351 $ (8,431)
========= ====== ======= ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
RNA(G) AVF(F) SRE(G)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.............. $ 1,529 $ 772 $ 236
------- ------- -----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $12,599 $11,213 $ 116
Cost of investments sold............ 13,318 11,155 121
------- ------- -----
Net realized gains (losses)......... $ (719) $ 58 $ (5)
------- ------- -----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 1,521 $ 3,120 $(157)
Beginning of year................... -- -- --
------- ------- -----
Change in unrealized appreciation
(depreciation).................. $ 1,521 $ 3,120 $(157)
------- ------- -----
Realized and unrealized gains
(losses).......................... $ 802 $ 3,178 $(162)
------- ------- -----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 2,331 $ 3,950 $ 74
======= ======= =====
</TABLE>
(b) For the period May 6, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(c) For the period June 25, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(d) For the period June 30, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(f) For the period July 22, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(h) For the period August 3, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
50 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS EGS
SUB-ACCOUNT SUB-ACCOUNT
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------ ------------ -------------
1999 1998 1999 1998
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 16,738 $ 7,994 $ 739 $ 598
Net realized gains (losses)............................... 736 (2,035) 9,682 362
Net unrealized gains (losses)............................. 69,877 15,085 179,134 6,490
-------- -------- -------- -------
Increase (Decrease) in net assets from operations..... $ 87,351 $ 21,044 $189,555 $ 7,450
-------- -------- -------- -------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.............................. $ 88,046 $ 69,165 $ 76,314 $18,930
Net transfers between Sub-Accounts...................... 59,089 49,909 216,689 13,669
Withdrawals, surrenders, annuitizations and contract
charges............................................... (9,282) (3,904) (7,146) (1,061)
-------- -------- -------- -------
Increase (Decrease) in net assets from contract owner
transactions............................................ $137,853 $115,170 $285,857 $31,538
-------- -------- -------- -------
Increase (Decrease) in net assets....................... $225,204 $136,214 $475,412 $38,988
NET ASSETS:
Beginning of year......................................... 136,214 -- 41,811 2,823
-------- -------- -------- -------
End of year............................................... $361,418 $136,214 $517,223 $41,811
======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
GSS MIS(C) MMS(E)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------------- ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------- ------------ ------------
1999 1998 1999 1999
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 16,132 $ 8,657 $ -- $ 12,356
Net realized gains (losses)............................... (1,137) 186 364 --
Net unrealized gains (losses)............................. (20,658) 6,237 43,002 --
-------- -------- -------- ----------
Increase (Decrease) in net assets from operations..... $ (5,663) $ 15,080 $ 43,366 $ 12,356
-------- -------- -------- ----------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.............................. $313,310 $165,413 $111,816 $ 897,156
Net transfers between Sub-Accounts...................... 23,430 -- 84,273 262,777
Withdrawals, surrenders, annuitizations and contract
charges............................................... (13,273) (7,748) (4,769) (11,439)
-------- -------- -------- ----------
Increase (Decrease) in net assets from contract owner
transactions............................................ $323,467 $157,665 $191,320 $1,148,494
-------- -------- -------- ----------
Increase (Decrease) in net assets....................... $317,804 $172,745 $234,686 $1,160,850
NET ASSETS:
Beginning of year......................................... 329,048 156,303 -- --
-------- -------- -------- ----------
End of year............................................... $646,852 $329,048 $234,686 $1,160,850
======== ======== ======== ==========
</TABLE>
(c) For the period June 25, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(e) For the period July 9, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
51 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
RES(G) TRS UTS(G)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ---------------------------- ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------ ------------- ------------
1999 1999 1998 1999
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $-- $ 195,833 $ 64,091 $--
Net realized gains (losses)............................... 38 (11,756) 4,643 388
Net unrealized gains (losses)............................. 1,570 (144,678) (6,224) 4,230
------- ---------- --------- -------
Increase (Decrease) in net assets from operations..... $ 1,608 $ 39,399 $ 62,510 $ 4,618
------- ---------- --------- -------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.............................. $12,837 $ 872,032 $ 742,106 $54,335
Net transfers between Sub-Accounts...................... 1 96,648 (115,350) (6,705)
Withdrawals, surrenders, annuitizations and contract
charges............................................... (578) (52,973) (34,953) (2,553)
------- ---------- --------- -------
Increase (Decrease) in net assets from contract owner
transactions............................................ $12,260 $ 915,707 $ 591,803 $45,077
------- ---------- --------- -------
Increase (Decrease) in net assets....................... $13,868 $ 955,106 $ 654,313 $49,695
NET ASSETS:
Beginning of year......................................... -- 654,313 -- --
------- ---------- --------- -------
End of year............................................... $13,868 $1,609,419 $ 654,313 $49,695
======= ========== ========= =======
</TABLE>
<TABLE>
<CAPTION>
WGO FEI FGP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------------- --------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------- ------------ ------------ ------------- -------------
1999 1998 1999 1998 1999 1998
------------- ------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 53,421 $ 39,888 $ 84,128 $ 821 $ 289,893 $ 34,173
Net realized gains (losses)...... 13,086 1,466 21,616 (5,033) 63,936 1,372
Net unrealized gains (losses).... 881,273 16,998 50,483 122,975 1,138,794 529,196
---------- -------- ---------- ---------- ---------- ----------
Increase (Decrease) in net
assets from operations..... $ 947,780 $ 58,352 $ 156,227 $ 118,763 $1,492,623 $ 564,741
---------- -------- ---------- ---------- ---------- ----------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received..... $ 743,442 $540,355 $1,800,084 $1,756,032 $2,503,859 $1,547,362
Net transfers between
Sub-Accounts................. 20,392 2,700 (445,069) (58,426) (100,061) 259,472
Withdrawals, surrenders,
annuitizations and contract
charges...................... (46,986) (26,751) (111,858) (78,355) (165,490) (80,050)
---------- -------- ---------- ---------- ---------- ----------
Increase (Decrease) in net assets
from contract owner
transactions................... $ 716,848 $516,304 $1,243,157 $1,619,251 $2,238,308 $1,726,784
---------- -------- ---------- ---------- ---------- ----------
Increase (Decrease) in net
assets....................... $1,664,628 $574,656 $1,399,384 $1,738,014 $3,730,931 $2,291,525
NET ASSETS:
Beginning of year................ 780,914 206,258 1,750,918 12,904 2,538,235 246,710
---------- -------- ---------- ---------- ---------- ----------
End of year...................... $2,445,542 $780,914 $3,150,302 $1,750,918 $6,269,166 $2,538,235
========== ======== ========== ========== ========== ==========
</TABLE>
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
52 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
FHI FMM FAM(F)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------------------- ---------------------------- ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------ ------------- ------------ ------------
1999 1998 1999 1998 1999
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 16,590 $ -- $ 25,843 $ 32,102 $--
Net realized gains (losses)..................... (3,985) (254) -- -- (29)
Net unrealized gains (losses)................... 1,376 1,576 -- -- 288
--------- -------- --------- ----------- -------
Increase (Decrease) in net assets from
operations................................ $ 13,981 $ 1,322 $ 25,843 $ 32,102 $ 259
--------- -------- --------- ----------- -------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.................... $ 96,271 $ 75,590 $ 243,917 $ 1,495,810 $ 6,389
Net transfers between Sub-Accounts............ (125,515) 94,193 (187,845) (1,173,716) 8,929
Withdrawals, surrenders, annuitizations and
contract charges............................ (8,324) (3,669) (14,221) (28,796) (654)
--------- -------- --------- ----------- -------
Increase (Decrease) in net assets from contract
owner transactions............................ $ (37,568) $166,114 $ 41,851 $ 293,298 $14,664
--------- -------- --------- ----------- -------
Increase (Decrease) in net assets............. $ (23,587) $167,436 $ 67,694 $ 325,400 $14,923
NET ASSETS:
Beginning of year............................... 167,436 -- 431,101 105,701 --
--------- -------- --------- ----------- -------
End of year..................................... $ 143,849 $167,436 $ 498,795 $ 431,101 $14,923
========= ======== ========= =========== =======
</TABLE>
<TABLE>
<CAPTION>
FCN FIG(A) FIP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------- ------------ ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ ------------ ------------ ------------
1999 1998 1999 1999 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 21,709 $ 382 $ -- $ 77,078 $ 48,449
Net realized gains (losses)..................... 17,346 1,167 (65) 242,668 111,953
Net unrealized gains (losses)................... 122,915 97,064 (2,155) 976,661 595,373
-------- -------- -------- ---------- ----------
Increase (Decrease) in net assets from
operations................................ $161,970 $ 98,613 $ (2,220) $1,296,407 $ 755,775
-------- -------- -------- ---------- ----------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.................... $361,996 $153,403 $216,815 $2,751,116 $2,846,625
Net transfers between Sub-Accounts............ (41,751) 268,273 233,259 (208,570) 320,272
Withdrawals, surrenders, annuitizations and
contract charges............................ (31,364) (7,846) (11,100) (234,696) (524,138)
-------- -------- -------- ---------- ----------
Increase (Decrease) in net assets from contract
owner transactions............................ $288,881 $413,830 $438,974 $2,307,850 $2,642,759
-------- -------- -------- ---------- ----------
Increase (Decrease) in net assets............. $450,851 $512,443 $436,754 $3,604,257 $3,398,534
NET ASSETS:
Beginning of year............................... 518,962 6,519 -- 4,376,542 978,008
-------- -------- -------- ---------- ----------
End of year..................................... $969,813 $518,962 $436,754 $7,980,799 $4,376,542
======== ======== ======== ========== ==========
</TABLE>
(a) For the period March 16, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(f) For the period July 22, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
53 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
NLM NMC(G) NPP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------- ------------ ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ ------------ ------------ ------------
1999 1998 1999 1999 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 1,845 $ 167 $-- $ 33,511 $ 97,246
Net realized gains (losses)..................... (1,283) 506 127 (23,884) (40,762)
Net unrealized gains (losses)................... (489) 399 7,763 74,269 (49,692)
-------- ------- ------- ---------- ----------
Increase (Decrease) in net assets from
operations................................ $ 73 $ 1,072 $ 7,890 $ 83,896 $ 6,792
-------- ------- ------- ---------- ----------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.................... $ 3,519 $26,898 $36,642 $ 568,576 $ 829,194
Net transfers between Sub-Accounts............ (34,632) 2,696 (2,311) (193,236) 80,931
Withdrawals, surrenders, annuitizations and
contract charges............................ (741) (1,541) (1,489) (43,019) (40,375)
-------- ------- ------- ---------- ----------
Increase (Decrease) in net assets from contract
owner transactions............................ $(31,854) $28,053 $32,842 $ 332,321 $ 869,750
-------- ------- ------- ---------- ----------
Increase (Decrease) in net assets............. $(31,781) $29,125 $40,732 $ 416,217 $ 876,542
NET ASSETS:
Beginning of year............................... 31,781 2,656 -- 1,000,092 123,550
-------- ------- ------- ---------- ----------
End of year..................................... $ -- $31,781 $40,732 $1,416,309 $1,000,092
======== ======= ======= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JBP JEP JSC
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------- --------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ ------------ ------------ ------------ ------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 38,128 $ 32,711 $ 24,316 $ 19,117 $ 8,658 $ 12,274
Net realized gains (losses)...... (3,212) 7,002 2,929 13,026 (3,046) (28,111)
Net unrealized gains (losses).... (51,685) 6,645 15,268 4,990 120,407 (11,212)
---------- --------- -------- -------- -------- --------
Increase (Decrease) in net
assets from operations..... $ (16,769) $ 46,358 $ 42,513 $ 37,133 $126,019 $(27,049)
---------- --------- -------- -------- -------- --------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received..... $ 874,712 $ 971,373 $155,378 $267,400 $175,595 $281,469
Net transfers between
Sub-Accounts................. (25,002) 42,894 (45,294) (92,224) (232,970) 87,065
Withdrawals, surrenders,
annuitizations and contract
charges...................... (48,051) (366,856) (10,709) (8,367) (16,242) (14,937)
---------- --------- -------- -------- -------- --------
Increase (Decrease) in net assets
from contract owner
transactions................... $ 801,659 $ 647,411 $ 99,375 $166,809 $(73,617) $353,597
---------- --------- -------- -------- -------- --------
Increase (Decrease) in net
assets....................... $ 784,890 $ 693,769 $141,888 $203,942 $ 52,402 $326,548
NET ASSETS:
Beginning of year................ 792,983 99,214 203,942 -- 326,548 --
---------- --------- -------- -------- -------- --------
End of year...................... $1,577,873 $ 792,983 $345,830 $203,942 $378,950 $326,548
========== ========= ======== ======== ======== ========
</TABLE>
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
54 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
TSF DCA(H) DSC(C)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------- ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ ------------ ------------
1999 1998 1999 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 49,240 $ 22,221 $ 716 $ --
Net realized gains (losses)............................... (15,425) (24,809) 35 (979)
Net unrealized gains (losses)............................. 128,581 (21,918) (177) 6,081
-------- -------- ------- --------
Increase (Decrease) in net assets from operations..... $162,396 $(24,506) $ 574 $ 5,102
-------- -------- ------- --------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.............................. $305,091 $257,817 $84,406 $ 61,004
Net transfers between Sub-Accounts...................... (120,364) 189,442 28 (10,803)
Withdrawals, surrenders, annuitizations and contract
charges............................................... (23,726) (17,017) (9,412) (1,777)
-------- -------- ------- --------
Increase (Decrease) in net assets from contract owner
transactions............................................ $161,001 $430,242 $75,022 $ 48,424
-------- -------- ------- --------
Increase (Decrease) in net assets....................... $323,397 $405,736 $75,596 $ 53,526
NET ASSETS:
Beginning of year......................................... 485,561 79,825 -- --
-------- -------- ------- --------
End of year............................................... $808,958 $485,561 $75,596 $ 53,526
======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
DQB(C) DSI(B) REI(D)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ ------------
1999 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 1,154 $ 27,435 $ 3,752
Net realized gains (losses)............................... 1 (981) (1,032)
Net unrealized gains (losses)............................. (197) 216,897 (11,151)
------- ---------- --------
Increase (Decrease) in net assets from operations..... $ 958 $ 243,351 $ (8,431)
------- ---------- --------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.............................. $40,487 $1,676,584 $ 42,160
Net transfers between Sub-Accounts...................... -- 723,185 51,428
Withdrawals, surrenders, annuitizations and contract
charges................................................ (1,283) (40,056) (1,687)
------- ---------- --------
Increase (Decrease) in net assets from contract owner
transactions............................................ $39,204 $2,359,713 $ 91,901
------- ---------- --------
Increase (Decrease) in net assets....................... $40,162 $2,603,064 $ 83,470
NET ASSETS:
Beginning of year......................................... -- -- --
------- ---------- --------
End of year............................................... $40,162 $2,603,064 $ 83,470
======= ========== ========
</TABLE>
(b) For the period May 6, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(c) For the period June 25, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(d) For the period June 30, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(h) For the period August 3, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
55 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
RNA(G) AVF(F) SRE(G)
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ ------------
1999 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 1,529 $ 772 $ 236
Net realized gains (losses)............................... (719) 58 (5)
Net unrealized gains (losses)............................. 1,521 3,120 (157)
------- ------- ------
Increase (Decrease) in net assets from operations..... $ 2,331 $ 3,950 $ 74
------- ------- ------
CONTRACT OWNER TRANSACTIONS:
Purchase payments received.............................. $24,658 $47,123 $4,497
Net transfers between Sub-Accounts...................... 602 13,399 (113)
Withdrawals, surrenders, annuitizations and contract
charges................................................ (901) (1,935) --
------- ------- ------
Increase (Decrease) in net assets from contract owner
transactions............................................ $24,359 $58,587 $4,384
------- ------- ------
Increase (Decrease) in net assets....................... $26,690 $62,537 $4,458
NET ASSETS:
Beginning of year......................................... -- -- --
------- ------- ------
End of year............................................... $26,690 $62,537 $4,458
======= ======= ======
</TABLE>
(f) For the period July 22, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
See notes to financial statements
56 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life of Canada (U.S.) Variable Account G (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.) (the "Sponsor"),
was established on July 25, 1996 as a funding vehicle for the variable portion
of certain individual variable life insurance contracts. The Variable Account is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a single corresponding investment portfolio
of one of the following mutual funds: MFS/Sun Life Series Trust, Fidelity
Variable Insurance Products Fund, Fidelity Variable Insurance Products Fund II,
Neuberger Berman Advisers Management Trust, J.P. Morgan Series Trust II,
Templeton Variable Products Series Fund, Dreyfus Variable Investment Fund,
Dreyfus Stock Index Fund, T. Rowe Price Equity Series, Inc., AIM Variable
Insurance Funds, Inc. and Sun Capital Advisers Trust. Massachusetts Financial
Services Company, an affiliate of the Sponsor, is the investment adviser to
MFS/Sun Life Series Trust. Sun Capital Advisers, Inc., an affiliate of the
Sponsor, is the investment adviser to Sun Capital Advisers Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Sponsor's management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVESTMENT VALUATIONS
Investments in shares of an investment portfolio of the mutual funds are
recorded at their net asset value. Realized gains and losses on sales of shares
are determined on the identified cost basis. Dividend income and capital gain
distributions received by the Sub-Accounts are reinvested in additional shares
and are recognized on the ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately. The Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not taxable, and
therefore, no provision has been made for federal income taxes.
57 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
NOTES TO FINANCIAL STATEMENTSCONTINUED
(3) CONTRACT CHARGES
The Sponsor deducts expense charges applied to premium consisting of the premium
tax, the federal DAC (Deferred Acquisition Cost) tax and the sales load. The
premium tax varies by state but in general will range from 2% to 4% of the
premium in most states (Kentucky charges 7%). The DAC tax charge is 1.25% of the
premium. The sales load is 8.75% of the premium up to target premium and 2.25%
of the premium in excess of the target premium. A portion of the sales load is
refunded for surrenders in the first three policy years.
The Sponsor deducts certain charges from the account value of each contract,
through the cancellation of units, on a monthly basis. A monthly expense charge
of $13.75 per policy at the beginning of each month during the first policy year
and $7.50 for months thereafter is deducted to recover certain administration
expenses. The Sponsor also deducts a charge at the end of each policy month for
providing life insurance protection. This charge will be based upon the
Sponsor's expectations of future mortality, persistency, interest rates,
expenses and taxes. However, the maximum rates for the base death benefit for
insureds that are not rated substandard risks will not exceed those based on the
1980 CSO Mortality Tables, and the maximum rates for the APB rider death benefit
for similar insureds will not exceed those based on 125% of the 1980 CSO
Mortality Tables.
The Sponsor deducts certain charges from the account value of each contract,
through the cancellation of units, at the end of each valuation period for the
mortality and expense risks assumed by the Sponsor. The daily deduction is
currently 0.0016389% (which is equivalent to an annual rate of 0.60%) for
policies in their first ten policy years, 0.0005474% (which is equivalent to an
annual rate of 0.20%) for the next ten policy years and 0.0002738% (which is
equivalent to an annual rate of 0.10%) for policies in policy years twenty-one
and beyond.
58 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE (U.S.) VARIABLE ACCOUNT G
NOTES TO FINANCIAL STATEMENTS -- continued
(4) TRANSACTIONS IN UNITS OUTSTANDING
<TABLE>
<CAPTION>
UNITS WITHDRAWN,
UNITS TRANSFERRED SURRENDERED AND
UNITS OUTSTANDING BETWEEN CANCELED FOR
BEGINNING OF YEAR UNITS PURCHASED SUB-ACCOUNTS CONTRACT CHARGES
---------------------- --------------------- ---------------------- ---------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
---------- ----------- --------- ----------- --------- ------------ --------- -----------
SUB-ACCOUNTS 1999 1998 1999 1998 1999 1998 1999 1998
- ------------ ---------- ----------- --------- ----------- --------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAS.............................. 10,660 -- 6,528 6,564 4,820 4,445 (683) (349)
EGS.............................. 2,838 257 4,390 1,599 13,133 1,067 (389) (85)
GSS.............................. 28,642 14,789 27,845 14,555 2,074 -- (1,179) (702)
MIS(c)........................... -- -- 10,765 -- 8,040 -- (451) --
MMS(e)........................... -- -- 87,693 -- 25,960 -- (1,115) --
RES(g)........................... -- -- 1,112 -- -- -- (51) --
TRS.............................. 55,937 -- 74,038 69,056 8,235 (10,148) (4,424) (2,971)
UTS(g)........................... -- -- 4,370 -- (402) -- (373) --
WGO.............................. 64,502 19,525 57,783 46,090 1,889 1,282 (3,404) (2,395)
FEI.............................. 143,740 1,182 143,020 155,915 (34,888) (6,554) (8,647) (6,803)
FGP.............................. 177,748 24,099 158,594 137,491 (6,477) 22,870 (10,431) (6,712)
FHI.............................. 16,457 -- 8,913 7,374 (11,529) 9,430 (768) (347)
FMM.............................. 28,692 -- 21,693 141,043 (16,561) (109,762) (1,246) (2,589)
FAM(f)........................... -- -- 569 -- 733 -- (59) --
FCN.............................. 36,202 591 23,174 9,406 (2,910) 26,828 (2,018) (623)
FIG(a)........................... -- -- 20,475 -- 22,028 -- (1,055) --
FIP.............................. 295,225 84,660 178,054 225,497 (11,909) 24,933 (14,640) (39,865)
NLM.............................. 2,941 257 325 2,523 (3,198) 305 (68) (144)
NMC(g)........................... -- -- 2,847 -- (395) -- (115) --
NPP.............................. 90,519 11,653 48,750 76,494 (16,164) 6,112 (3,713) (3,740)
JBP.............................. 69,180 9,348 76,407 89,677 (2,247) 3,925 (4,242) (33,770)
JEP.............................. 16,179 -- 11,028 24,048 (3,276) (7,212) (787) (657)
JSC.............................. 31,656 -- 16,256 27,699 (20,958) 5,298 (1,512) (1,341)
TSF.............................. 49,794 8,289 27,536 27,080 (10,852) 16,159 (2,218) (1,734)
DCA(h)........................... -- -- 6,907 -- -- -- (772) --
DSC(c)........................... -- -- 6,511 -- (1,247) -- (191) --
DQB(c)........................... -- -- 4,047 -- -- -- (127) --
DSI(b)........................... -- -- 171,041 -- 71,377 -- (3,991) --
REI(d)........................... -- -- 3,780 -- 4,527 -- (158) --
RNA(g)........................... -- -- 2,358 -- 29 -- (86) --
AVF(f)........................... -- -- 4,390 -- 1,104 -- (183) --
SRE(g)........................... -- -- 494 -- -- -- (13) --
Unit Activity
From Sponsor Transactions........ 10,000 10,000 -- -- -- -- -- --
<CAPTION>
UNITS OUTSTANDING
END OF YEAR
---------------------
YEAR YEAR
ENDED ENDED
DEC. 31, DEC. 31,
--------- -----------
SUB-ACCOUNTS 1999 1998
- ------------ --------- -----------
<S> <C> <C>
CAS.............................. 21,325 10,660
EGS.............................. 19,972 2,838
GSS.............................. 57,382 28,642
MIS(c)........................... 18,354 --
MMS(e)........................... 112,538 --
RES(g)........................... 1,061 --
TRS.............................. 133,786 55,937
UTS(g)........................... 3,595 --
WGO.............................. 120,770 64,502
FEI.............................. 243,225 143,740
FGP.............................. 319,434 177,748
FHI.............................. 13,073 16,457
FMM.............................. 32,578 28,692
FAM(f)........................... 1,243 --
FCN.............................. 54,448 36,202
FIG(a)........................... 41,448 --
FIP.............................. 446,730 295,225
NLM.............................. -- 2,941
NMC(g)........................... 2,337 --
NPP.............................. 119,392 90,519
JBP.............................. 139,098 69,180
JEP.............................. 23,144 16,179
JSC.............................. 25,442 31,656
TSF.............................. 64,260 49,794
DCA(h)........................... 6,135 --
DSC(c)........................... 5,073 --
DQB(c)........................... 3,920 --
DSI(b)........................... 238,427 --
REI(d)........................... 8,149 --
RNA(g)........................... 2,301 --
AVF(f)........................... 5,311 --
SRE(g)........................... 481 --
Unit Activity
From Sponsor Transactions........ 10,000 10,000
</TABLE>
(a) For the period March 16, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(b) For the period May 6, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(c) For the period June 25, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(d) For the period June 30, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(e) For the period July 9, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(f) For the period July 22, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(g) For the period August 2, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
(h) For the period August 3, 1999 (commencement of operations of Sub-Account)
through December 31, 1999.
59 SUN LIFE CORPORATE VUL-SM-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in Sun Life of Canada (U.S.) Variable
Account G and the Board of Directors of Sun Life Assurance Company of Canada
(U.S.):
We have audited the accompanying statement of condition of Capital Appreciation
Sub-Account, Emerging Growth Sub-Account, Government Securities Sub-Account,
Massachusetts Investors Growth Stock Sub-Account, Money Market Sub-Account,
Research Sub-Account, Total Return Sub-Account, Utilities Sub-Account, Global
Growth Sub-Account, VIP Equity Income Sub-Account, VIP Growth Sub-Account, VIP
High Income Sub-Account, VIP Money Market Sub-Account, VIP II Asset Manager:
Growth Sub-Account, VIP II Contrafund Sub-Account, VIP II Investment Grade Bond
Sub-Account, VIP II Index 500 Sub-Account, Limited Maturity Bond Sub-Account,
Mid-Cap Growth Sub-Account, Partners Sub-Account, J.P. Morgan Bond Sub-Account,
J.P. Morgan Equity Sub-Account, J.P. Morgan Small Company Sub-Account, Templeton
Stock Fund: Class 1 Sub-Account, Capital Appreciation Sub-Account, Small Cap
Sub-Account, Quality Bond Sub-Account, Dreyfus Stock Index Sub-Account, T. Rowe
Price Equity Income Sub-Account, T. Rowe Price New America Growth Sub-Account,
AIM V.I. Value Sub-Account and Real Estate Sub-Account of Sun Life of Canada
(U.S.) Variable Account G (the "Sub-Accounts") as of December 31, 1999, the
related statement of operations for the year then ended and the statements of
changes in net assets for the years ended December 31, 1999 and 1998. These
financial statements are the responsibility of management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held at December 31, 1999 by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Sub-Accounts at December 31, 1999, the
results of their operations and the changes in their net assets for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 10, 2000
60 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND
CAPITAL STOCK AND SURPLUS
DECEMBER 31, 1999 AND 1998 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
ADMITTED ASSETS
Bonds $ 1,221,970 $ 1,763,468
Common stocks 75,283 128,445
Mortgage loans on real estate 528,911 535,003
Properties acquired in satisfaction of debt 15,641 17,207
Investment real estate 79,182 78,021
Policy loans 40,095 41,944
Cash and short-term investments 316,971 265,226
Other invested assets 67,938 64,177
Investment income due and accrued 25,303 35,706
Federal income tax recoverable and interest thereon -- 1,110
Other assets 5,807 1,928
----------- -----------
General account assets 2,377,101 2,932,235
Separate account assets
Unitized 15,490,328 11,774,745
Non-unitized 2,080,726 2,195,641
----------- -----------
Total admitted assets $19,948,155 $16,902,621
=========== ===========
LIABILITIES
Aggregate reserve for life policies and contracts $ 1,153,642 $ 1,216,107
Supplementary contracts 3,182 1,885
Policy and contract claims 962 369
Liability for premium and other deposit funds 564,820 1,000,875
Surrender values on cancelled policies 16 5
Interest maintenance reserve 41,771 40,490
Commissions to agents due or accrued 3,253 2,615
General expenses due or accrued 14,055 5,932
Transfers from Separate Accounts due or accrued (467,619) (361,863)
Taxes, licenses and fees due or accrued, excluding FIT 379 401
Federal income taxes due or accrued 89,031 25,019
Unearned investment income 22 23
Amounts withheld or retained by company as agent or
trustee (442) 529
Remittances and items not allocated 1,078 5,176
Asset valuation reserve 44,071 44,392
Payable to parent, subsidiaries, and affiliates 26,284 30,381
Payable for securities -- 428
Other liabilities 16,674 9,770
----------- -----------
General account liabilities 1,491,179 2,022,534
Separate account liabilities:
Unitized 15,489,908 11,774,522
Non-unitized 2,080,726 2,195,641
----------- -----------
Total liabilities 19,061,813 15,992,697
----------- -----------
CAPITAL STOCK AND SURPLUS
Common capital stock 5,900 5,900
----------- -----------
Surplus notes 565,000 565,000
Gross paid in and contributed surplus 199,355 199,355
Unassigned funds 116,087 139,669
----------- -----------
Surplus 880,442 904,024
----------- -----------
Total common capital stock and surplus 886,342 909,924
----------- -----------
Total liabilities, capital stock and surplus $19,948,155 $16,902,621
=========== ===========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
61 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INCOME:
Premiums and annuity considerations $ 69,492 $ 210,198 $ 254,066
Deposit-type funds 2,598,265 2,140,604 2,155,297
Considerations for supplementary contracts without
life contingencies and dividend accumulations 3,461 2,086 1,615
Net investment income 167,035 184,532 270,249
Amortization of interest maintenance reserve 3,702 2,282 1,166
Income from fees associated with investment
management and administration and contract
guarantees from Separate Account 173,417 141,211 109,757
Net gain from operations from Separate Account 61 -- 5
Other income 24,554 87,364 102,889
---------- ---------- ----------
Total Income 3,039,987 2,768,277 2,895,044
---------- ---------- ----------
BENEFITS AND EXPENSES:
Death benefits 4,386 15,335 17,284
Annuity benefits 155,387 153,636 148,135
Disability benefits and benefits under accident and
health policies -- 104 132
Surrender benefits and other fund withdrawals 2,313,179 1,933,833 1,854,004
Interest on policy or contract funds 237 (140) 699
Payments on supplementary contracts without life
contingencies and dividend accumulations 2,345 2,528 1,687
Increase (decrease) in aggregate reserves for life
and accident and health policies and contracts (62,465) (972,135) 127,278
Decrease in liability for premium and other deposit
funds (436,055) (449,831) (447,603)
Increase (decrease) in reserve for supplementary
contracts without life contingencies and for
dividend and coupon accumulations 1,296 (362) 42
---------- ---------- ----------
Total Benefits 1,978,310 682,968 1,701,658
---------- ---------- ----------
Commissions on premiums and annuity considerations
(direct business only) 155,381 137,718 132,700
Commissions and expense allowances on reinsurance
assumed -- 13,032 17,951
General insurance expenses 75,046 58,132 46,624
Insurance taxes, licenses and fees, excluding federal
income taxes 8,710 7,388 8,267
Increase (decrease) in loading on and cost of
collection in excess of loading on deferred and
uncollected premiums -- (1,663) 523
Net transfers to Separate Accounts 727,811 722,851 844,130
Reserve and fund adjustments on reinsurance
terminated -- 1,017,112 --
---------- ---------- ----------
Total Benefits and Expenses $2,945,258 $2,637,538 $2,751,853
---------- ---------- ----------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
62 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF OPERATIONS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net gain from operations before dividends to
policyholders and federal income tax expense $94,729 $130,739 $143,191
Dividends to policyholders -- (5,981) 33,316
------- -------- --------
Net gain from operations after dividends to
policyholders and before federal income tax
expense 94,729 136,720 109,875
Federal income tax expense, (excluding tax on
capital gains) 24,479 11,713 7,339
------- -------- --------
Net gain from operations after dividends to
policyholders and federal income taxes and
before realized capital gains 70,250 125,007 102,536
Net realized capital gains less capital gains
tax and transferred to the Interest
Maintenance Reserve 20,108 394 26,706
------- -------- --------
NET INCOME $90,358 $125,401 $129,242
======= ======== ========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
63 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- --------
<S> <C> <C> <C>
Capital and Surplus, Beginning of Year $909,924 $832,695 $567,143
-------- -------- --------
Net Income 90,358 125,401 129,242
Change in net unrealized capital gains (losses) (36,111) (384) 1,152
Change in non-admitted assets and related items 1,715 (1,086) (463)
Change in reserve due to change in valuation basis -- 39,016
Change in asset valuation reserve 320 3,213 6,307
Surplus (contributed to) withdrawn from Separate
Accounts during period 136 82 --
Other changes in surplus in Separate Accounts
Statements -- 10 --
Change in surplus notes -- -- 250,000
Dividends to stockholders (80,000) (50,000) (159,722)
Aggregate write-ins for gains and (losses) in surplus -- (7) 20
-------- -------- --------
Net change in capital and surplus for the year (23,582) 77,229 265,552
-------- -------- --------
Capital and Surplus, End of Year $886,342 $909,924 $832,695
======== ======== ========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
64 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF CASH FLOW
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash Provided by Operations:
Premiums, annuity considerations and deposit
funds received $ 2,667,756 $ 2,361,669 $ 2,410,919
Considerations for supplementary contracts and
dividend accumulations received 3,461 2,086 1,615
Net investment income received 225,038 236,944 345,279
Fees associated with investment management,
administration, and contract guarentees from
Separate Accounts 173,417 141,211 --
Other income received 24,555 111,936 208,223
----------- ----------- -----------
Total receipts 3,094,227 2,853,846 2,966,036
----------- ----------- -----------
Benefits paid (other than dividends) 2,474,693 2,107,736 2,020,747
Insurance expenses and taxes paid (other than
federal income and capital gains taxes) 230,744 217,023 203,650
Net cash transferred to Separate Accounts 833,567 800,636 895,465
Dividends paid to policyholders -- 26,519 28,316
Federal income tax payments
(recoveries),(excluding tax on capital gains) (40,644) 46,965 1,397
Other--net 237 (138) 698
----------- ----------- -----------
Total payments 3,498,597 3,198,741 3,150,273
----------- ----------- -----------
Net cash used in operations (404,370) (344,895) (184,237)
----------- ----------- -----------
Proceeds from long-term investments sold,
matured or repaid (after deducting taxes on
capital gains (losses) of $(1,768) for 1999,
$2,038 for 1998, and $750 for 1997) 1,065,307 1,261,396 1,343,803
Issuance of surplus notes -- -- 250,000
Other cash provided (used) 13,797 (40,529) 71,095
----------- ----------- -----------
Total cash provided 1,079,104 1,220,867 1,664,898
----------- ----------- -----------
Cash Applied:
Cost of long-term investments acquired (484,417) (967,901) (773,783)
Other cash applied (138,572) (187,263) (310,519)
----------- ----------- -----------
Total cash applied (622,989) (1,155,164) (1,084,302)
Net change in cash and short-term investments 51,745 (279,192) 396,359
Cash and short-term investments:
Beginning of year 265,226 544,418 148,059
----------- ----------- -----------
End of year $ 316,971 $ 265,226 $ 544,418
=========== =========== ===========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
65 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Sun Life Assurance Company of Canada (U.S.) (the "Company") is incorporated as a
life insurance company and is currently engaged in the sale of individual
variable life insurance, individual fixed and variable annuities, group fixed
and variable annuities, and group pension contracts.
Effective May 1, 1997, the Company became a wholly-owned subsidiary of the newly
established Sun Life of Canada (U.S.) Holdings, Inc. ("Life Holdco"). On
December 18, 1997, Life Holdco became a wholly-owned subsidiary of Sun Life
Assurance Company of Canada - U.S. Operations Holdings, Inc. ("US Holdco"). US
Holdco is a wholly-owned subsidiary of Sun Life Assurance Company of Canada
("SLOC"), a mutual insurance company.
The Company, which is domiciled in the State of Delaware, prepares its financial
statements in accordance with statutory accounting practices prescribed or
permitted by the State of Delaware Insurance Department. Prescribed accounting
practices include practices described in a variety of publications of the
National Association of Insurance Commissioners ("NAIC"), as well as state laws,
regulations and general administrative rules. Permitted accounting practices
encompass all accounting practices not so prescribed. The permitted accounting
practices adopted by the Company are not material to the financial statements.
Prior to 1996, statutory accounting practices were recognized by the insurance
industry and the accounting profession as generally accepted accounting
principles for mutual life insurance companies and stock life insurance
companies wholly-owned by mutual life insurance companies. In April 1993, the
Financial Accounting Standards Board ("FASB") issued an interpretation (the
"Interpretation"), that became effective in 1996, which changed the previous
practice of mutual life insurance companies (and stock life insurance companies
that are wholly-owned subsidiaries of mutual life insurance companies) with
respect to utilizing statutory basis financial statements for general purposes,
in that it will no longer allow such financial statements to be described as
having been prepared in conformity with generally accepted accounting principles
("GAAP"). Consequently, these financial statements prepared in conformity with
statutory accounting practices, as described above, vary from and are not
intended to present the Company's financial position, results of operations or
cash flow in conformity with generally accepted accounting principles. (See Note
19 for further discussion relative to the Company's basis of financial statement
presentation.) The effects on the financial statements of the variances between
the statutory basis of accounting and GAAP, although not reasonably
determinable, are presumed to be material.
INVESTED ASSETS
Bonds are carried at cost, adjusted for amortization of premium or accrual of
discount. Investments in mortgage backed securities are generally carried at
amortized cost. Changes in prepayment assumptions and resulting cash flows are
confirmed retrospectively. The adjusted yield is used to calculate investment
income in future periods. If current book value exceeds future undiscounted cash
flows, a realized capital loss is recorded and amortized through the Interest
Maintenance Reserve (IMR). Investments in non-insurance subsidiaries are carried
on the equity basis. Investments in insurance subsidiaries are carried at their
statutory surplus values. Mortgage loans
66 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
acquired at a premium or discount are carried at amortized values and other
mortgage loans are carried at the amounts of the unpaid balances. Real estate
investments are carried at the lower of cost, adjusted for accumulated
depreciation or appraised value, less encumbrances. Short-term investments are
carried at amortized cost, which approximates fair value. Depreciation of
buildings and improvements is calculated using the straight-line method over the
estimated useful life of the property, generally 40 to 50 years.
POLICY AND CONTRACT RESERVES
The reserves for life insurance and annuity contracts are computed in accordance
with presently accepted actuarial standards, and are based on actuarial
assumptions and methods (including use of published mortality tables and
prescribed interest rates) which produce reserves at least as great as those
required by law and contract provisions.
INCOME AND EXPENSES
For life and annuity contracts, premiums are recognized as revenues over the
premium paying period, whereas commissions and other costs applicable to the
acquisition of new business are charged to operations as incurred.
SEPARATE ACCOUNTS
The Company has established unitized separate accounts applicable to various
classes of contracts providing for variable benefits. Contracts for which funds
are invested in separate accounts include variable life insurance and individual
and group qualified and non-qualified variable annuity contracts.
The Company has also established a non-unitized separate account for amounts
allocated to the fixed portion of certain combination fixed/variable deferred
annuity contracts. The assets of this account are available to fund general
account liabilities, and general account assets are available to fund
liabilities of this account.
Assets and liabilities of the separate accounts, representing net deposits and
accumulated net investment earnings less fees, held primarily for the benefit of
contract holders, are shown as separate captions in the financial statements.
Assets held in the separate accounts are carried at market value as determined
by quoted market prices of the underlying investments.
Gains (losses) from mortality experience and investment experience of the
separate accounts, not applicable to contract owners, and accrued expense
allowances recognized in reserves are receivable from or payable to the general
account. Accumulated amounts that have not been transferred are recorded as a
payable (receivable) to (from) the general account. Amounts payable to the
general account of the Company were $467,619,000 in 1999 and $361,863,000 in
1998.
CHANGES IN ACCOUNTING PRINCIPLES AND REPORTING
As described more fully in Note 10, during 1997 the Company changed certain
assumptions used in determining actuarial reserves.
In March 1998, the National Association of Insurance Commissioners adopted the
Codification of Statutory Accounting Principles ("Codification"). The
Codification, which is intended to standardize regulatory accounting and
reporting for the insurance industry, is proposed to be effective January 1,
2001. However, statutory
67 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
accounting principles will continue to be established by individual state laws
and permitted practices and it is uncertain when, or if, the state of Delaware
will require adoption of Codification for the preparation of statutory financial
statements. The Company has not finalized the quantification of the effects of
Codification on its statutory financial statements.
OTHER
Preparation of the financial statements requires management to make estimates
and assumptions that affect reported amounts of assets, liabilities, revenues
and expenses. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to amounts as
presented in the current year.
2. INVESTMENTS IN SUBSIDIARIES
The Company owns all of the outstanding shares of the following subsidiaries:
Sun Life Insurance and Annuity Company of New York ("Sun Life (N.Y.)") is
engaged in the sale of individual fixed and variable annuity contracts and group
life and group long term disability insurance contracts in the State of New
York;
Sun Life of Canada (U.S.) Distributors, Inc. (formerly Sun Investment Services
Company) ("Sundisco"), is a registered broker-dealer;
Sun Life Financial Services Limited ("SLFSL"), serves as the marketing
administrator for the distribution of the offshore products of SLOC (Bermuda
branch), an affiliate;
Sun Benefit Services Company, Inc. ("Sunbesco") receives renewal commissions on
a disability product and is currently inactive;
Sun Capital Advisers, Inc. ("Sun Capital") is a registered investment adviser;
Sun Life Finance Corporation ("Sunfinco") is a finance company and currently
inactive;
Sun Life of Canada (U.S.) SPE 97-1, Inc. ("SPE 97-1") is a special purpose
corporation engaging in activities incidental to securitizing mortgage loans;
Clarendon Insurance Agency, Inc. ("Clarendon") is a registered broker-dealer
that acts as the general distributor of certain annuity and life insurance
contracts issued by the Company and its affiliates;
Sun Life Information Services Ireland Limited ("SLISL") is an offshore
technology services center for affiliates.
On October 29,1999, the Company sold New London Trust F.S.B. ("NLT") to an
unaffiliated party for $30,254,000. The Company realized a post tax gain of
$13,170,000.
On February 5, 1999, the Company sold Massachusetts Casualty Insurance Company
("MCIC"), a disability insurance company, to an unaffiliated party. The net
proceeds of this sale were $33,965,000. The Company realized a post tax gain of
$4,900,000.
68 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
The impact of the sales of NLT and MCIC on continuing operations of the Company
is not expected to be material.
Prior to December 24, 1997, the Company owned 93.6% of the outstanding shares of
Massachusetts Financial Services Company ("MFS"), a registered investment
adviser. On December 24, 1997, the Company transferred all of its shares of MFS
to Life Holdco in the form of a dividend valued at $159,722,000. As a result of
this transaction, the Company realized a gain of $21,195,000 of undistributed
earnings.
During 1999, 1998, and 1997, the Company contributed capital in the following
amounts to its subsidiaries:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
MCIC $ -- $ -- $ 2,000
SLFSL 1,000 750 1,000
SPE 97-1 -- -- 20,377
Sundisco 19,000 10,000 --
Sun Capital -- 500 --
Clarendon -- 10 --
SLISL -- 502 --
</TABLE>
During 1999, 1998, and 1997, the Company received dividends from the following
subsidiaries:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
SUN Life (N.Y.) $ 6,500 $ 3,000 $ --
NLT 19,319 -- 7,500
MFS -- -- 33,110
SPE 97-1 -- 675 --
SUNDISCO -- -- 571
</TABLE>
69 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Summarized combined financial information of the Company's subsidiaries as of
December 31, 1999, 1998 and 1997 and for the years then ended, follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Assets $ 877,939 $ 1,315,317 $ 1,190,951
Liabilities (802,656) (1,186,872) (1,073,966)
----------- ----------- -----------
Total net assets $ 75,283 $ 128,445 $ 116,985
=========== =========== ===========
Total revenues $ 82,443 $ 222,853 $ 750,364
Operating expenses (90,318) (221,933) (646,896)
Income tax expense 3,249 (1,222) (43,987)
----------- ----------- -----------
Net income (loss) $ (4,626) $ (302) $ 59,481
=========== =========== ===========
</TABLE>
3. BONDS
Investments in debt securities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
---- ----- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-term bonds:
United States government and government
agencies and authorities $ 78,161 $ 2,091 $ (2,454) $ 77,798
States, provinces and political subdivisions 20,428 69 (57) 20,440
Public utilities 181,466 6,854 (5,907) 182,413
Transportation 188,285 7,689 (2,709) 193,265
Finance 88,517 4,631 (518) 92,630
All other corporate bonds 665,113 18,353 (17,152) 666,314
---------- -------- -------- ----------
Total long-term bonds 1,221,970 39,687 (28,797) 1,232,860
---------- -------- -------- ----------
Short-term bonds:
U.S. Treasury Bills, bankers acceptances and
commercial paper 312,585 -- -- 312,585
---------- -------- -------- ----------
Total short-term bonds 312,585 -- -- 312,585
---------- -------- -------- ----------
Total bonds $1,534,555 $ 39,687 $(28,797) $1,545,445
========== ======== ======== ==========
</TABLE>
70 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
3. BONDS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
---- ----- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-term bonds:
United States government and government
agencies and authorities $ 140,417 $ 7,635 $ (177) $ 147,875
States, provinces and political subdivisions 16,632 2,219 -- 18,851
Public utilities 397,670 38,740 (238) 436,172
Transportation 197,207 22,481 (18) 219,670
Finance 144,958 12,542 (494) 157,006
All other corporate bonds 866,584 50,814 (6,419) 910,979
---------- -------- ------- ----------
Total long-term bonds 1,763,468 134,431 (7,346) 1,890,553
---------- -------- ------- ----------
Short-term bonds:
U.S. Treasury Bills, bankers acceptances and
commercial paper 43,400 -- -- 43,400
Affiliates 220,000 -- -- 220,000
---------- -------- ------- ----------
Total short-term bonds 263,400 -- -- 263,400
---------- -------- ------- ----------
Total bonds $2,026,868 $134,431 $(7,346) $2,153,953
========== ======== ======= ==========
</TABLE>
The amortized cost and estimated fair value of bonds at December 31, 1999 are
shown below by contractual maturity. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call and/or prepayment penalties.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---- ----------
(IN THOUSANDS)
<S> <C> <C>
Maturities:
Due in one year or less $ 376,761 $ 376,823
Due after one year through five years 184,077 182,788
Due after five years through ten years 259,042 263,321
Due after ten years 542,678 543,301
---------- ----------
1,362,558 1,366,233
Mortgage-backed securities 171,997 179,212
---------- ----------
Total bonds $1,534,555 $1,545,445
========== ==========
</TABLE>
71 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
3. BONDS (CONTINUED)
Proceeds from sales and maturities of investments in debt securities during
1999, 1998, and 1997 were $740,081,000, $1,016,811,000 and $980,264,000, gross
gains were $7,688,000, $17,025,000, and $10,732,000 and gross losses were
$4,477,000, $866,000, and $2,446,000, respectively.
Bonds included above with an amortized cost of approximately $2,604,000,
$2,572,000, and $2,578,000 at December 31, 1999, 1998 and 1997, respectively,
were on deposit with governmental authorities as required by law.
Excluding investments in U.S. government and agencies securities, the Company is
not exposed to significant concentrations of credit risk in its portfolio.
4. SECURITIES LENDING
The Company has a securities lending program operated on its behalf by the
Company's primary custodian, Chase Manhattan Bank of New York. The custodian has
indemnified the Company against losses arising from this program. There were no
securities on loan as of December 31, 1999, 1998 or 1997. Income resulting from
this program was $20,000, $94,000, and $200,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
5. MORTGAGE LOANS
The Company invests in commercial first mortgage loans throughout the United
States. The Company monitors the condition of the mortgage loans in its
portfolio. In those cases where mortgages have been restructured, appropriate
allowances for losses have been made. In those cases where, in management's
judgment, the mortgage loans' values are impaired, appropriate losses are
recorded.
The following table shows the geographical distribution of the mortgage loan
portfolio.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
---- ----
(IN THOUSANDS)
<S> <C> <C>
California $ 72,693 $ 82,397
Massachusetts 38,083 53,528
Michigan 32,941 34,357
New York 22,912 21,190
Ohio 31,914 36,171
Pennsylvania 92,825 93,587
Washington 30,265 36,548
All other 207,278 177,225
-------- --------
$528,911 $535,003
======== ========
</TABLE>
72 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
5. MORTGAGE LOANS (CONTINUED)
The Company has restructured mortgage loans totaling $15,644,000 and $30,743,000
and corresponding allowances for losses of $1,043,000 and $2,120,000 at December
31, 1999 and 1998, respectively.
On December 22, 1999, the Company acquired 28 mortgages from SLOC at a cost of
$118,091,637. The Company in turn sold a 90% participation in these 28 plus an
additional 11 existing mortgage loans to a third party as part of two mortgage
participation agreements, for which the Company received proceeds of
$146,974,851.
The Company has outstanding mortgage loan commitments on real estate totaling
$2,384,000 and $18,005,000 at December 31, 1999 and 1998, respectively.
6. INVESTMENT GAINS AND LOSSES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Net realized gains (losses):
Bonds $ 70 $ 5,659 $ 2,882
Common stock of affiliates 15,290 -- 21,195
Common stocks -- 48 --
Mortgage loans 787 2,374 3,837
Real estate (481) 955 2,912
Other invested assets -- (3,827) (717)
-------- ------- -------
Subtotal 15,666 5,209 30,109
Capital gains tax expense (benefit) (4,442) 4,815 3,403
-------- ------- -------
Total $ 20,108 $ 394 $26,706
======== ======= =======
Changes in unrealized gains (losses):
Bonds $ (6,689) $ -- $ --
Common stock of affiliates (30,966) (302) (2,894)
Mortgage loans 83 (1,312) 1,524
Real estate 1,461 403 3,377
Other invested assets -- 827 (855)
-------- ------- -------
Total $(36,111) $ (384) $ 1,152
======== ======= =======
</TABLE>
Realized capital gains and losses on bonds and mortgages and interest rate swaps
which relate to changes in levels of interest rates are charged or credited to
an interest maintenance reserve ("IMR") and amortized into income over the
remaining contractual life of the security sold. The net realized capital gains
credited to the interest maintenance reserve were $4,965,000 in 1999, $8,943,000
in 1998, and $6,321,000 in 1997. All gains and losses are transferred net of
applicable income taxes.
73 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
7. NET INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income from bonds $128,992 $167,436 $188,924
Income from investment in common stock of affiliates 25,819 3,675 41,181
Interest income from mortgage loans 50,327 53,269 76,073
Real estate investment income 15,696 15,932 17,161
Interest income from policy loans 3,118 2,881 3,582
Other investment income (loss) (1,700) (641) (193)
-------- -------- --------
Gross investment income 222,252 242,552 326,728
-------- -------- --------
Interest on surplus notes and notes payable (43,266) (44,903) (42,481)
Investment expenses (11,951) (13,117) (13,998)
-------- -------- --------
Net investment income $167,035 $184,532 $270,249
======== ======== ========
</TABLE>
8. DERIVATIVES
The Company uses derivative instruments for interest rate risk management
purposes, including hedges against specific interest rate risk and to minimize
the Company's exposure to fluctuations in interest rates and foreign currency
exchange rates. The Company's use of derivatives has included U.S. Treasury
futures, conventional interest rate swaps, and currency and interest rate swap
agreements structured as forward spread lock interest rate swaps.
In the case of interest rate futures, gains or losses on contracts that qualify
as hedges are deferred until the earliest of the completion of the hedging
transaction, determination that the transaction will no longer take place, or
determination that the hedge is no longer effective. Upon completion of the
hedge, where it is impractical to allocate gains or losses to specific hedged
assets or liabilities, gains or losses are deferred in IMR and amortized over
the remaining life of the hedged assets. At December 31, 1999 and 1998, there
were no futures contracts outstanding.
In the case of interest rate and foreign currency swap agreements and forward
spread lock interest rate swap agreements, gains or losses on terminated swaps
are deferred in IMR and amortized over the shorter of the remaining life of the
hedged asset or the remaining term of the swap contract. The net differential to
be paid or received on interest rate swaps is recorded monthly as interest rates
change.
74 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
8. DERIVATIVES (CONTINUED)
The Company's open positions are as follows:
<TABLE>
<CAPTION>
SWAPS OUTSTANDING
AT DECEMBER 31, 1999
--------------------------------
NOTIONAL MARKET VALUE
PRINCIPAL AMOUNTS OF POSITIONS
----------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Conventional interest rate swaps $20,000 $249
Foreign currency swap 648 113
</TABLE>
<TABLE>
<CAPTION>
SWAPS OUTSTANDING
AT DECEMBER 31, 1998
--------------------------------
NOTIONAL MARKET VALUE
PRINCIPAL AMOUNTS OF POSITIONS
----------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Conventional interest rate swaps $45,000 $508
Foreign currency swap 1,178 263
</TABLE>
The market value of swaps is the estimated amount that the Company would receive
or pay on termination or sale, taking into account current interest rates and
the current creditworthiness of the counterparties. The Company is exposed to
potential credit loss in the event of nonperformance by counterparties. The
counterparties are major financial institutions and management believes that the
risk of incurring losses related to credit risk is remote.
9. LEVERAGED LEASES
The Company is a lessor in a leveraged lease agreement entered into on
October 21, 1994, under which equipment having an estimated economic life of
25-40 years was leased for a term of 9.75 years. The Company's equity investment
represented 22.9% of the purchase price of the equipment. The balance of the
purchase price was furnished by third-party long-term debt financing,
collateralized by the equipment and non-recourse to the Company. At the end of
the lease term, the Master Lessee may exercise a fixed price purchase option to
purchase the equipment.
75 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
9. LEVERAGED LEASES (CONTINUED)
The Company's net investment in leveraged leases is composed of the following
elements:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---- ----
(IN THOUSANDS)
<S> <C> <C>
Lease contracts receivable $ 69,766 $ 78,937
Less non-recourse debt (69,749) (78,920)
-------- --------
Net receivable 17 17
Estimated residual value of leased assets 41,150 41,150
Less unearned and deferred income (7,808) (8,932)
-------- --------
Investment in leveraged leases 33,359 32,235
Less fees (113) (138)
-------- --------
Net investment in leveraged leases $ 33,246 $ 32,097
======== ========
</TABLE>
The net investment is included in "Other invested assets" on the balance sheet.
10. REINSURANCE
The Company has agreements with SLOC which provide that SLOC will reinsure the
mortality risks of the individual life insurance contracts sold by the Company.
Under these agreements basic death benefits and supplementary benefits are
reinsured on a yearly renewable term basis and coinsurance basis, respectively.
Reinsurance transactions under these agreements had the effect of decreasing
income from operations by approximately $1,527,000, $2,128,000 and $1,381,000
for the years ended December 31, 1999, 1998 and 1997, respectively.
Effective January 1, 1991, the Company entered into an agreement with SLOC under
which certain individual life insurance contracts issued by SLOC were reinsured
by the Company on a 90% coinsurance basis. During 1997, SLOC changed certain
assumptions used in determining the gross and the ceded reserve balance. The
Company reflected the effect of the changes in assumptions to its assumed
reserves as a direct credit to surplus. The effect of the change was a
$39,016,000 decrease in reserves. Also, the agreement required SLOC to reinsure
the mortality risks in excess of $500,000 per policy for the individual life
insurance contracts assumed by the Company. Such death benefits are reinsured on
a yearly renewable term basis. The life reinsurance assumed agreement required
the reinsurer to withhold funds in amounts equal to the reserves assumed. These
agreements had the effect of increasing income from operations by approximately
$24,579,000, and $37,050,000 for the years ended December 31, 1998 and 1997,
respectively. The Company terminated this agreement effective October 1, 1998,
resulting in an increase in income from operations of $65,679,000 which included
a cash settlement.
76 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
10. REINSURANCE (CONTINUED)
The following are summarized pro-forma results of operations of the Company for
the years ended December 31, 1999, 1998 and 1997 before the effect of
reinsurance transactions with SLOC:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Income:
Premiums, annuity deposits and other revenues $2,874,513 $2,377,364 $2,340,733
Net investment income and realized gains 190,845 187,208 298,120
---------- ---------- ----------
Subtotal 3,065,358 2,564,572 2,638,853
---------- ---------- ----------
Benefits and Expenses:
Policyholder benefits 2,709,712 2,312,247 2,350,354
Other expenses 239,282 203,238 187,591
---------- ---------- ----------
Subtotal 2,948,994 2,515,485 2,537,945
---------- ---------- ----------
Income from operations $ 116,364 $ 49,087 $ 100,908
========== ========== ==========
</TABLE>
The Company has an agreement with an unrelated company which provides
reinsurance of certain individual life insurance contracts on a modified
coinsurance basis and under which all deficiency reserves related to these
contracts are reinsured. Reinsurance transactions under this agreement had the
effect of increasing income from operations by $193,000 in 1999, $3,008,000 in
1998, and decreasing income from operations by $2,658,000 in 1997.
During 1999 the Company entered into an agreement with an unrelated company
which provides reinsurance on certain fixed group annuity contracts. The net
effect of this agreement was to increase income from operations by approximately
$3,400,000. Also during 1999, the Company entered into three agreements with two
unrelated companies for the purpose of obtaining stop-loss coverage of
guaranteed minimum death benefit exposure with respect to the Company's variable
annuity business. The net effect of these agreements was to increase income from
operations by approximately $157,000.
The Company is contingently liable for the portion of the policies reinsured
under each of its existing reinsurance agreements in the event the reinsurance
companies are unable to pay their portion of any reinsured claim. Management
believes that any liability from this contingency is unlikely. However, to limit
the possibility of such losses, the Company evaluates the financial condition of
its reinsurers and monitors concentration of credit risk.
77 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
11. WITHDRAWAL CHARACTERISTICS OF ANNUITY ACTUARIAL RESERVES AND DEPOSIT
LIABILITIES
The withdrawal characteristics of general account and separate account annuity
reserves and deposits are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------
AMOUNT % OF TOTAL
------ ----------
(IN THOUSANDS)
<S> <C> <C>
Subject to discretionary withdrawal-with adjustment:
With market value adjustment $ 2,346,853 13
At market value 15,010,696 81
At book value less surrender charges (surrender charge
>5%) 45,722 --
At book value (minimal or no charge or adjustment) 104,539 1
Not subject to discretionary withdrawal provision 1,015,108 5
----------- ---
Total annuity actuarial reserves and deposit liabilities $18,522,918 100
=========== ===
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------
AMOUNT % OF TOTAL
------ ----------
(IN THOUSANDS)
<S> <C> <C>
Subject to discretionary withdrawal-with adjustment:
With market value adjustment $ 2,896,529 19
At market value 11,368,059 73
At book value less surrender charges (surrender charge
>5%) 62,404 --
At book value (minimal or no charge or adjustment) 111,757 1
Not subject to discretionary withdrawal provision 1,055,642 7
----------- ---
Total annuity actuarial reserves and deposit liabilities $15,494,391 100
=========== ===
</TABLE>
12. SEGMENT INFORMATION
The Company offers financial products and services such as fixed and variable
annuities, retirement plan services and life insurance on an individual basis.
Within these areas, the Company conducts business principally in two operating
segments and maintains a corporate segment to provide for the capital needs of
the various operating segments and to engage in other financing related
activities.
The Protection segment markets and administers a variety of life insurance
products sold to individuals and corporate owners of individual life insurance.
The products include whole life, universal life and variable life products.The
Wealth Management segment markets and administers individual and group variable
annuity products, individual and group fixed annuity products which include
market value adjusted annuities, and other retirement benefit products.
78 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
12. SEGMENT INFORMATION (CONTINUED)
The following amounts pertain to the various business segments:
<TABLE>
<CAPTION>
FEDERAL
TOTAL TOTAL PRETAX INCOME TOTAL
REVENUES EXPENDITURES* INCOME TAX ASSETS
---------- ------------- -------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1999
Protection $ 33,236 $ 41,030 $ (7,794) $ (2,661) $ 136,127
Wealth Management 2,979,450 2,898,158 81,292 18,593 19,015,394
Corporate 27,301 6,070 21,231 8,547 796,634
---------- ---------- -------- -------- -----------
Total $3,039,987 $2,945,258 $ 94,729 $ 24,479 $19,948,155
---------- ---------- -------- -------- -----------
1998
Protection $ 229,710 $ 144,800 $ 84,910 $ (4,148) $ 199,683
Wealth Management 2,527,608 2,483,715 43,893 12,486 16,123,905
Corporate 10,959 3,042 7,917 3,375 579,033
---------- ---------- -------- -------- -----------
Total $2,768,277 $2,631,557 $136,720 $ 11,713 $16,902,621
---------- ---------- -------- -------- -----------
1997
Protection $ 304,141 $ 272,333 $ 31,808 $ 13,825 $ 1,143,697
Wealth Management 2,533,006 2,507,592 25,414 10,667 14,043,221
Corporate 57,897 5,244 52,653 (17,153) 738,439
---------- ---------- -------- -------- -----------
Total $2,895,044 $2,785,169 $109,875 $ 7,339 $15,925,357
---------- ---------- -------- -------- -----------
</TABLE>
- ------------------------
* Total expenditures includes dividends to policyholders of $0 for 1999,
$(5,981) for 1998, and $33,316 for 1997.
13. RETIREMENT PLANS
The Company participates with SLOC in a noncontributory defined benefit pension
plan covering essentially all employees. The benefits are based on years of
service and compensation.
The funding policy for the pension plan is to contribute an amount, which at
least satisfies the minimum amount required by ERISA; currently, the plan is
fully funded. The Company is charged for its share of the pension cost based
upon its covered participants. Pension plan assets consist principally of
separate accounts of SLOC.
The Company's share of the group's accrued pension obligation was $1,914,000,
and $1,178,000 at December 31, 1999 and 1998, respectively. The Company's share
of net periodic pension cost was $736,000, $586,000, and $146,000 for 1999, 1998
and 1997, respectively.
The Company also participates with SLOC and certain affiliates in a 401(k)
savings plan for which substantially all employees are eligible. The Company
matches, up to specified amounts, employees' contributions to the plan. Company
contributions were $284,000, $231,000, and $259,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
79 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
13. RETIREMENT PLANS (CONTINUED)
OTHER POST-RETIREMENT BENEFIT PLANS
In addition to pension benefits the Company provides certain health, dental, and
life insurance benefits ("post-retirement benefits") for retired employees and
dependents. Substantially all employees may become eligible for these benefits
if they reach normal retirement age while working for the Company, or retire
early upon satisfying an alternate age plus service condition. Life insurance
benefits are generally set at a fixed amount.
The Company records an accrual of the estimated cost of retiree benefit payments
during the years the employee provides services, and amortizes an obligation of
approximately $400,000 over a period of ten years. The Company's cash flows are
not affected by this method, however the net effect decreased income by
$185,000, $95,000, and $117,000, for the years ended December 31, 1999, 1998,
and 1997, respectively. The Company's post-retirement health, dental and life
insurance benefits currently are not funded.
80 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
13. RETIREMENT PLANS (CONTINUED)
The following table sets forth the change in the pension and other
post-retirement benefit plans' benefit obligations and assets as well as the
plans' funded status reconciled with the amount shown in the Company's financial
statements at December 31:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
1999 1998 1999 1998
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $110,792 $ 79,684 $ 10,419 $ 9,845
Service cost 5,632 4,506 413 240
Interest cost 6,952 6,452 845 673
Actuarial loss (gain) (21,480) 21,975 1,048 308
Benefits paid (2,376) (1,825) (508) (647)
-------- -------- -------- --------
Benefit obligation at end of year $ 99,520 $110,792 $ 12,217 $ 10,419
======== ======== ======== ========
The Company's share:
Benefit obligation at beginning of year $ 9,125 $ 5,094 $ 416 $ 385
Benefit obligation at end of year $ 8,816 $ 9,125 $ 743 $ 416
Change in plan assets:
Fair value of plan assets at beginning of year $151,575 $136,610 $ -- $ --
Actual return on plan assets 9,072 16,790 -- --
Employer contribution -- -- 508 647
Benefits paid (2,376) (1,825) (508) (647)
-------- -------- -------- --------
Fair value of plan assets at end of year $158,271 $151,575 $ -- $ --
======== ======== ======== ========
Funded status $ 58,752 $ 40,783 $(12,217) $(10,419)
Unrecognized net actuarial gain (loss) (20,071) (2,113) 1,469 586
Unrecognized transition obligation (asset) (22,617) (24,674) 140 185
Unrecognized prior service cost 7,081 7,661 -- --
-------- -------- -------- --------
Prepaid (accrued) benefit cost $ 23,145 $ 21,657 $(10,608) $ (9,648)
======== ======== ======== ========
The Company's share of accrued benefit cost $ (1,914) $ (1,178) $ (381) $ (195)
Weighted-average assumptions as of December 31:
Discount rate 7.50% 6.75% 7.50% 6.75%
Expected return on plan assets 8.75% 8.00% N/A N/A
Rate of compensation increase 4.50% 4.50% N/A N/A
</TABLE>
81 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
13. RETIREMENT PLANS (CONTINUED)
For measurement purposes, a 10.9% annual rate of increase in the per capita cost
of covered health care benefits was assumed for 1999 (5.6% for dental benefits).
The rates were assumed to decrease gradually to 5% for 2005 and remain at that
level thereafter.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
1999 1998 1999 1998
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost $ 5,632 $ 4,506 $ 413 $ 240
Interest cost 6,952 6,452 845 673
Expected return on plan assets (12,041) (10,172) -- --
Amortization of transition obligation (asset) (2,056) (2,056) 45 45
Amortization of prior service cost 580 580 -- --
Recognized net actuarial (gain) loss (554) (677) 164 (20)
-------- ------- ------ ------
Net periodic benefit cost $ (1,487) $(1,367) $1,467 $ 938
======== ======= ====== ======
The Company's share of net periodic benefit cost $ 736 $ 586 $ 185 $ 95
======== ======= ====== ======
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage-point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1-PERCENTAGE-POINT 1-PERCENTAGE-POINT
INCREASE DECREASE
------------------ ------------------
(IN THOUSANDS)
<S> <C> <C>
Effect on total of service and interest cost components $ 288 $ (518)
Effect on postretirement benefit obligation 2,754 (2,279)
</TABLE>
82 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values of
the Company's financial instruments at December 31:
<TABLE>
<CAPTION>
1999
--------------------------------------
CARRYING AMOUNT ESTIMATED FAIR VALUE
--------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Bonds (including short-term) $1,534,555 $1,545,445
Mortgages 528,911 526,608
Derivatives -- 362
Other Invested Assets 67,938 67,938
Policy loans 40,095 40,095
LIABILITIES:
Insurance reserves $ 120,536 $ 120,536
Individual annuities 247,619 238,229
Pension products 661,806 665,830
<CAPTION>
1998
--------------------------------------
CARRYING AMOUNT ESTIMATED FAIR VALUE
--------------- --------------------
(IN THOUSANDS)
ASSETS:
<S> <C> <C>
Bonds (including short-term) $2,026,868 $2,153,953
Mortgages 535,003 556,143
Derivatives -- 771
Policy loans 41,944 41,944
LIABILITIES:
Insurance reserves $ 121,100 $ 121,100
Individual annuities 274,448 271,849
Pension products 1,104,489 1,145,351
</TABLE>
The major methods and assumptions used in estimating the fair values of
financial instruments are as follows:
The fair values of short-term bonds are estimated to be the amortized cost. The
fair values of long-term bonds which are publicly traded are based upon market
prices or dealer quotes. For privately placed bonds, fair values are estimated
by taking into account prices for publicly traded bonds of similar credit risk
and maturity and repayment and liquidity characteristics.
The fair values of mortgages are estimated by discounting future cash flows
using current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
The fair values of policy loans approximate carrying amounts.
83 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
14. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The fair values of derivative financial instruments are estimated using the
process described in Note 8.
The fair values of the Company's general account insurance reserves and
liabilities under investment-type contracts (insurance, annuity and pension
contracts that do not involve mortality or morbidity risks) are estimated using
discounted cash flow analyses or surrender values. Those contracts that are
deemed to have short-term guarantees have a carrying amount equal to the
estimated fair value.
15. STATUTORY INVESTMENT VALUATION RESERVES
The asset valuation reserve ("AVR") provides a reserve for losses from
investments in bonds, stocks, mortgage loans, real estate and other invested
assets with related increases or decreases being recorded directly to surplus.
Realized capital gains and losses on bonds and mortgages which relate to changes
in levels of interest rates are charged or credited to an interest maintenance
reserve and amortized into income over the remaining contractual life of the
security sold.
The table shown below presents changes in the major elements of the AVR and IMR.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998
------------------- -------------------
AVR IMR AVR IMR
--- --- --- ---
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance, beginning of year $44,392 $40,490 $47,605 $33,830
Net realized investment gains, net of tax 9,950 4,983 256 8,942
Amortization of net investment gains -- (3,702) -- (2,282)
Unrealized investment losses (9,705) -- (6,550) --
Required by formula (566) -- 3,081 --
------- ------- ------- -------
Balance, end of year $44,071 $41,771 $44,392 $40,490
======= ======= ======= =======
</TABLE>
16. FEDERAL INCOME TAXES
The Company, its subsidiaries and certain other affiliates file a consolidated
federal income tax return. Federal income taxes are calculated for the
consolidated group based upon amounts determined to be payable as a result of
operations within the current year. No provision is recognized for timing
differences which may exist between financial statement and taxable income. Such
timing differences include reserves, depreciation and accrual of market discount
on bonds. Cash payments for federal income taxes were approximately $3,000,000,
$48,144,000, and $31,000,000 for the years ended December 31, 1999, 1998 and
1997, respectively.
The Company is currently undergoing an audit by the Internal Revenue Service.
The Company believes that there will be no material audit adjustments for the
periods under examination.
84 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
17. RELATED PARTY TRANSACTIONS
A. SURPLUS NOTES AND NOTES RECEIVABLE (PAYABLE)
On December 22, 1997, the Company issued a $250,000,000 surplus note to Life
Holdco. This note has an interest rate of 8.625% and is due on or after
November 6, 2027.
On May 9, 1997, the Company issued a short-term note of $600,000,000 to Life
Holdco at an interest rate of 5.10%, which was extended at various interest
rates. This note was repaid on December 22, 1997.
On December 19, 1995, the Company issued surplus notes totaling $315,000,000 to
an affiliate, Sun Canada Financial Co., at interest rates between 5.75% and
7.25%. Of these notes, $157,500,000 will mature in the year 2007 and
$157,500,000 will mature in the year 2015. Interest on these notes is payable
semiannually.
Principal and interest on surplus notes are payable only to the extent that the
Company meets specified requirements regarding free surplus exclusive of the
principal amount and accrued interest, if any, on these notes and with the
consent of the Delaware Insurance Commissioner.
The Company accrued $4,259,000 and $4,259,000 for interest on surplus notes for
the years ended December 31, 1999 and 1998, respectively.
The Company expensed $43,266,000, $44,903,000, and $42,481,000 for interest on
surplus notes and notes payable for the years ended December 31, 1999, 1998 and
1997, respectively.
On September 28, 1998 a $500,000 note was issued by SLISL to the Company at a
rate of 6.0%, maturing on September 28, 2002.
A $110,000,000 note was issued to the Company by MFS on February 11, 1998 at an
interest rate of 6.0% due February 11, 1999. Another $110,000,000 note was
issued to the Company on December 22, 1998 at an interest rate of 5.55% due
February 11, 1999. These two notes and an additional $10,000,000 were combined
into a new note of $230,000,000 with a floating interest rate based on the six
month LIBOR rate plus 25 basis points. The $230,000,000 note was repaid to the
Company on December 21, 1999.
On January 14, 2000, the Company purchased $200,000,000 of notes from MFS.
On December 23, 1997, the Company issued a $110,000,000 note to US Holdco at an
interest rate of 5.80%, which was repaid on March 1, 1998. A $110,000,000 note
was also issued to the Company by MFS on December 23, 1997 at an interest rate
of 5.85% and was repaid on February 11, 1998.
On December 31, 1996, the Company issued a $58,000,000 note to SLOC at an
interest rate of 5.70% which was repaid on February 10, 1997. Also on December
31, 1996, the Company was issued a $58,000,000 note by MFS at an interest rate
of 5.76%. This note was repaid to the Company on February 10, 1997.
On December 31, 1998, the Company had an additional $20,000,000 in notes issued
by MFS, scheduled to mature in 2000. These notes were repaid to the Company on
December 21, 1999.
85 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
B. STOCKHOLDER DIVIDENDS
The maximum amount of dividends which can be paid by the Company without prior
approval of the Insurance Commissioner of the State of Delaware is subject to
restrictions relating to statutory surplus. In 1999, a dividend in the amount of
$80,000,000 was declared and paid by the Company to its parent, Life Holdco.
This dividend was approved by the Board of Directors, but did not require
approval of the Insurance Commissioner. In 1998, a dividend in the amount of
$50,000,000 was declared and paid by the Company to its parent, Life Holdco.
This dividend was approved by the Insurance Commissioner and the Board of
Directors. On December 24, 1997 the Company transferred all of its shares of MFS
to Life Holdco in the form of a dividend valued at $159,722,000. This dividend
was approved by the Insurance Commissioner and the Board of Directors.
C. SERVICE AGREEMENTS
The Company has an agreement with SLOC which provides that SLOC will furnish, as
requested, personnel as well as certain services and facilities on a
cost-reimbursement basis. Expenses under this agreement amounted to
approximately $28,700,000 in 1999, $16,344,000 in 1998, and $15,997,000 in 1997.
The Company leases office space to SLOC under lease agreements with terms
expiring in December, 2004 and options to extend the terms for each of twelve
successive five-year terms at fair market rental not to exceed 125% of the fixed
rent for the term which is ending. Rent received by the Company under the leases
for 1999 amounted to approximately $6,943,000.
18. RISK-BASED CAPITAL
Effective December 31, 1993, the NAIC adopted risk-based capital requirements
for life insurance companies. The risk-based capital requirements provide a
method for measuring the minimum acceptable amount of adjusted capital that a
life insurer should have, as determined under statutory accounting practices,
taking into account the risk characteristics of its investments and products.
The Company has met the minimum risk-based capital requirements at December 31,
1999, 1998 and 1997.
19. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, at the present time the
Company does not anticipate that the ultimate liability arising from such
pending or threatened litigation, after consideration of provisions made for
potential losses and costs of defense, will have a material adverse effect on
the financial condition or operating results of the Company.
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred it it would threaten an insurer's solvency and
further provide annual limits on such assessments. Part of
86 SUN LIFE CORPORATE VUL-SM-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
19. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
the assessments paid by the Company and its subsidiaries pursuant to these laws
may be used as credits for a portion of the associated premium taxes. The
Company incurred guaranty fund assessments of approximately $3,500,000,
$3,500,000, and $3,083,000 in 1999, 1998 and 1997, respectively.
20. ACCOUNTING POLICIES AND PRINCIPLES
The financial statements of the Company have been prepared on the basis of
statutory accounting practices which, prior to 1996, were considered by the
insurance industry and the accounting profession to be in accordance with GAAP
for mutual life insurance companies. The primary differences between statutory
accounting practices and GAAP are described as follows. Under statutory
accounting practices, financial statements are not consolidated and investments
in subsidiaries are shown at net equity value. Accordingly, the assets,
liabilities and results of operations of the Company's subsidiaries are not
consolidated with the assets, liabilities and results of operations,
respectively, of the Company. Changes in net equity value of the common stock of
the Company's United States life insurance subsidiaries are directly reflected
in the Company's surplus. Changes in the net equity value of the common stock of
all other subsidiaries are directly reflected in the Company's Asset Valuation
Reserve. Dividends paid by subsidiaries to the Company are included in the
Company's net investment income.
Other differences between statutory accounting practices and GAAP include the
following items. Statutory accounting practices do not recognize the following
assets or liabilities which are reflected under GAAP: deferred policy
acquisition costs, deferred federal income taxes and statutory nonadmitted
assets. Asset Valuation Reserves and Interest Maintenance Reserves are
established under statutory accounting practices but not under GAAP. Methods for
calculating real estate depreciation and investment valuation allowances differ
under statutory accounting practices and GAAP. Actuarial assumptions and
reserving methods differ under statutory accounting practices and GAAP. Premiums
for universal life and investment-type products are recognized as income for
statutory purposes and as deposits to policyholders' accounts for GAAP.
Investments in fixed maturity securities classified as available-for-sale are
carried at aggregate fair value with changes in unrealized gains and losses
reported net of taxes in a separate component of stockholder's equity for GAAP
and generally at amortized cost under statutory accounting practices.
87 SUN LIFE CORPORATE VUL-SM-
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
We have audited the accompanying statutory statements of admitted assets,
liabilities and capital stock and surplus of Sun Life Assurance Company of
Canada (U.S.) (the "Company") as of December 31, 1999 and 1998, and the related
statutory statements of operations, changes in capital stock and surplus, and
cash flow for each of the three years in the period ended December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Notes 1 and 20 to the financial statements, the
Company prepared these financial statements using accounting practices
prescribed or permitted by the Insurance Department of the State of Delaware,
which is a comprehensive basis of accounting other than generally accepted
accounting principles. The effects on the financial statements of the
differences between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.
In our opinion, the statutory financial statements referred to above present
fairly, in all material respects, the admitted assets, liabilities, and capital
stock and surplus of Sun Life Assurance Company of Canada (U.S.) as of
December 31, 1999 and 1998, and the results of its operations and its cash flow
for each of the three years in the period ended December 31, 1999 on the basis
of accounting described in Notes 1 and 20.
However, because of the differences between the two bases of accounting referred
to in the second preceding paragraph, in our opinion, the statutory financial
statements referred to above do not present fairly, in conformity with generally
accepted accounting principles, the financial position of Sun Life Assurance
Company of Canada (U.S.) as of December 31, 1999 and 1998 or the results of its
operations or its cash flow for each of the three years in the period ended
December 31, 1999.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 10, 2000
88 SUN LIFE CORPORATE VUL-SM-
<PAGE>
APPENDIX A
GLOSSARY OF POLICY TERMS
ACCOUNT VALUE--The sum of the amounts in each Sub-Account of the Variable
Account with respect to a Policy, and the amount of the Loan Account.
ANNIVERSARY--The same day in each succeeding year as the day of the year
corresponding to the Issue Date.
APB RIDER--An Additional Protection Benefit Rider (APB Rider) with which the
Policy may be issued to provide additional life insurance coverage under the
Policy.
APB RIDER DEATH BENEFIT--The death benefit under the APB Rider.
APB RIDER FACE AMOUNT--The amount of APB Rider coverage you request, as
specified in your Application, used in determining the Death Benefit.
ATTAINED AGE--The insured's Issue Age plus the number of completed Policy
Years.
BASE DEATH BENEFIT--The death benefit under the Policy, exclusive of any APB
Rider Death Benefit or any other supplemental benefits.
BUSINESS DAY--Any day that we are open for business.
CASH SURRENDER VALUE--The Account Value less by the balance of any
outstanding Policy Debt, plus any Sales Load Refund at Surrender.
CLASS--The risk, underwriting, and substandard table rating, if any,
classification of the insured.
DAILY RISK PERCENTAGE--The applicable daily rate for deduction of the
mortality and expense risk charge.
DEATH BENEFIT--The sum of the Base Death Benefit and any APB Rider Death
Benefit.
DUE PROOF--Such evidence as we may reasonably require to establish that
Policy Proceeds are due and payable.
EFFECTIVE DATE OF COVERAGE--
- Initially, the Investment Start Date;
- with respect to any increase in the Total Face Amount, the
Monthly Anniversary Day that falls on or next follows the
date we approve the supplemental application for such
increase; and
- with respect to any decrease in the Total Face Amount, the
Monthly Anniversary Day that falls on or next follows the
date we receive your request.
EXPENSE CHARGES APPLIED TO PREMIUM--The expense charges applied to premium,
consisting of the charges for premium tax, our federal tax obligations with
respect to the Policy, and the sales load.
FUND--A mutual fund in which a Sub-Account invests.
GENERAL ACCOUNT--The assets held by us other than those allocated to the
Sub-Accounts of the Variable Account or any of our other separate accounts.
INVESTMENT START DATE--The date the first premium is applied, which will be
the later of--
<PAGE>
- the Issue Date,
- the Business Day we approve the application for a Policy, or
- the Business Day we receive a Premium equal to or in excess
of the Minimum Premium.
ISSUE AGE--The insured's age as of the insured's birthday nearest the Issue
Date.
ISSUE DATE--A date specified in your Policy, from which Policy
Anniversaries, Policy Years and Policy Months are measured.
LOAN ACCOUNT--An account established for the Policy, the value of which is
the principal amount of any outstanding loan against the Policy, plus credited
interest thereon.
MATURITY--The Anniversary on which the insured's Attained Age is 100.
MINIMUM PREMIUM--The premium amount due and payable as of the Issue Date, as
specified in your Policy. The Minimum Premium varies based on the Class, Issue
Age, and sex of the insured and the Total Face Amount of the Policy.
MONTHLY ANNIVERSARY DAY--The same day in each succeeding month as the day of
the month corresponding to the Issue Date.
MONTHLY COST OF INSURANCE--A deduction made on a monthly basis for the
insurance coverage provided by the Policy.
MONTHLY EXPENSE CHARGE--A per Policy deduction made on a monthly basis for
administration and other expenses.
NET PREMIUM--The amount you pay as the premium minus Expense Charges Applied
to Premium.
OUR PRINCIPAL OFFICE--Sun Life Assurance Company of Canada (U.S.) (Attn:
Corporate Markets), One Sun Life Executive Park, Wellesley Hills, Massachusetts,
02481, or such other address as we may specify to you by written notice.
POLICY DEBT--The principal amount of any outstanding loans against the
Policy, plus accrued but unpaid interest on such loans.
POLICY MONTH--A one-month period commencing on the Issue Date or any Monthly
Anniversary Day and ending on the next Monthly Anniversary Day.
POLICY PROCEEDS--The amount determined in accordance with the terms of this
Policy that is payable at the death of the insured prior to Maturity.
POLICY YEAR--A one-year period commencing on the Issue Date or any
Anniversary and ending on the next Anniversary.
SALES LOAD REFUND AT SURRENDER--The portion of any premium paid in the
Policy Year of surrender that we will refund if you surrender your Policy in the
first three Policy Years.
SEC--Securities and Exchange Commission.
A-2
<PAGE>
SERVICE CENTER--Andesa TPA, Inc., 1605 N. Cedar Crest Blvd., Suite 502,
Allentown, Pennsylvania, 18104-2351, (610) 821-8980, or such other service
center or address as we may hereafter specify to you by written notice.
SPECIFIED FACE AMOUNT--The amount of life insurance coverage you request, as
specified in your Policy, exclusive of any APB Rider coverage, used in
determining the Death Benefit.
SUB-ACCOUNTS--Sub-Accounts into which the assets of the Variable Account are
divided, each of which corresponds to an investment choice available to you.
TARGET PREMIUM--An amount of premium specified as such in your Policy, used
to determine our sales load charges.
TOTAL FACE AMOUNT--The sum of the Specified Face Amount and the APB Rider
Face Amount.
UNIT--A unit of measurement that we use to calculate the value of each
Sub-Account.
UNIT VALUE--The value of each Unit of assets in a Sub-Account.
VALUATION DATE--Any day that benefits vary and on which we, the applicable
Fund, and the New York Stock Exchange are open for business and any other day as
may be required by the applicable rules and regulations of the Securities and
Exchange Commission.
VALUATION PERIOD--A period of time from one to the next determination of
Unit Values. We will determine Unit Values for each Valuation Date as of the
close of the New York Stock Exchange on that Valuation Date.
VARIABLE ACCOUNT--Sun Life of Canada (U.S.) Variable Account G, one of our
separate accounts established for purposes including the funding of variable
insurance benefits payable under the Policy.
A-3
<PAGE>
APPENDIX B
HYPOTHETICAL ILLUSTRATIONS OF CASH SURRENDER VALUES,
ACCOUNT VALUES AND DEATH BENEFITS
The Tables on the following pages illustrate the way in which a Policy's
Death Benefit, Account Value and Cash Surrender Value could vary over an
extended period of time. They assume that all premiums are allocated to and
remain in the Variable Account for the entire period shown and are based on
hypothetical gross annual investment returns for the Funds (i.e., investment
income and capital gains and losses, realized or unrealized) equivalent to
constant gross annual rates of 0%, 6%, and 12% over the periods indicated.
All Tables illustrate a Policy where the insured is a male, Issue Age 45, in
the preferred (non-tobacco) rate class. These illustrations all assume a Total
Face Amount of $500,000 and payment of an annual premium of $12,600. Tables 1,
2, 5 and 6 assume a Specified Face Amount of $500,000. Tables 3 and 4 assume a
Specified Face Amount of $50,000 and an APB Rider Face Amount of $450,000.
Tables 1 and 2 are based on guaranteed issue underwriting, Death Benefit Option
A, the Cash Value Accumulation Test and a Specified Face Amount of $500,000.
Tables 3 and 4 are based on the same assumptions, except that the Total Face
Amount reflects a Specified Face Amount of $50,000 and an APB Rider Face Amount
of $450,000. Tables 5 and 6 are based on full medical underwriting, Death
Benefit Option B, the Guideline Premium Test, and a Specified Face Amount of
$500,000. Tables 1, 3 and 5 differ from Tables 2, 4 and 6, respectively, only in
that Tables 1, 3 and 5 reflect the deduction of current policy charges as
outlined below, while Tables 2, 4 and 6 reflect the deduction of policy charges
at the guaranteed maximum rates (except that Kentucky policyowners will have
higher premium tax deductions than those reflected).
The Account Values and Death Benefits would be different from those shown if
the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above or below such averages for individual
Policy Years. The values would also be different depending on the allocation of
a Policy's total Account Value among the Sub-Accounts of the Variable Account,
if the actual rates of return averaged 0%, 6% or 12%, but the rates of each Fund
varied above and below such averages.
The amounts shown for the Death Benefits and Account Values take into
account all charges and deductions imposed under the Policy based on the
assumptions set forth in the Tables. These include: Expense Charges Applied to
Premium, assuming a premium tax rate of 2% for Tables 1, 3 and 5 and 4% for
Tables 2, 4 and 6. The Daily Risk Percentage charged against the Separate
Account for mortality and expense risks, at an effective annual rate of 0.60%
for the first 10 Policy Years, 0.20% for Policy Years 11 through 20, and 0.10%
thereafter for Tables 1, 3 and 5, and 0.90% for all Policy Years for Tables 2, 4
and 6; the Monthly Expense Charge of $13.75 per month for the first Policy Year
and $7.50 per month thereafter for Tables 1, 3 and 5, and $13.75 per month for
all Policy Years for Tables 2, 4, and 6; and the Monthly Cost of Insurance based
on current charges for Tables 1, 3 and 5, and guaranteed charges for Tables 2,
4, and 6.
The amounts shown in the Tables also take into account the Funds' advisory
fees and operating expenses, which are assumed to be at an annual rate of
0.7750% of the average daily net assets of each Fund. This is based upon a
simple average of the advisory fees and expenses of all the Funds for the most
recent fiscal year taking into account any applicable expense caps or expense
reimbursement arrangements. Actual fees and expenses of the Funds may be more or
less than 0.7750%, will vary from year to year, and will depend upon how Account
Value is allocated among the Sub-Accounts. See the individual prospectus for
each Fund for more information on fund expenses.
<PAGE>
The gross annual rates of investment return of 0%, 6% and 12% correspond to
net annual rates of -1.37%, 4.60%, and 10.56%, respectively, during the first 10
Policy Years, -0.97%, 5.01%, and 11.00% for Policy Years 11 through 20, and
- -0.87%, 5.12%, and 11.11%, respectively, thereafter taking into account the
current Daily Risk Percentage and the assumed 0.7750% charge for the Funds'
advisory fees and operating expenses; and -1.66%, 4.29%, and 10.24%,
respectively taking into account the guaranteed Daily Risk Percentage.
The hypothetical returns shown in the Tables do not reflect any charges for
income taxes against the Variable Account since no charges are currently made.
If, in the future, such charges are made, in order to produce the illustrated
death benefits and cash values, the gross annual investment rate of return would
have to exceed 0%, 6%, or 12% by a sufficient amount to cover the tax charges.
The second column of each Table shows the amount which would accumulate if
an amount equal to each premium were invested and earned interest, after taxes,
at 5% per year, compounded annually.
We will furnish upon request a comparable Table using any specific set of
circumstances. In addition to a Table assuming policy charges at their maximum,
we will furnish a Table assuming current policy charges.
B-2
<PAGE>
TABLE 1
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, GI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.37% NET 4.60%
PREMIUMS -------------------------------- --------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- --------------------- -------------- ---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,230 11,449 10,347 500,000 12,094 10,991 500,000
2 27,121 21,424 20,321 500,000 23,356 22,253 500,000
3 41,708 31,103 30,001 500,000 34,976 33,873 500,000
4 57,023 39,440 39,440 500,000 45,923 45,923 500,000
5 73,104 48,690 48,690 500,000 58,473 58,473 500,000
6 89,989 57,772 57,772 500,000 71,568 71,568 500,000
7 107,719 66,701 66,701 500,000 85,248 85,248 500,000
8 126,335 76,571 76,571 500,000 100,702 100,702 500,000
9 145,881 86,263 86,263 500,000 116,844 116,844 500,000
10 166,406 95,779 95,779 500,000 133,710 133,710 500,000
11 187,956 105,509 105,509 500,000 151,916 151,916 500,000
12 210,584 115,049 115,049 500,000 170,984 170,984 500,000
13 234,343 124,392 124,392 500,000 190,964 190,964 500,000
14 259,290 133,538 133,538 500,000 211,913 211,913 500,000
15 285,484 142,529 142,529 500,000 233,929 233,929 500,000
16 312,989 151,263 151,263 500,000 257,003 257,003 500,000
17 341,868 159,748 159,748 500,000 281,138 281,138 523,801
18 372,191 168,000 168,000 500,000 306,283 306,283 556,567
19 404,031 175,990 175,990 500,000 332,456 332,456 589,511
20 437,463 183,735 183,735 500,000 359,707 359,707 622,744
Age 60 285,484 142,529 142,529 500,00 233,929 233,929 500,000
Age 65 437,463 183,735 183,735 500,000 359,707 359,707 622,744
Age 70 631,430 219,012 219,012 500,000 515,298 515,298 798,314
Age 75 878,986 245,382 245,382 500,000 703,275 703,275 988,439
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.56%
----------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
1 12,739 11,636 500,000
2 26,365 24,263 500,000
3 39,166 38,064 500,000
4 53,222 53,222 500,000
5 69,936 69,936 500,000
6 88,396 88,396 500,000
7 108,807 108,807 500,000
8 132,609 132,609 500,000
9 158,936 158,936 500,000
10 188,068 188,068 500,000
11 221,176 221,176 500,000
12 257,870 257,870 547,826
13 298,378 298,378 616,959
14 343,085 343,085 690,748
15 392,465 392,465 769,701
16 446,884 446,884 854,061
17 506,854 506,854 944,343
18 572,949 572,949 1,041,143
19 645,744 645,744 1,145,032
20 725,931 725,931 1,256,772
Age 60 392,465 392,465 769,701
Age 65 725,931 725,931 1,256,772
Age 70 1,270,672 1,270,672 1,968,560
Age 75 2,146,673 2,146,673 3,017,106
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
B-3
<PAGE>
TABLE 2
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, GI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.66% NET 4.29%
PREMIUMS -------------------------------- --------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- --------------------- -------------- ---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,230 9,830 8,278 500,000 9,960 8,858 500,000
2 27,121 17,380 16,277 500,000 19,058 17,955 500,000
3 41,708 25,097 23,994 500,000 28,399 27,297 500,000
4 57,023 31,428 31,428 500,000 36,892 36,892 500,000
5 73,104 38,566 38,566 500,000 46,738 46,738 500,000
6 89,989 45,403 45,403 500,000 56,844 56,844 500,000
7 107,719 51,910 51,910 500,000 67,193 67,193 500,000
8 126,335 59,160 59,160 500,000 78,938 78,938 500,000
9 145,881 66,024 66,024 500,000 90,971 90,971 500,000
10 166,406 72,472 72,472 500,000 103,283 103,283 500,000
11 187,956 78,494 78,494 500,000 115,889 115,889 500,000
12 210,584 84,071 84,071 500,000 128,796 128,796 500,000
13 234,343 89,199 89,199 500,000 142,032 142,032 500,000
14 259,290 93,862 93,862 500,000 155,620 155,620 500,000
15 285,484 98,041 98,041 500,000 169,582 169,582 500,000
16 312,989 101,695 101,695 500,000 183,933 183,933 500,000
17 341,868 104,775 104,775 500,000 198,687 198,687 500,000
18 372,191 107,215 107,215 500,000 213,858 213,858 500,000
19 404,031 108,937 108,937 500,000 229,461 229,461 500,000
20 437,463 109,862 109,862 500,000 245,529 245,529 500,000
Age 60 285,484 98,041 98,041 500,000 169,582 169,582 500,000
Age 65 437,463 109,862 109,862 500,000 245,529 245,529 500,000
Age 70 631,430 99,847 99,847 500,000 334,921 334,921 518,868
Age 75 878,986 50,859 50,859 500,000 432,436 432,436 607,780
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.23%
----------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
1 10,542 9,439 500,000
2 20,808 19,705 500,000
3 31,984 30,881 500,000
4 43,065 43,065 500,000
5 56,353 56,353 500,000
6 70,866 70,866 500,000
7 86,714 86,714 500,000
8 105,261 105,261 500,000
9 125,571 125,571 500,000
10 147,836 147,836 500,000
11 172,296 172,296 500,000
12 199,223 199,223 500,000
13 228,944 228,944 500,000
14 261,692 261,692 526,877
15 297,200 297,200 582,868
16 335,634 335,634 641,446
17 377,199 377,199 702,777
18 422,097 422,097 767,019
19 470,532 470,532 834,347
20 522,723 522,723 904,967
Age 60 297,200 297,200 582,868
Age 65 522,723 522,723 904,967
Age 70 849,376 849,376 1,315,876
Age 75 1,312,344 1,312,344 1,844,474
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
B-4
<PAGE>
TABLE 3
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, GI, AGE 45
$50,000 SPECIFIED FACE AMOUNT
$450,000 APB RIDER SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.37% NET 4.60%
PREMIUMS -------------------------------- ---------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- --------------------- -------------- ---------- -------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,230 11,441 10,978 500,000 12,124 11,661 500,000
2 27,121 22,039 21,576 500,000 24,087 23,624 500,000
3 41,708 32,336 31,873 500,000 36,443 35,980 500,000
4 57,023 41,923 41,923 500,000 48,802 48,802 500,000
5 73,104 51,777 51,777 500,000 62,161 62,161 500,000
6 89,989 61,456 61,456 500,000 76,106 76,106 500,000
7 107,719 70,977 70,977 500,000 90,678 90,678 500,000
8 126,335 80,800 80,800 500,000 106,397 106,397 500,000
9 145,881 90,447 90,447 500,000 122,819 122,819 500,000
10 166,406 99,918 99,918 500,000 139,979 139,979 500,000
11 187,956 109,622 109,622 500,000 158,521 158,521 500,000
12 210,584 119,137 119,137 500,000 177,946 177,946 500,000
13 234,343 128,456 128,456 500,000 198,305 198,305 500,000
14 259,290 137,581 137,581 500,000 219,657 219,657 500,000
15 285,484 146,551 146,551 500,000 242,100 242,100 500,000
16 312,989 155,268 155,268 500,000 265,621 265,621 507,640
17 341,868 163,738 163,738 500,000 290,141 290,141 540,575
18 372,191 171,977 171,977 500,000 315,687 315,687 573,655
19 404,031 179,958 179,958 500,000 342,275 342,275 606,922
20 437,463 187,696 187,696 500,000 369,958 369,958 640,491
Age 60 285,484 146,551 146,551 500,000 242,100 242,100 500,000
Age 65 437,463 187,696 187,696 500,000 369,958 369,958 640,491
Age 70 631,430 223,018 223,018 500,000 528,018 528,018 818,020
Age 75 878,986 249,581 249,581 500,000 718,940 718,940 1,010,456
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.56%
----------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
1 12,807 12,344 500,000
2 26,218 25,754 500,000
3 40,887 40,424 500,000
4 56,456 56,456 500,000
5 74,328 74,328 500,000
6 93,973 93,973 500,000
7 115,698 115,698 500,000
8 140,248 140,248 500,000
9 167,407 167,407 500,000
10 197,463 197,463 500,000
11 231,637 231,637 505,825
12 269,435 269,435 572,394
13 311,159 311,159 643,386
14 357,208 357,208 719,183
15 408,070 408,070 800,306
16 464,122 464,122 887,005
17 525,889 525,889 979,808
18 593,965 593,965 1,079,332
19 668,939 668,939 1,186,162
20 751,527 751,527 1,301,085
Age 60 408,070 408,070 800,306
Age 65 751,527 751,527 1,301,085
Age 70 1,312,581 1,312,581 2,033,486
Age 75 2,214,778 2,214,778 3,112,827
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
B-5
<PAGE>
TABLE 4
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, GI, AGE 45
$50,000 SPECIFIED FACE AMOUNT
$450,000 APB RIDER SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.66% NET 4.29%
PREMIUMS -------------------------------- --------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- --------------------- -------------- ---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,230 8,863 8,400 500,000 9,467 9,004 500,000
2 27,121 16,945 16,482 500,000 18,683 18,220 500,000
3 41,708 24,725 24,262 500,000 28,135 27,672 500,000
4 57,023 31,741 31,741 500,000 37,373 37,373 500,000
5 73,104 38,900 38,900 500,000 47,319 47,319 500,000
6 89,989 45,734 45,734 500,000 57,520 57,520 500,000
7 107,719 52,206 52,206 500,000 67,954 67,954 500,000
8 126,335 58,751 58,751 500,000 79,106 79,106 500,000
9 145,881 64,872 64,872 500,000 90,501 90,501 500,000
10 166,406 70,531 70,531 500,000 102,128 102,128 500,000
11 187,956 75,710 75,710 500,000 113,999 113,999 500,000
12 210,584 80,382 80,382 500,000 126,121 126,121 500,000
13 234,343 84,536 84,536 500,000 138,524 138,524 500,000
14 259,290 88,147 88,147 500,000 151,229 151,229 500,000
15 285,484 91,183 91,183 500,000 164,259 164,259 500,000
16 312,989 93,585 93,585 500,000 177,625 177,625 500,000
17 341,868 95,283 95,283 500,000 191,340 191,340 500,000
18 372,191 96,183 96,183 500,000 205,415 205,415 500,000
19 404,031 96,172 96,172 500,000 219,864 219,864 500,000
20 437,463 95,130 95,130 500,000 234,717 234,717 500,000
Age 60 285,484 91,183 91,183 500,000 164,259 164,259 500,000
Age 65 437,463 95,130 95,130 500,000 234,717 234,717 500,000
Age 70 631,430 69,984 69,984 500,000 317,860 317,860 500,000
Age 75 878,986 0 0 0 413,588 413,588 581,290
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.23%
----------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
1 10,073 9,610 500,000
2 20,497 20,034 500,000
3 31,841 31,378 500,000
4 43,747 43,747 500,000
5 57,243 57,243 500,000
6 71,996 71,996 500,000
7 88,125 88,125 500,000
8 106,298 106,298 500,000
9 126,229 126,229 500,000
10 148,122 148,122 500,000
11 172,240 172,240 500,000
12 198,883 198,883 500,000
13 228,418 228,418 500,000
14 261,107 261,107 525,699
15 296,563 296,563 581,620
16 334,943 334,943 640,125
17 376,449 376,449 701,379
18 421,283 421,283 765,540
19 469,649 469,649 832,781
20 521,766 521,766 903,311
Age 60 296,563 296,563 581,620
Age 65 521,766 521,766 903,311
Age 70 847,958 847,958 1,313,680
Age 75 1,310,278 1,310,278 1,841,569
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
B-6
<PAGE>
TABLE 5
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, MI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION B
GUIDELINE PREMIUM TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.37% NET 4.60%
PREMIUMS -------------------------------- ---------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- --------------------- -------------- ---------- -------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,230 11,470 10,367 510,367 12,115 11,012 511,012
2 27,121 21,478 20,375 520,375 23,410 22,307 522,307
3 41,708 31,194 30,091 530,091 35,065 33,963 533,962
4 57,023 39,555 39,555 539,555 46,031 46,031 546,031
5 73,104 48,788 48,788 548,788 58,550 58,550 558,550
6 89,989 57,907 57,907 557,907 71,657 71,657 571,657
7 107,719 66,812 66,812 566,812 85,275 85,275 585,275
8 126,335 76,593 76,593 576,593 100,580 100,580 600,580
9 145,881 86,116 86,116 586,116 116,460 116,460 616,460
10 166,406 95,365 95,365 595,365 132,924 132,924 632,924
11 187,956 104,717 104,717 604,717 150,550 150,550 650,550
12 210,584 113,727 113,727 613,727 168,803 168,803 668,803
13 234,343 122,357 122,357 622,357 187,671 187,671 687,671
14 259,290 130,574 130,574 630,574 207,147 207,147 707,147
15 285,484 138,389 138,389 638,389 227,268 227,268 727,268
16 312,989 145,572 145,572 645,572 247,828 247,828 747,828
17 341,868 152,285 152,285 652,285 269,008 269,008 769,008
18 372,191 158,539 158,539 658,539 290,845 290,845 790,845
19 404,031 164,254 164,254 664,254 313,286 313,286 813,286
20 437,463 169,447 169,447 669,447 336,374 336,374 836,374
Age 60 285,484 138,389 138,389 638,389 227,268 227,268 727,268
Age 65 437,463 169,447 169,447 669,447 336,374 336,374 836,374
Age 70 631,430 185,988 185,988 685,988 462,038 462,038 962,038
Age 75 878,986 179,123 179,123 679,123 597,325 597,325 1,097,325
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.56%
----------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
1 12,760 11,657 511,657
2 25,420 24,317 524,317
3 39,253 38,151 538,151
4 53,320 53,320 553,320
5 69,984 69,984 569,984
6 88,421 88,421 588,421
7 108,711 108,711 608,711
8 132,268 132,268 632,268
9 158,182 158,182 658,182
10 186,682 186,682 686,682
11 218,864 215,864 718,864
12 254,323 254,232 754,323
13 293,376 293,376 793,376
14 336,378 336,378 836,378
15 383,773 383,773 883,773
16 435,797 435,797 935,797
17 493,123 493,123 993,123
18 556,341 556,341 1,056,341
19 626,011 626,011 1,126,011
20 702,856 702,856 1,202,856
Age 60 383,773 383,773 883,773
Age 65 702,856 702,856 1,202,856
Age 70 1,228,432 1,228,432 1,728,432
Age 75 2,088,827 2,088,827 2,588,827
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
B-7
<PAGE>
TABLE 6
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, MI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION B
GUIDELINE PREMIUM TEST
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.66% NET 4.29%
PREMIUMS -------------------------------- --------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- --------------------- -------------- ---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,230 9,337 8,234 508,234 9,914 8,811 508,811
2 27,121 17,250 16,148 516,148 18,914 17,812 517,812
3 41,708 24,834 23,731 523,731 28,096 26,994 526,994
4 57,023 30,981 30,981 530,981 36,355 36,355 536,355
5 73,104 37,876 37,876 537,876 45,878 45,878 545,878
6 89,989 44,409 44,409 544,409 55,554 55,554 555,554
7 107,719 50,540 50,540 550,540 65,344 65,344 565,344
8 126,335 57,325 57,325 557,325 76,366 76,366 576,366
9 145,881 63,625 63,625 563,625 87,478 87,478 587,478
10 166,406 69,399 69,399 569,399 98,632 98,632 598,632
11 187,956 74,624 74,624 574,624 109,799 109,799 609,799
12 210,584 79,270 79,270 579,270 120,940 120,940 620,940
13 234,343 83,327 83,327 583,327 132,032 132,032 632,032
14 259,290 86,770 86,770 586,770 143,038 143,038 643,038
15 285,484 89,569 89,569 589,569 153,913 153,913 653,913
16 312,989 91,669 91,669 591,669 164,584 164,584 664,584
17 341,868 93,008 93,008 593,008 174,966 174,966 674,966
18 372,191 93,504 93,504 593,504 184,950 184,950 684,950
19 404,031 93,060 93,060 593,060 194,405 194,405 694,405
20 437,463 91,588 91,588 591,588 203,201 203,201 703,201
Age 60 285,484 89,569 89,569 589,569 153,913 153,913 653,913
Age 65 437,463 91,588 91,588 591,588 203,201 203,201 703,201
Age 70 631,430 66,350 66,350 566,350 232,949 232,949 732,949
Age 75 878,986 346 346 500,346 220,786 220,786 720,786
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.23%
----------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
1 10,493 9,390 509,390
2 20,650 19,547 519,547
3 31,637 30,535 530,535
4 42,427 42,427 542,427
5 55,289 55,289 555,289
6 69,207 69,207 569,207
7 84,239 84,239 585,239
8 101,679 101,679 601,679
9 120,512 120,512 620,512
10 140,826 140,826 640,826
11 162,742 162,742 662,742
12 186,382 186,382 686,382
13 211,901 211,901 711,901
14 239,456 239,456 739,456
15 269,211 269,211 769,211
16 301,324 301,324 801,324
17 335,958 335,958 835,958
18 373,270 373,270 873,270
19 413,419 413,419 913,419
20 456,584 456,584 956,584
Age 60 269,211 269,211 769,211
Age 65 456,584 456,584 956,584
Age 70 726,020 726,020 1,226,020
Age 75 1,108,825 1,108,825 1,608,825
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
B-8
<PAGE>
A complete copy of the registration statement, of which this prospectus is a
part, as well as additional information about us, the Policy, the Variable
Account and the underlying Funds which may be of interest to you, is available
on the SEC's Internet Web site (http//www.sec.gov). You may also review and copy
this information at the SEC's Public Reference Room in Washington, D.C. Call
1-800-SEC-0330 for more information about the operation of the Public Reference
Room. In addition, you may obtain copies of this information, upon payment of a
fee, by writing the Public Reference Section of the Securities and Exchange
Commission, Washington, D.C. 20549-6009.
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
REPRESENTATION OF REASONABLENESS OF FEES
Sun Life Assurance Company of Canada (U.S.) hereby represents that the
aggregate fees and charges under the Policy are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Sun Life Assurance Company of Canada (U.S.).
UNDERTAKING ON INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to its certificate of incorporation, bylaws, or otherwise,
the depositor has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
depositor of expenses incurred or paid by a director, officer or controlling
person of the depositor in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the depositor will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the act and will
be governed by the final adjudication of such issue.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 104 pages.
The Undertaking to File reports.
Representation of Reasonableness of Fees.
The Rule 484 Undertaking.
The signatures.
Written consents of the following persons:
Roy P. Creedon, Assistant Vice President and Senior Counsel
(Exhibit 2)
John E. Coleman, FSA, MAAA (Exhibit 6)
Deloitte & Touche LLP, Independent Public Accountants (Exhibit 7)
The following exhibits:
1.A. (1) Resolution of Board of Directors of Sun Life Assurance Company
of Canada (U.S.), dated December 3, 1985, authorizing the
establishment of Sun Life of Canada (U.S.) Variable Account
G (1)
(2) Not Applicable
(3)(a) Principal Underwriting Agreement (2)
(3)(b) Form of Selling Agreements
(3)(c) Schedule of Sales Commissions
(4) Not Applicable
(5)(a) Form of Flexible Premium Variable Universal Life Insurance
Policy (3)
(5)(b) Form of Additional Protection Benefit Rider (APB Rider) (3)
(6)(a) Certificate of Incorporation of Sun Life Assurance Company of
Canada (U.S.) (4)
(6)(b) Bylaws of Sun Life Assurance Company of Canada (U.S.) (4)
(7) Not Applicable.
(8)(a)(i) Participation Agreement, dated as of February 17, 1998, by and
among AIM Variable Insurance Funds, Inc., AIM Distributors,
Inc., Sun Life Assurance Company of Canada (U.S.), and
Clarendon Insurance Agency, Inc. (8)
(8)(a)(ii) Amendment No. 1 to Participation Agreement by and among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., Sun
Life Assurance Company of Canada (U.S.), and Clarendon
Insurance Agency, Inc. (8)
(8)(a)(iii) Amendment No. 2 to Participation Agreement by and among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., Sun
Life Assurance Company of Canada (U.S.), and Clarendon
Insurance Agency, Inc. (8)
(8)(b)(i) Form of Participation Agreement by and among Sun Capital
Advisers Trust, Sun Capital Advisers, Inc., and Sun Life
Assurance Company of Canada (U.S.) (8)
(8)(b)(ii) Amendment No. 1, effective May 1, 1999, to Participation
Agreement by and among Sun Capital Advisers Trust, Sun
Capital Advisers, Inc., and Sun Life Assurance Company of
Canada (U.S.). (8)
<PAGE>
(8)(c) Participation Agreement, dated as of April 20, 1998, by and
among T. Rowe Price Equity Series, Inc., T. Rowe Price
Investment Services, Inc., and Sun Life of Canada (U.S.) (8)
(8)(d)(i) Other Participation Agreements (3)
(8)(d)(ii) Addendum dated as of May 1, 2000 to Fund Participation
Agreement December 5, 1996, among Sun Life Assurance Company of
Canada (U.S.), Neuberger Berman Advisers Management Trust,
Advisers Management Trust, and Neuberger Berman Management Inc.
(8)(e) Form of Participation Agreement, dated as of May 1, 2000 by
and among the Franklin Templeton Variable Insurance Products
Trust, Franklin Templeton Distributors, Inc., and Sun Life
Assurance Company of Canada (U.S.)
(9) Not Applicable.
<PAGE>
(10) Form of Application for Flexible Premium Variable Universal Life
Insurance Policy (3)
(11) Memorandum describing Sun Life Assurance Company of Canada
(U.S.)'s Issuance, Transfer and Redemption Procedures (5)
2. Opinion and Consent of Counsel as to the Legality of the Securities Being
Registered
3. None
4. Not Applicable
5. Not Applicable
6. Opinion and Consent of Actuary
7. Consent of Deloitte & Touche LLP, Independent Public Accountants
8. (a) Powers of Attorney (Incorporated by reference to the Registration
Statement on Form S-6 File No. 333-94359, filed January 10, 2000);
(b) Power of Attorney of William W. Stinson;
9. Representation of Counsel Pursuant to Rule 485(b).
____________
(1) Incorporated herein by reference to the Registration Statement of Sun Life
of Canada (U.S.) Variable Account F on Form N-4, File No. 333-29852.
(2) Incorporated herein by reference to Post-Effective Amendment No. 2 to the
Registration Statement of Sun Life of Canada (U.S.) Variable Account I on
Form S-6, File No. 333-94359, filed with the Securities and Exchange
Commission on March 31, 2000.
(3) Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Registration Statement of Sun Life of Canada (U.S.) Variable Account G on
Form S-6, File No. 333-13087, filed with the Securities and Exchange
Commission on January 22, 1997.
(4) Incorporated herein by reference to the Registration Statement of Sun Life
of Canada (U.S.) Variable Account F on Form N-4, File No. 333-37907,
filed with the Securities and Exchange Commission on October 14, 1997.
(5) Incorporated herein by reference to Post-Effective Amendment No. 3 to
the Registration Statement of Sun Life of Canada (U.S.) Variable Account G
on Form S-6, filed with the Securities and Exchange Commission on
February 16, 1999.
(6) Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Registration Statement of Sun Life of Canada (U.S.) Variable Account G on
Form S-6, File No. 333-13087, filed with the Securities and Exchange
Commission on April 30, 1997.
(7) Incorporated herein by reference to Post-Effective Amendment No. 4 to the
Registration Statement of Sun Life of Canada (U.S.) Variable Account G on
Form S-6, File No. 333-13087, filed with the Securities and Exchange
Commission on March 4, 1999.
(8) Incorporated herein by reference to Post-Effective Amendment No. 5 to
the Registration Statement No. 5 to the Registration Statement of Sun Life
of Canada (U.S.) Variable Account G on Form S-6, File No. 333-13087, filed
with the Securities and Exchange Commission on April 29, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this registration statement to be signed on
its behalf by the undersigned thereunto duly authorized, and attested, all
in the town of Wellesley, and the Commonwealth of Massachusetts on the 25th
day of April, 2000.
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
(Registrant)
By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
(Depositor)
By: /s/ James A. McNulty, III
------------------------------------
James A. McNulty, III, President
Attest: /s/ Ellen B. King
------------------------
Ellen B. King, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons and in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ James A. McNulty, III President and Director
- --------------------------- (Principal Executive Officer) April 25, 2000
James A. McNulty
/s/ Davey Scoon Vice President, Finance and Treasurer
- --------------------------- (Principal Financial & Accounting Officer) April 25, 2000
Davey Scoon
* /s/ Donald A. Stewart Chairman and Director
- ----------------------------
Donald A. Stewart
* /s/ C. James Prieur Vice Chairman and Director
- ----------------------------
C. James Prieur
* /s/ Richard B. Bailey Director
- ----------------------------
Richard B. Bailey
* /s/ Gregory W. Gee Director
- ----------------------------
Gregory W. Gee
* /s/ David D. Horn Director
- ----------------------------
David D. Horn
* /s/ Angus A. MacNaughton Director
- ----------------------------
Angus A. MacNaughton
* /s/ S. Caesar Raboy Director
- ----------------------------
S. Caesar Raboy
** /s/ William W. Stinson Director
- ----------------------------
William W. Stinson
</TABLE>
By: /s/ Ellen B. King
------------------------------- April 25, 2000
Ellen B. King, Attorney-in-Fact
* By Ellen B. King pursuant to Powers of Attorney filed with the Registration
Statement of Sun Life of Canada (U.S.) Variable Account I on form S-6,
File No. 333-94359 filed with the Securities and Exchange Commission on
January 10, 2000.
** By Ellen B. King pursuant to Power of Attorney filed with this Registration
Statement.
<PAGE>
CORPORATE MARKETS VARIABLE LIFE INSURANCE
SALES AGREEMENT
AGREEMENT by and between SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) ("the
Company"), a Delaware corporation; Clarendon Insurance Agency, Inc.
("Clarendon"), a Massachusetts corporation, a broker-dealer registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "1934 Act") and a member of the National Association of Securities Dealers,
Inc. ("NASD");_________________________________________________________________
_________________ ("Selling Broker-Dealer"), also a broker-dealer registered
under the 1934 Act and a member of the NASD; and________________________________
("Producer") an insurance agency affiliate of Selling Broker-Dealer.
W I T N E S S E T H:
WHEREAS, the Company issues certain life insurance contracts listed in
Schedule A (the "Contracts"), which are registered under the Securities Act of
1933 (the "1933 Act"):
WHEREAS, the Company has authorized Clarendon to act as the general
distributor and principal underwriter of the Contracts; and in that capacity to
enter into agreements, subject to the consent of the Company, with
Broker-Dealers and such Producers to act as Special COLI Producers for the
distribution of the Contracts:
WHEREAS, Clarendon has agreed to assist in obtaining licenses,
registrations and appointments to enable the registered representatives and
sub-brokers of Producer to sell the Contracts:
WHEREAS, Selling Broker-Dealer and Producer have been selected by Clarendon
to distribute the Contracts and Selling Broker-Dealer and Producer, in an
insurance brokerage capacity, wish to participate in the distribution of the
Contracts to their clients.
NOW THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
I.
APPOINTMENT
Subject to the terms and conditions of this Agreement, the Company and
Clarendon hereby appoint Selling Broker-Dealer and Producer to solicit
applications for the Contracts.
Selling Broker-Dealer and Producer jointly and severally accept such
appointment and each agrees to use its best efforts to find purchasers for the
Contracts acceptable to the Company.
<PAGE>
2
II.
AUTHORITY AND DUTIES OF PRODUCER
A. Licensing and Appointment of Sub-brokers
Producer is authorized to appoint sub-broker ("Sub-brokers") to solicit
sales of the Contracts. Producer agrees to fulfill all requirements set forth in
the General Letter of Recommendation attached as Schedule B hereto in
conjunction with its submission of licensing and appointment papers for all
Sub-brokers.
Producer warrants that it and all of its Sub-brokers appointed pursuant to
this Agreement shall not solicit nor aid, directly or indirectly, in the
solicitation of any application for any Contract until fully licensed by the
proper authorities under the applicable insurance laws within the applicable
jurisdictions where Producer proposes to offer the Contracts, where the Company
is authorized to conduct business and where the Contracts may be lawfully sold.
Producer shall periodically provide the Company with a list of all
Sub-brokers appointed by Producer and the jurisdictions where such Sub-brokers
are licensed to solicit sales of the Contracts. The company shall periodically
provide Producer with a list which shows; (i) the jurisdictions where the
Company is authorized to do business; and (ii) any limitations on the
availability of the Contracts in any of such jurisdictions.
Producer shall prepare and transmit the appropriate appointment forms to
the Company. Producer shall pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and authorizations
for Sub-brokers to solicit and sell the Contracts. The Company will pay
appointment fees for Selling Broker-Dealer and resident appointment fees for
Sub-brokers. Non-resident appointment fees for Sub-brokers will be paid by the
Producer. The Company may refuse for any reason to apply for the appointment of
a Sub-broker and may cancel any existing appointment at any time.
B. Rejection of Sub-broker
The Company or Clarendon may refuse for any reason, by written notice to
Producer to permit any Sub-broker the right to solicit applications for the sale
of any of the Contracts. Upon receipt of such notice, Producer immediately shall
cause such Sub-broker to cease such solicitations of sales and cancel the
appointment of any Sub-broker under this agreement.
C. Supervision of Sub-broker
Producer, jointly with Selling Broker-Dealer, shall supervise all
Sub-brokers appointed pursuant to this Agreement to solicit sales of the
Contracts and bear responsibility for all acts and omissions of each Sub-broker.
Producer shall comply with and exercise all responsibilities required by
applicable federal and state law and regulations. Producer shall train and
supervise its Sub-brokers to ensure that purchase of a Contract is recommended
only to applicants where there are reasonable grounds to believe the purchase of
the Contract is suitable for that applicant.
<PAGE>
3
While not limited to the following, a determination of suitability shall be
based on information furnished to a Selling Broker-Dealer after reasonable
inquiry of such applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood that the applicant
will continue to make any premium payments contemplated by the Contracts and
will keep the Contract in force for a sufficient period of time so that the
Company's acquisition costs are amortized over a reasonable period of time.
Nothing contained in this Agreement or otherwise shall be deemed to make
any Sub-broker appointed by Producer an employee or agent of the Company or
Clarendon. Neither the Company nor Clarendon shall have any responsibility for
the training and supervision of any Sub-broker or any employee of Producer. If
the act or omission of a Sub-broker or any employee of Producer is the proximate
cause of claim, damage or liability (including reasonable attorneys' fees) to
the Company or Clarendon, Producer and Selling Broker-Dealer shall be
responsible and liable, jointly and severally, therefor.
III.
AUTHORITY AND DUTIES OF SELLING BROKER-DEALER
Selling Broker-Dealer agrees that it has the full legal responsibility for
the training and supervision of all persons, including Sub-brokers of Producer,
associated with Selling Broker-Dealer who are engaged directly or indirectly in
the offer or sale of Contracts. All such persons shall be registered
representatives of Selling Broker-Dealer and shall be subject to the control and
supervision of Selling Broker-Dealer with respect to their securities regulated
activities. Selling Broker-Dealer shall: (i) train and supervise Sub-brokers, in
their capacity as registered representatives, in the sale of Contracts; (ii) use
its best efforts to cause such Sub-brokers to qualify under applicable federal
and state laws to engage in the sale of Contracts; (iii) provide the Company and
Clarendon to their satisfaction with evidence of Sub-brokers' qualifications to
sell Contracts; (iv) notify the Company if any of such Sub-brokers ceases to be
a registered representative of Selling Broker-Dealer; and (v) train and
supervise Sub-brokers to ensure compliance with applicable federal and state
securities laws, rules, regulations, statements of policy thereunder and with
NASD rules. Selling Broker-Dealer, jointly with Producer, shall train and
supervise Sub-brokers to ensure that purchase of a Contract is recommended only
to applicants where there are reasonable grounds to believe the purchase of the
Contract is suitable for that applicant. While not limited to the following, a
determination of suitability shall be based on information furnished to a
Sub-broker after reasonable inquiry of such applicant concerning the applicant's
other security holdings, financial situation and needs. Selling Broker-Dealer
shall ensure that any offer of a Contract made by a Sub-broker will be made by
means of a currently effective prospectus.
The Company and Clarendon shall not have any responsibility for the
supervision of any registered representative or any employee or affiliate of
Selling Broker-Dealer. If the act or omission of a registered representative or
any employee or affiliate of Selling Broker-Dealer is
<PAGE>
4
the proximate cause of any claim, damage or liability (including reasonable
attorney's fees) to the Company or Clarendon, Selling Broker-Dealer and Producer
shall be responsible and liable, jointly and severally, therefor.
Selling Broker-Dealer at all times shall be duly registered as a
broker-dealer under the 1934 Act, a member in good standing of the NASD and duly
licensed in all states and jurisdictions where required to perform pursuant to
this agreement. Selling Broker-Dealer shall fully comply with the requirements
of the 1934 Act and all other applicable federal or state laws and with the
rules of the NASD. Selling Broker-Dealer shall establish such rules and
procedures as may be necessary to cause diligent supervision of the securities
activities of the Sub-brokers including ensuring compliance with the prospectus
delivery requirements of the 1933 Act.
IV.
AUTHORITY AND DUTIES OF
PRODUCER AND SELLING BROKER-DEALER
A. Contracts
The Contracts issued by the Company to which this Agreement applies are
listed in Schedule A. This Schedule A may be amended from time to time by the
Company. The Company, in its sole discretion, with prior or concurrent written
notice to Selling Broker-Dealer and Producer, may suspend distribution of any
Contract. The Company also has the right to amend any Contract at any time.
B. Securing Applications
Each application for a Contract shall be made on an application form
provided by the Company and all payments collected by Selling Broker-Dealer,
Producer or any registered representative and Sub-broker shall be remitted
promptly in full, together with such application form and any other required
documentation, directly to the Company at the address indicated on such
application or to such other address as may be designated by the Company. All
such payments and documents shall be the property of the Company. Selling
Broker-Dealer and Producer shall review all such applications for completeness
and for compliance with the conditions herein, including the suitability and
prospectus delivery requirements set forth herein. Check or money order in
payment of such Contracts should be made payable to the order of "Sun Life
Assurance Company of Canada (U.S.)". All applications are subject to acceptance
or rejection by the Company in its sole discretion.
C. Receipt of Money
All money payable in connection with any of the Contracts, whether as
premium, purchase payment or otherwise and whether paid by or on behalf of any
contract owner or
<PAGE>
5
anyone else having an interest in the Contracts, is the property of the
Company and shall be transmitted immediately in accordance with the
administrative procedures of the Company without any deduction or offset for
any reason including, but not limited to, any deduction or offset for
compensation claimed by Selling Broker-Dealer or Producer, unless there has
been a prior written arrangement for net wire transmissions between the
Company and Selling Broker-Dealer or Producer.
D. Notice of Sub-broker's Noncompliance
Selling Broker-Dealer shall immediately notify Clarendon and Producer in
the event a Sub-broker fails or refuses to submit to the supervision of Selling
Broker-Dealer or Producer in accordance with this Agreement or any related
agreement between Selling Broker-Dealer, Producer and Sub-broker or otherwise
fails to meet the rules and standards imposed by Selling Broker-Dealer or its
registered representatives or Producer or its Sub-brokers. Selling Broker-Dealer
or Producer shall also immediately notify such Sub-broker that he or she is no
longer authorized to sell the Contracts, and both Selling Broker-Dealer and
Producer shall take whatever additional action may be necessary to terminate the
sales activities of such Sub-broker relating to the Contracts.
E. Sales Promotion, Advertising and Prospectuses
No sales promotion materials, circulars, documents or any advertising
relating to any of the Contracts shall be used by Selling Broker-Dealer,
Producer or any Sub-brokers unless the specific item has been approved in
writing by Clarendon and the Company prior to use. Selling Broker-Dealer shall
be provided, without any expense to Selling Broker-Dealer, with prospectuses
relating to Contracts. Selling Broker-Dealer and Producer shall be provided with
such other material as Clarendon determines necessary or desirable for use in
connection with sales of the Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or Producer from advertising life insurance and
annuities on a generic basis.
Selling Broker-Dealer, Producer and Sub-brokers shall make no material
representations relating to the Contracts, other than those contained in the
relevant registration statement, as may be amended, or in sales promotion or
other materials approved by the Company and Clarendon as provided herein.
F. Confidentiality
The Company, Clarendon, Selling Broker-Dealer and Producer shall keep
confidential all information obtained pursuant to this Agreement, including,
without limitation, names of the purchasers of the Contracts, and shall disclose
such information, only if authorized to make such disclosure in writing, or if
such disclosure is expressly required by applicable federal or state regulatory
authorities.
<PAGE>
6
G. Records
Selling Broker-Dealer and Producer shall have the responsibility for
maintaining the records of its Sub-brokers and representatives licensed,
registered and otherwise qualified to sell the Contracts. Selling Broker-Dealer
and Producer shall maintain such other records as are required of them by
applicable laws and regulations. The books, accounts and records of Selling
Broker-Dealer and Producer relating to the sale of the Contracts shall be
maintained so as to clearly and accurately disclose the nature and details of
the transactions. Selling Broker-Dealer and Producer each agree to make the
books and records relating to the sale of the Contracts available to the Company
or Clarendon upon their written request.
H. Sub-Broker Agreements
Before a Sub-broker is permitted by Producer and Selling Broker-Dealer to
offer the Contracts, Sub-broker shall have entered into a written agreement with
Producer and Selling Broker-Dealer pursuant to which (i) Sub-broker is appointed
as a Sales representative of Producer and a registered representative of Selling
Broker-Dealer; (ii) Sub-broker agrees that his or her selling activities
relating to Contracts shall be under the supervision and control of Selling
Broker-Dealer and Producer, and (iii) that Sub-brokers right to continue to sell
such Contracts is subject to his or her continued compliance with such agreement
and any procedures, rules or regulations implemented by Selling Broker-Dealer or
Producer. At the request of the Company, a copy of each such written agreement
shall be mailed to the Company.
V.
COMPENSATION
A. Commissions and Fees
Commissions and fees payable to Selling Broker-Dealer or any Sub-broker in
connection with the Contracts shall be paid by the Company through Clarendon, as
paying agent for the Company to Producer, or otherwise permitted by law or
regulation. Selling Broker-Dealer shall pay Sub-broker. Clarendon will provide
Selling Broker-Dealer and Producer with a copy of its current Compensation
Schedule(s), attached hereto as Schedule C. Unless otherwise provided in
Schedule C. compensation will be paid as a percentage of premiums or purchase
payments (collectively, "Payments") received and accepted by the Company on
applications obtained by the various Sub-brokers appointed by Producer
hereunder. Upon termination of this Agreement, all compensation to Selling
Broker-Dealer and Sub-broker hereunder shall cease. However, Selling
Broker-Dealer or Sub-broker shall be entitled to receive compensation for all
new and additional premium payments which are in process at the time of
termination in accordance with Schedule C, and shall continue to be liable for
any charge-backs pursuant to the provisions of said Schedule C, or for any other
amount advanced by or otherwise due the Company or
<PAGE>
7
Clarendon hereunder. The Company reserves the right not to pay compensation on a
Contract for which the premium is paid in whole or in part by the loan or
surrender value of any other life insurance policy or annuity contract issued by
the Company or any direct or indirect affiliated company.
Clarendon, at the direction of the Company, shall deduct any charge backs
from compensation otherwise due Selling Broker-Dealer or Sub-broker. If any
amount to be deducted exceeds compensation otherwise due, Selling Broker-Dealer
and/or Sub-broker shall promptly pay back the amount of the excess following a
written demand by Clarendon or the Company. Selling Broker-Dealer, Producer and
Sub-broker are jointly and severally liable for such charge backs.
The Company recognizes the Contract Owners' right on issued Contracts to
terminate its agent of record status with Producer and/or change a Selling
Broker-Dealer, provided that the Contract Owner notifies Clarendon in writing.
When a Contract Owner terminates its agent of record, no further service fees
nor compensation on any payments due or received on any increases in face amount
in the existing policy after termination, shall be payable to Selling
Broker-Dealer or Producer in accordance with Schedule C after the notice of
termination is received and accepted by Clarendon. However, when a Contract
Owner designates a new Selling Broker-Dealer other than those of record,
compensation on any payments due or received on any increases in face amount in
the existing Contract after the change, shall be payable to the new Selling
Broker-Dealer in accordance with Schedule C in effect at the time of issuance of
the Contract.
A change of Selling Broker-Dealer request by a Contract Owner shall be
honored by the Company only if there exists a valid similar Corporate Markets
Variable Life Insurance Sales Agreement between the Company, Clarendon and the
new Selling Broker-Dealer and (1) the Contract Owner(s) requests in writing that
the Sub-broker remains as representative of record, or (2) both the former and
future Selling Broker-Dealers direct the Company and Clarendon in a joint
writing to transfer all policies and future compensation to the new Selling
Broker-Dealer, or (3) the NASD approves and effects a bulk transfer of all
representatives to a new Selling Broker-Dealer.
B. Time of Payment
Clarendon will pay any commissions due Producer in accordance with Schedule
C of this Agreement, as it may be amended from time to time.
C. Amendment of Schedules
Clarendon may amend Schedule C upon at least ten (10) days' prior written
notice to Selling Broker-Dealer and Producer. The submission of an application
for the Contracts by Selling Broker-Dealer or Producer after the effective date
of any such amendment shall constitute
<PAGE>
8
agreement to such amendment. Any such amendment shall apply to compensation due
on applications received by the Company after the effective date of such notice.
D. Prohibition Against Rebates
The Company or Clarendon may terminate this Agreement if Selling
Broker-Dealer, Producer or any Sub-broker rebates, offers to rebate or withholds
any part of any Payment on the Contracts. If Selling Broker-Dealer, Producer or
any Sub-broker shall at any time induce or endeavor to induce any Owner of any
Contract issued hereunder to discontinue payments or to relinquish any such
Contract, except under circumstances where there is reasonable grounds for
believing the Contract is not suitable for such person, any and all compensation
due Producer hereunder shall cease and terminate.
E. Indebtedness and Right of Set Off
Nothing contained in this Agreement shall be construed as giving Selling
Broker-Dealer or Producer the right to incur any indebtedness on behalf of the
Company or Clarendon. Selling Broker-Dealer and Producer hereby authorize
Clarendon and the Company to set off liabilities of Selling Broker-Dealer and
Producer to the Company and Clarendon against any and all amounts otherwise
payable to Selling Broker-Dealer or Producer.
VI.
GENERAL PROVISIONS
A. Waiver
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed to be, or shall constitute,
a waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. Limitations
The Selling Broker-Dealer and Producer are independent contractors with
respect to the Company and Clarendon. No sub-broker is a party to this Agreement
nor is any sub-broker entitled to claim the status of a third party beneficiary
with respect to this Agreement. No party other than the Company and or
Clarendon, as the case may be, shall have the authority to: (i) make, alter or
discharge any Contract issued by the Company; (ii) waive any forfeiture or
extend the time of making any payments; (iii) enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of the
Company or Clarendon; (iv) contract for the
<PAGE>
9
expenditure of funds of the Company or Clarendon; (v) alter the forms which the
Company prescribes, or substitute other forms in place of those prescribed by
Clarendon.
C. Fidelity Bond and Other Liability Coverage
Selling Broker-Dealer and Producer each represent that all directors,
officers, agents, employees and brokers who are licensed pursuant to this
Agreement as brokers for the Company for state insurance law purposes or who
have access to funds of the Company, including but not limited to, funds
submitted with applications for the Contracts are and shall be covered by a
blanket fidelity bond, including coverage for larceny and embezzlement issued by
a reputable bonding company. This bond shall be maintained by Selling
Broker-Dealer or Producer at their expense and shall be, at a minimum, of the
form, type and amount required under NASD Rules endorsed to extend coverage to
transactions relating to the Contracts. The Company may require evidence
satisfactory to it, that such coverage is in force and Selling Broker-Dealer or
Producer, as the case may be, shall give prompt written notice to the Company of
any notice of cancellation of the bond or change of coverage.
Selling Broker-Dealer and Producer hereby assign any proceeds received from
a fidelity bonding company, error and omissions or other liability coverage, to
the Company or Clarendon as their interest may appear, to the extent of their
loss due to activities covered by the bond, policy or other liability coverage.
If there is any deficiency amount, whether due to a deductible or otherwise,
Selling Broker-Dealer or Producer shall promptly pay such amounts on demand.
Selling Broker-Dealer and Producer hereby indemnify and hold harmless the
Company and Clarendon from any such deficiency and from the costs of collection
thereof (including reasonable attorneys' fees).
D. Binding Effect
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that neither
Selling Broker-Dealer nor Producer may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company.
E. Regulations
All parties agree to observe and comply with the existing laws and rule or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
<PAGE>
10
F. Indemnification
The Company and Clarendon agree to indemnify and hold harmless Selling
Broker-Dealer and Producer, their officers, directors, agents and employees,
against any and all losses, claims, damages or liabilities to which they may
become subject under the 1933 Act, the 1934 Act, or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in the
registration statement for the Contracts filed pursuant to the 1933 Act, or any
prospectus included as a part thereof, as from time to time amended and
supplemented, or in any advertisement or sales literature approved in writing by
the Company and Clarendon pursuant to this Agreement.
Selling Broker-Dealer and Producer agree to indemnify and hold harmless the
Company and Clarendon, their officers, directors, agents and employees, against
any and all losses, claims, damages or liabilities to which they may become
subject under the 1933 Act, the 1934 Act, or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (a) any oral or written misrepresentation by Selling Broker-Dealer or
Producer or their officers, directors, employees or agents unless such
misrepresentation is contained in the registration statement for the Contracts,
any prospectus included as a part thereof, as from time to time amended and
supplemented, or any advertisement or sales literature approved in writing by
the Company and Clarendon pursuant to this Agreement, (b) the failure of Selling
Broker-Dealer or Producer or their officers, directors, employees or agents to
comply with any applicable provisions of this Agreement or (c) claims by brokers
or employees of Producer or Selling Broker-Dealer for payments of compensation
or remuneration of any type. Selling Broker-Dealer and Producer will reimburse
the Company or Clarendon or any director, officer, agent or employee of either
entity for any legal or other expenses reasonable incurred by the Company,
Clarendon, or such office, director, agent or employee in connection with
investigating or defending any such loss, claims, damages, liability or action.
This indemnity agreement will be in addition to any liability which
Broker-Dealer may otherwise have.
G. Notices
All notices or communications shall be sent to the following address for
the Company or Clarendon, or to such other address as the Company or Clarendon
may request by giving written notice to the other parties:
Sun Life Assurance Co. Of Canada (U.S.) Clarendon Insurance Agency, Inc.
One Sun Life Executive Park, SC 2145 One Sun Life Executive Park, SC 1335
Wellesley Hills, MA 02181 Wellesley Hills, MA 02181
<PAGE>
11
All notices or communications to the Selling Broker-Dealer or Producer
shall be sent to the last address known to the Company for that party, or to
such other address as Selling Broker-Dealer or Producer may request by giving
written notice to the other parties.
H. Governing Law
This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
I. Amendment of Agreement
Clarendon may amend this Agreement upon at least ten (10) days' prior
written notice to Selling Broker-Dealer and Producer. The submission of an
application for the Contracts by Selling Broker-Dealer or Producer after the
effective date of any such amendment shall constitute agreement to such
amendment.
J. Producer as Broker-Dealer
Selling Broker-Dealer and Producer shall not have the other entity's
authority and shall not be responsible for the other entity's duties hereunder
unless Selling Broker-Dealer and Producer are the same entity, subject to their
acceptance of joint and several responsibility under this Agreement. If Selling
Broker-Dealer and Producer are the same person or legal entity, such person or
legal entity shall have the rights and obligations hereunder of both Selling
Broker-Dealer and Producer and this Agreement shall be binding and enforceable
by and against such person or legal entity in both capacities.
K. Complaints and Investigations
The Company, Clarendon, Selling Broker-Dealer and Producer agree to
cooperate fully in any insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts distributed under
this Agreement. The Company, Clarendon, Selling Broker-Dealer and Producer
further agree to cooperate fully in any securities regulatory investigation or
proceeding with respect to the Company, Clarendon, Selling Broker-Dealer and
Producer, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with the Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) Selling Broker-Dealer or Producer will be notified promptly of any
customer complaint or notice of any regulatory investigation or proceeding
or judicial proceeding received by the Company or Clarendon with respect to
Selling Broker-Dealer or Producer or any Sub-broker or which may affect the
Company's issuance of any contracts sold under this Agreement; and
<PAGE>
12
(b) Selling Broker-Dealer and Producer will promptly notify the Company and
Clarendon of any customer complaint or notice of any regulatory
investigation or proceeding received by Selling Broker-Dealer, Producer or
their affiliates with respect to Selling Broker-Dealer, Producer or any
Sub-broker in connection with any Contracts distributed under this
Agreement or any activity in connection with any such policies.
In the case of a substantive customer complaint, the Company, Clarendon,
Selling Broker-Dealer and Producer will cooperate in investigating such
complaint and any response will be sent to the other party to this Agreement for
approval not less than five business days prior to its being sent to the
customer or regulatory authority, except that if a more prompt response is
required, the proposed response shall be communicated by telephone or telegraph.
L. Termination
This Agreement may be terminated, without cause, by any party upon thirty
(30) days' prior written notice. This Agreement also may be terminated
immediately if Clarendon or Selling Broker-Dealer shall cease to be a registered
Broker-Dealer under the 1934 Act or a member in good standing of the NASD, or if
there occurs the dissolution, bankruptcy or insolvency of Selling Broker-Dealer
or Producer. Sections VI, F and K shall survive termination of this Agreement.
Upon termination of this Agreement, Selling Broker-Dealer and Producer
shall each use their best efforts to have all property of the Company and
Clarendon in Selling Broker-Dealer, Producer or Sub-brokers' possession promptly
returned to the Company or Clarendon, as the case may be. Such property includes
illustration software, prospectuses, applications and other literature supplied
by the Company or Clarendon.
M. Exclusivity
Selling Broker-Dealer and Producer each agree that no territory is assigned
exclusively hereunder and that the Company and Clarendon reserve the right in
their discretion to establish one or more agencies in any jurisdiction in which
Selling Broker-Dealer and Producer transact business hereunder.
<PAGE>
13
This Agreement shall be effective as of________________________________.
Sun Life Assurance Company of Canada (U.S. _________________________________
(Selling Broker-Dealer)
By:_________________________________ By:______________________________
(Signature) (Signature)
Title: _________________________________ Title:___________________________
Date:_________________________________ Date:____________________________
Clarendon Insurance Agency, Inc. _________________________________
(Producer)
By:__________________________________ By: _____________________________
(Signature) (Signature)
Title:________________________________ Title:___________________________
Date:________________________________ Date: ___________________________
<PAGE>
14
SCHEDULE A
TYPES OF PLANS
- - Sun Life Corporate VUL_
(flexible premium variable universal life insurance policy)
<PAGE>
15
SCHEDULE B
General Letter of Recommendation
PRODUCER hereby certifies to Sun Life of Canada (U.S.) and Clarendon that
all the following requirements will be fulfilled in conjunction with the
submission of licensing/appointment papers for all applicants as sub-brokers
submitted by PRODUCER. PRODUCER will, upon request, forward proof of compliance
with same to Sun Life of Canada (U.S.) in a timely manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known
to us, has been examined by us, is known to be of good moral
character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as a
sales representative for Sun Life of Canada (U.S.) to hold
himself out in good faith to the general public. We vouch for
each applicant.
2. We have on file a B-300, B-301, or U-4 form which was
completed by each applicant. We have fulfilled all the
necessary investigative requirements for the registration of
each applicant as a registered representative through our NASD
member firm, and each applicant is presently registered as an
NASD registered representative with our NASD member firm.
The above information in our files indicates no fact or
condition which would disqualify the applicant from receiving
a license and all the findings of all investigative
information is favorable.
3. We certify that all educational requirements have been met for
the specific state each applicant is requesting a license in,
and that, all such persons have fulfilled the appropriate
examination, education and training requirements.
4. If the applicant is required to submit his picture, his
signature, and securities registration in the state in which
he is applying for a license, we certify that those items
forwarded to Sun Life of Canada (U.S.) are those of the
applicant and the securities registration is a true copy of
the original.
5. We hereby warrant that the applicant is not applying for a
license with Sun Life of Canada (U.S.) in order to place
insurance chiefly and solely on his life or property, lives or
property of his relatives, or property or liability of his
associates.
<PAGE>
16
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of
any or all risks written by these applicants, to the end that
the insurance interest of the public will be properly
protected.
7. We will not permit any applicant to transact insurance until
duly licensed therefore. No applicants have been given a
contract or furnished supplies, nor have any applicants been
permitted to write, or solicit business in any capacity, and
they will not be so permitted until the certificate of
authority or license applied for is received. We acknowledge
that the applicant, when licensed, shall be a broker for Sun
Life of Canada (U.S.) and not an agent or sub-agent of Sun
Life of Canada (U.S.).
<PAGE>
17
SCHEDULE C
SUN LIFE
ASSURANCE COMPANY OF CANADA (U.S.)
CORPORATE MARKETS PRODUCER'S
REMUNERATION SCHEDULE FOR
SUN LIFE CORPORATE VARIABLE UNIVERSAL LIFE
<PAGE>
18
I. DEFINITIONS
1.1 POLICY YEAR. Twelve consecutive months beginning with a policy's
anniversary date.
1.2 PRODUCER. Special producers contracted soley for the distribution of Sun
Life Corporate Variable Universal Life.
1.3 FIRST YEAR COMMISSION (FYC). Income paid to the Broker Dealer/Sub-broker
upon underwriting approval, based on premiums on policies of individual
life insurance collected by Sun Life during the first policy year, in
accordance with the Commission Scales found in Section IV of this Schedule.
The FYC includes vested commissions and non-vested service fees.
1.4 RENEWAL COMMISSION. Income paid to the Broker Dealer/Sub-broker based on
premiums collected by Sun Life after the first policy year, in accordance
with the Commission Scales found in Section IV of this Schedule. Renewal
commission includes vested commissions and non-vested service fees.
1.5 NET FIRST YEAR COMMISSION (NFYC). A production measurement equal to First
Year Commission, less any commission adjustments due to policy cancellation
(lapse or surrender) in accordance with Section II of this Schedule.
1.6 TARGET PREMIUM. The basis for measuring commissions on Sun Life Corporate
VUL, as found in Section IV of this schedule. Target premium is similar to,
but not identical to the 7 pay premium for the base face amount (without
APB Rider) as defined by IRC '7702A.
1.7 TARGET_2 PREMIUM. The basis for measuring commissions on Sun Life Corporate
VUL, as found in Section IV of this schedule. This is similar to, but not
identical to the 7 pay premium for base face amount and APB Rider as
defined by IRC '7702A.
1.8 SERVICE FEE. A non-vested, non-negotiable fee paid for the ongoing service
of the policies, in accordance with Section IV of this Schedule. This fee
will no longer be paid to the Broker Dealer/Sub-broker upon the policy
owner's written request to change to a new Broker Dealer/Sub-broker or upon
termination of the Corporate Markets Variable Life Insurance Sales
Agreement.
II. COMMISSION ADJUSTMENTS DUE TO POLICY CANCELLATION
2.1 If any policy sold under this Agreement is canceled within the first
sixteen months following its effective date, the Broker Dealer will be
charged back 50% of the First Year Commission payable under the applicable
Commission Scale up to date of policy cancellation.
2.2 If any policy sold under this Agreement is canceled from the seventeenth
through the thirty-sixth month following its effective date, the Broker
Dealer will be charged back 50% of the
<PAGE>
19
First Year Commission payable under the Applicable Commission Scale,
reduced at the rate of 2.5% for each month beyond the sixteenth month that
the policy remained in force.
EXAMPLE: If the policy is surrendered in the seventeenth month, the
chargeback is 47.5% of FYC. If the policy is surrendered in the twentieth
month, the chargeback is 40% of FYC.
III. TERMINATED SUB-BROKERS
3.1 Commissions in years 1-7 on all policies listed under Section IV will be
paid when due except that service fees terminate at the date of termination
of the Sub-Broker's contract.
IV. SUN LIFE CORPORATE VUL POLICY COMMISSION SCALE
4.1 FIRST YEAR AND RENEWAL COMMISSIONS: Producer can choose, on a per case
basis, a 100% heaped commission scale, a 100% level commission scale, or a
blend of the two. The commission scale indicated on the AFS disk submitted
with a case will be the commission scale for the entire life of the case.
This commission scale must be the same for the entire case and cannot vary
on a life by life basis. The 100% heaped commission scale is the default.
If anything other than 100% heaped or 100% level is chosen, then an
AMENDMENT TO REMUNERATION SCHEDULE must be signed by the Sun-Broker &
Broker Dealer. THE FOLLOWING COMMISSION SCALES INCLUDE NON-VESTED SERVICE
FEES (AS DESCRIBED IN SECTION 4.2 OF THIS AGREEMENT).
<TABLE>
<CAPTION>
HEAPED % OF PREMIUM COMMISSION
UP TO TARGET TARGET TO TARGET_2 EXCESS
<S> <C> <C> <C>
Policy Year 1 15% 2.5% 0%
Policy Years 2 - 7 7.5% 2.5% 2.5%
Policy Years 8+ 0% 0% 0%
<CAPTION>
LEVEL % OF PREMIUM COMMISSION
UP TO TARGET TARGET TO TARGET_2 EXCESS
<S> <C> <C> <C>
Policy Year 1 9% 2.5% 0%
Policy Years 2 - 7 9% 2.5% 2.5%
Policy Years 8+ 0% 0% 0%
<CAPTION>
ASSET TRAIL COMMISSION
(% OF ACCOUNT VALUE)
NON-SINGLE PAY* SINGLE PAY**
<S> <C> <C>
Policy Years 1 - 7 .10% .05%
Policy Years 8-20 .20% .05%
Policy Years 21+ .10% .05%
</TABLE>
<PAGE>
20
4.2 SERVICE FEE: The service fee is non-vested (see Sections 1.7 and 3.1 of
this Schedule) and
<TABLE>
<CAPTION>
PERCENT OF PREMIUM
UP TO TARGET_2 EXCESS
<S> <C> <C>
Policy Year 1 2.5% 0%
Policy Years 2 - 7 2.5% 2.5%
<CAPTION>
ASSET TRAIL (% OF ACCOUNT VALUE)
NON-SINGLE PAY* SINGLE PAY**
<S> <C> <C>
Policy Years 1 - 7 .10% .05%
Policy Years 8-20 .20% .05%
Policy Years 21+ .10% .05%
</TABLE>
*CALCULATED AS 0.25 TIMES 10 BASIS POINTS(YEARS 1-7), 0.25 TIMES 20 BASIS POINTS
(YEARS 8-20) AND 0.25 TIMES 10 BASIS POINTS(YEARS 21+) TIMES THE NON-LOANED
ACCOUNT VALUE AT THE END OF EACH QUARTER.
**CALCULATED AS 0.25 TIMES 5 BASIS POINTS TIMES THE NON-LOANED ACCOUNT VALUE AT
THE END OF EACH QUARTER IN ALL YEARS.
4.3 ANNUALIZATION: None
4.4 FACE AMOUNT INCREASES/DECREASES:
Target premium is not increased and new commission scales do not begin for
increases in specified face amount. Target premium is decreased, however,
if the initial base coverage is subsequently decreased. Target_2 premium is
increased or decreased as the face amount of base or APB Rider is increased
or decreased.
4.5 FLAT EXTRAS/SUBSTANDARD TABLE RATINGS: No additional commission for flat
extras or substandard table ratings.
<PAGE>
21
<PAGE>
ADDENDUM TO FUND PARTICIPATION AGREEMENT
This ADDENDUM dated as of May 1, 2000 amends the Fund Participation
Agreement among Sun Life Assurance Company of Canada (U.S.)("Company"),
Neuberger Berman Advisers Management Trust ("Trust"), Advisers Managers Trust
("Managers Trust"), and Neuberger Berman Management Inc. ("NBMI").
WHEREAS, the Company, Trust, Managers Trust, and NBMI are parties to a
Fund Participation Agreement ("Agreement") pursuant to which separate accounts
of the Company invest proceeds from variable annuity and/or variable life
insurance policies in the one or more portfolios of the Trust ("Portfolios");
and
WHEREAS, the Trust, through the Portfolios, currently invests all of
its net investable assets in corresponding series of Managers Trust in a
"master-feeder" structure; and
WHEREAS, the Boards of Trustees of the Trust and Managers Trust have
approved a transaction to eliminate the current master-feeder structure in which
Trust will receive the portfolio securities held by Managers Trust in redemption
of the interests of Managers Trust held by the Trust (this transaction is
referred to as the "In-Kind Redemption"); and
WHEREAS, the In-Kind Redemption is currently scheduled to be effected
on or about May 1, 2000 (the date on which the In-Kind Redemption is effected is
referred to as the "Effective Date"); and
WHEREAS, upon completion of the In-Kind Redemption, the Trust will hold
and invest directly in its own portfolio of securities and Managers Trust will
cease investment operations and be dissolved; and
WHEREAS, the parties wish to amend the Agreement to reflect the In-Kind
Redemption and the elimination of the master-feeder structure.
NOW THEREFORE, effective on the Effective Date, the Trust assumes all
of the rights, obligations, and liabilities of Managers Trust under the
Agreement.
The undersigned hereby consents to the assignment described in the
preceding paragraph.
SUN LIFE ASSURANCE COMPANY ADVISERS MANAGERS TRUST
OF CANADA (U.S.)
By: ___________________________ By: _______________________________
Name: Name:
Title: Title:
<PAGE>
NEUBERGER BERMAN ADVISERS NEUBERGER BERMAN
MANAGEMENT TRUST MANAGEMENT INC.
By: ________________________________ By: _______________________________
Name: Name:
Title: Title:
2
<PAGE>
PARTICIPATION AGREEMENT
as of May 1, 2000
Franklin Templeton Variable Insurance Products Trust
Franklin Templeton Distributors, Inc.
Sun Life Assurance Company of Cananda (U.S.)
CONTENTS
PARAGRAPH SUBJECT MATTER
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
SCHEDULES TO THIS AGREEMENT
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust;
Investment Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. PARTIES AND PURPOSE
This agreement (the "Agreement") is between Franklin Templeton
Variable Insurance Products Trust, an open-end management investment company
organized as a business trust under Massachusetts law (the "Trust"), Franklin
Templeton Distributors, Inc., a California corporation which is the principal
underwriter for the Trust (the "Underwriter," and together with the Trust,
"we" or "us") and the insurance company identified on Schedule A ("you"), on
your own behalf and on behalf of each segregated asset account maintained by
you that is listed on Schedule B, as that schedule may be amended from time to
time ("Account" or "Accounts").
<PAGE>
The purpose of this Agreement is to entitle you, on behalf of the
Accounts, to purchase the shares, and classes of shares, of portfolios of the
Trust ("Portfolios") that are identified on Schedule C, solely for the purpose
of funding benefits of your variable life insurance policies or variable annuity
contracts ("Contracts") that are identified on Schedule D. This Agreement does
not authorize any other purchases or redemptions of shares of the Trust.
2. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES BY YOU
You represent and warrant that:
1. You are an insurance company duly organized and in
good standing under the laws of your state of incorporation.
2. All of your directors, officers, employees, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust, in an amount not less than $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. You agree to make all reasonable efforts
to see that this bond or another bond containing such provisions is always in
effect, and you agree to notify us in the event that such coverage no longer
applies.
3. Each Account is a duly organized, validly existing
segregated asset account under applicable insurance law and interests in each
Account are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Internal Revenue Code of 1986, as amended ("Code") and the regulations
thereunder. You will use your best efforts to continue to meet such definitional
requirements, and will notify us immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not be
met in the future.
4. Each Account either: (i) has been registered or,
prior to any issuance or sale of the Contracts, will be registered as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act"); or (ii)
has not been so registered in proper reliance upon an exemption from
registration under Section 3(c) of the 1940 Act; if the Account is exempt from
registration as an investment company under Section 3(c) of the 1940 Act, you
will make every effort to maintain such exemption and will notify us
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.
5. The Contracts or interests in the Accounts: (i) are
or, prior to any issuance or sale will be, registered as securities under the
Securities Act of 1933, as amended (the "1933 Act"); or (ii) are not registered
because they are properly exempt from registration under Section 3(a)(2) of the
1933 Act or will be offered exclusively in transactions that are properly exempt
from registration under Section 4(2) or Regulation D of the 1933 Act, in which
case you will make every effort to maintain such exemption and will notify us
immediately upon having a
2
<PAGE>
reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
6. The Contracts: (i) will be sold by broker-dealers, or
their registered representatives, who are registered with the Securities and
Exchange Commission ("SEC") under the Securities and Exchange Act of 1934, as
amended (the "1934 Act") and who are members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
state insurance suitability requirements and NASD suitability guidelines.
7. The Contracts currently are and will be treated as
annuity contracts or life insurance contracts under applicable provisions of the
Code and you will use your best efforts to maintain such treatment; you will
notify us immediately upon having a reasonable basis for believing that any of
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
8. The fees and charges deducted under each Contract, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.
9. You will use shares of the Trust only for the purpose
of funding benefits of the Contracts through the Accounts.
10. Contracts will not be sold outside of the United
States.
11. With respect to any Accounts which are exempt from
registration under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
a. the principal underwriter for each such
Account and any subaccounts thereof is a
registered broker-dealer with the SEC under
the 1934 Act;
b. the shares of the Portfolios of the Trust
are and will continue to be the only
investment securities held by the
corresponding subaccounts; and
c. with regard to each Portfolio, you, on
behalf of the corresponding subaccount,
will:
(i) vote such shares held by it in the
same proportion as the vote of all
other holders of such shares; and
(ii) refrain from substituting shares of
another security for such shares
unless the SEC has approved such
substitution in the manner provided
in Section 26 of the 1940 Act.
3
<PAGE>
(b) REPRESENTATIONS AND WARRANTIES BY THE TRUST
The Trust represents and warrants that:
1. It is duly organized and in good standing under the
laws of the State of Massachusetts.
2. All of its directors, officers, employees and others
dealing with the money and/or securities of a Portfolio are and shall be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust in an amount not less that the minimum coverage required by Rule 17g-1
or other regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3. It is registered as an open-end management investment
company under the 1940 Act.
4. Each class of shares of the Portfolios of the Trust
is registered under the 1933 Act.
5. It will amend its registration statement under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
6. It will comply, in all material respects, with the
1933 and 1940 Acts and the rules and regulations thereunder.
7. It is currently qualified as a "regulated investment
company" under Subchapter M of the Code, it will make every effort to maintain
such qualification, and will notify you immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future.
8. The Investments of each Portfolio will comply with
the diversification requirements for variable annuity, endowment or life
insurance contracts set forth in Section 817(h) of the Code, and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5. Upon having a reasonable basis for believing any Portfolio has ceased
to comply and will not be able to comply within the grace period afforded by
Regulation 1.817-5, the Trust will notify you immediately and will take all
reasonable steps to adequately diversify the Portfolio to achieve compliance.
9. It currently intends for one or more classes of
shares (each, a "Class") to make payments to finance its distribution expenses,
including service fees, pursuant to a plan ("Plan") adopted under rule 12b-1
under the 1940 Act ("Rule 12b-1"), although it may determine to discontinue such
practice in the future. To the extent that any Class of the Trust finances its
distribution expenses pursuant to a Plan adopted under rule 12b-1, the Trust
undertakes to comply with any then current SEC interpretations concerning rule
12b-1 or any successor provisions.
(c) REPRESENTATIONS AND WARRANTIES BY THE UNDERWRITER
4
<PAGE>
The Underwriter represents and warrants that:
1. It is registered as a broker dealer with the SEC
under the 1934 Act, and is a member in good standing of the NASD.
2. Each investment adviser listed on Schedule C (each,
an "Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law.
(d) WARRANTY AND AGREEMENT BY BOTH YOU AND US
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order grants exemptions from certain provisions of the 1940 Act
and the regulations thereunder to the extent necessary to permit shares of the
Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
and qualified pension and retirement plans outside the separate account context.
You and we both warrant and agree that both you and we will comply with the
"Applicants' Conditions" prescribed in the Shared Funding Order as though such
conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges.
3. PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
(a) We will make shares of the Portfolios available to the
Accounts for the benefit of the Contracts. The shares will be available for
purchase at the net asset value per share next computed after we (or our agent)
receive a purchase order, as established in accordance with the provisions of
the then current prospectus of the Trust. Notwithstanding the foregoing, the
Trust's Board of Trustees ("Trustees") may refuse to sell shares of any
Portfolio to any person, or may suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or if, in the sole discretion of the Trustees, they deem
such action to be in the best interests of the shareholders of such Portfolio.
Without limiting the foregoing, the Trustees have determined that there is a
significant risk that the Trust and its shareholders may be adversely affected
by investors whose purchase and redemption activity follows a market timing
pattern, and have authorized the Trust, the Underwriter and the Trust's transfer
agent to adopt procedures and take other action (including, without limitation,
rejecting specific purchase orders) as they deem necessary to reduce, discourage
or eliminate market timing activity. You agree to cooperate with us to assist us
in implementing the Trust's restrictions on purchase and redemption activity
that follows a market timing pattern.
(b) We agree that shares of the Trust will be sold only to life
insurance companies which have entered into fund participation agreements with
the Trust ("Participating Insurance Companies") and their separate accounts or
to qualified pension and retirement plans in
5
<PAGE>
accordance with the terms of the Shared Funding Order. No shares of any
Portfolio will be sold to the general public.
(c) You agree that all net amounts available under the Contracts
shall be invested in the Trust or in your general account. Net amounts available
under the Contracts may also be invested in an investment company other than the
Trust if: (i) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of the Portfolios; or (ii) you five us forty-five (45)
days written notice of your intention to make such other investment company
available as a funding vehicle for the Contracts; or (iii) such other investment
company is available as a funding vehicle for the Contracts at the date of the
Agreement and you so inform us prior to our signing this Agreement (a list of
such invest companies appears on Schedule E to this Agreement); or (iv) we
consent in writing to the use of such other investment company.
(d) You shall be the designee for us for receipt of purchase
orders and requests for redemption resulting from investment in and payments
under the Contracts ("Instructions"). The Business Day on which such
Instructions are received in proper form by you and time stamped by the close of
trading will be the date as of which Portfolio shares shall be deemed purchased,
exchanged, or redeemed as a result of such Instructions. Instructions received
in proper form by you and time stamped after the close of trading on any given
Business Day will have been received on the next following Business Day. You
warrant that all orders, Instructions and confirmations received by you which
will be transmitted to us for processing on a Business Day will have been
received and time stamped prior to the Close of Trading on that Business Day.
Instructions we receive after 9 a.m. Eastern Standard Time shall be processed on
the next Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC and its current prospectus.
(e) We shall calculate the net asset value per share of each
Portfolio on each Business Day, and shall communicate these net asset values to
you or your designated agent on a daily basis as soon as reasonably practical
after the calculation is completed (normally by 6:30 p.m. Eastern time).
(f) You shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of business on the
next Business Day after we receive the purchase order. Payment shall be made in
federal funds transmitted by wire to the Trust or to its designated custodian.
(g) We will redeem any full or fractional shares of any Portfolio,
when requested by you on behalf of an Account, at the net asset value next
computed after receipt by us (or our agent) of the request for redemption, as
established in accordance with the provisions of the then current prospectus of
the Trust. We shall make payment for such shares in the manner we establish from
time to time, but in no event shall payment be delayed for a greater period than
is permitted by the 1940 Act. Payments for the purchase or redemption of shares
by you may be netted against one another on any Business Day for the purpose of
determining the amount of any wire transfer on that Business Day.
6
<PAGE>
(h) Issuance and transfer of the Portfolio shares will be by book
entry only. Stock certificates will not be issued to you or the Accounts.
Portfolio shares purchased from the Trust will be recorded in the appropriate
title for each Account or the appropriate subaccount of each Account.
(i) We shall furnish, on or before the ex-dividend date, notice to
you of any income dividends or capital gain distributions payable on the shares
of any Portfolio. You hereby elect to receive all such income dividends and
capital gain distributions as are payable on shares of a Portfolio in additional
shares of that Portfolio, and you reserve the right to change this election in
the future. We will notify you of the number of shares so issued as payment of
such dividends and distributions.
4. FEES, EXPENSES, PROSPECTUSES, PROXY MATERIALS AND REPORTS
(a) We shall pay no fee or other compensation to you under this
Agreement except as provided on Schedule F, if attached.
(b) We shall prepare and be responsible for filing with the SEC,
and any state regulators requiring such filing, all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional information
of the Trust. We shall bear the costs of preparation and filing of the documents
listed in the preceding sentence, registration and qualification of the Trust's
shares of the Portfolios.
(c) We shall use reasonable efforts to provide you, on a timely
basis, with such information about the Trust, the Portfolios and each Adviser,
in such form as you may reasonably require, as you shall reasonably request in
connection with the preparation of disclosure documents and annual and
semi-annual reports pertaining to the Contracts.
(d) At your request, we shall provide you with camera ready copy,
in a form suitable for printing, of portions of the Trust's current prospectus,
annual report, semi-annual report and other shareholder communications,
including any amendments of supplements to any of the foregoing, pertaining
specifically to the Portfolios. We shall delete information relating to series
of the Trust other than the Portfolios to the extent practicable. We shall
provide you with a copy of the Trust's current statement of additional
information, including any amendments or supplements, in a form suitable for you
to duplicate. The expenses of furnishing such documents shall be borne by you.
You shall bear the costs of distributing prospectuses and statements of
additional information to Contract owners.
(e) We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall reasonable require
for distribution to Contract owners who are invested in a designated subaccount.
You shall bear the costs of distributing proxy materials (or similar materials
such as voting solicitation instructions) to Contract owners.
7
<PAGE>
(f) You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
5. VOTING
(a) All Participating Insurance Companies shall have the
obligations and responsibilities regarding pass-through voting and conflicts of
interest corresponding to those contained in the Shared Funding Order.
(b) If and to the extent required by law, you shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii) vote
Trust shares for which no instructions have been received in the same proportion
as Trust shares of such Portfolio for which instructions have been received; so
long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. You reserve
the right to vote Trust shares held in any Account in your own right, to the
extent permitted by law.
(c) So long as, and to the extent that, the SEC interprets the
1940 Act to require pass-through voting privileges for Contract owners, you
shall provide pass-through voting privileges to Contract owners whose Contract
values are invested, through the Accounts, in shares of one or more Portfolios
of the Trust. We shall require all Participating Insurance Companies to
calculate voting privileges in the same manner and you shall be responsible for
assuring that the Accounts calculate voting privileges in the manner established
by us. With respect to each Account, you will vote shares of each Portfolio of
the Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. SALES MATERIAL, INFORMATION AND TRADEMARKS
(a) For purposes of this Section 6, "Sales literature or other
Promotional material" includes, but it not limited to, portions of the following
that use any logo or other trademark related to the Trust or Underwriter or
refer to the Trust or affiliates of the Trust: advertisements (such as material
published or designed for use in a newspaper, magazine or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, electronic communication or other public media),
sales literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees in
any media, and disclosure documents, shareholder reports and proxy materials.
8
<PAGE>
(b) You shall furnish, or cause to be furnished to us or our
designee, at least one complete copy of each registration statement, prospectus,
statement of additional information, private placement memorandum, retirement
plan disclosure information or other disclosure documents or similar
information, as applicable (collectively "disclosure documents"), as well as any
report, solicitation for voting instructions, Sales literature or other
Promotional materials, and all amendments to any of the above that relate to the
Contracts or the Accounts prior to its first use. You shall furnish, or shall
cause to be furnished, to us or our designee each piece of Sales literature or
other Promotional material in which the Trust or an Adviser is named, at least
fifteen (15) Business Days prior to its proposed use. No such material shall be
used unless we or our designee approve such material and its proposed use.
(c) You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser, other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Trust shares (as such registration statement and prospectus
may be amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in Sales literature
or other Promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
(d) We shall not give any information or make any representations
or statements on behalf of you or concerning you, the Accounts or the Contracts
other than information or representations contained in and accurately derived
from disclosure documents for the Contracts (as such disclosure documents may be
amended or supplemented from time to time), or in materials approved by you for
distribution, including Sales literature or other Promotional materials, except
as required by legal process or regulatory authorities or with your written
permission. We may use the names of you, the Accounts and the Contracts in our
sales literature and disclosure documents.
(e) Except as provided in Section 6(b), you shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Templeton" or any logo or other trademark relating to the Trust or the
Underwriter without prior written consent, and upon termination of this
Agreement for any reason, you shall cease all use of any such name or mark as
soon as reasonably practicable.
7. INDEMNIFICATION
(a) INDEMNIFICATION BY YOU
9
<PAGE>
1. You agree to indemnify and hold harmless the
Underwriter, the Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" and individually the
"Indemnified Party" for purposes of this Section 7) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with your
written consent, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of
shares of the Trust or the Contracts and
a. arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
disclosure document for the Contracts or in the Contracts themselves or
in sales literature generated or approved by you on behalf of the
Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Section 7), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived from
written information furnished to you by or on behalf of the Trust for
use in Company Documents or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
b. arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined below in Section 7 (b)) or
wrongful conduct of you or persons under your control, with respect to
the sale or acquisition of the Contracts or Trust shares; or
c. arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust Documents as
defined below in Section 7(b) or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on behalf of you;
or
d. arise out of or result from any failure by you to provide
the services or furnish the materials required under the terms of this
Agreement;
e. arise out of or result from any material breach of any
representation and/or warranty made by you in this Agreement or arise
out of or result from any other material breach of this Agreement by
you; or
f. arise out of or result from a Contract failing to be
considered a life insurance policy or an annuity Contract, whichever is
appropriate, under applicable
10
<PAGE>
provisions of the Code thereby depriving the Trust of its compliance
with Section 817(h) of the Code.
2. You shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Trust or Underwriter,
whichever is applicable. You shall also not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified you in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify you of any such claim shall not relieve
you from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
you shall be entitled to participate, at your own expense, in the defense of
such action. Unless the Indemnified Party releases you from any further
obligations under this Section 7(a), you also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from you to such party of the your election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and you will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
3. The Indemnified Parties will promptly notify you of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Trust shares or the Contracts or the operation
of the Trust.
(b) INDEMNIFICATION BY THE UNDERWRITER
1. The Underwriter agrees to indemnify and hold harmless
you, and each of your directors and officers and each person, if any, who
controls you within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually an "Indemnified Party" for purposes of
this Section 7(b)) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses") to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the shares of
the Trust or the Contracts and:
a. arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement, prospectus
11
<PAGE>
or sales literature of the Trust (or any amendment or supplement to any
of the foregoing) (collectively, the "Trust Documents") or arise out of
or are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement
or omission of such alleged statement or omission was made in reliance
upon and in conformity with information furnished to us by or on behalf
of you for use in the Registration Statement or prospectus for the
Trust or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
b. arise out of or as a result of statements or representations
(other than statements or representations contained in the disclosure
documents or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the
Trust, Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Trust shares;
or
c. arise out of any untrue statement or alleged untrue
statement of a material fact contained in a disclosure document or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to you by or on behalf of the Trust; or
d. arise as a result of any failure by us to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the qualification representation specified
above in Section 2(b)(7) and the diversification requirements specified
above in Section 2(b)(8); or
e. arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance with
the provisions of Sections 7(b)(2) and 7(b)(3) hereof.
2. The Underwriter shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to you or the Accounts, whichever
is applicable.
3. The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on
12
<PAGE>
any designated agent), but failure to notify the Underwriter of any such claim
shall not relieve the Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. Unless the Indemnified Party releases the
Underwriter from any further obligations under this Section 7(b), the
Underwriter also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the expenses of any additional
counsel retained by it, and the Underwriter will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
4. You agree promptly to notify the Underwriter of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with the issuance or sale of the Contracts or the
operation of each Account.
13
<PAGE>
(c) INDEMNIFICATION BY THE TRUST
1. The Trust agrees to indemnify and hold harmless you,
and each of your directors and officers and each person, if any, who controls
you within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7(c)) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Trust, which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, are related to
the operations of the Trust, and arise out of or result from any material breach
of any representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement by the
Trust; as limited by and in accordance with the provisions of Sections 7(c)(2)
and 7(c)(3) hereof. It is understood and expressly stipulated that neither the
holders of shares of the Trust nor any Trustee, officer, agent or employee of
the Trust shall be personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
2. The Trust shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against any Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to you, the Trust, the Underwriter or each Account,
whichever is applicable.
3. The Trust shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. Unless the Indemnified Party releases
the Trust from any further obligations under this Section 7(c), the Trust also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Trust to such party of the
Trust's election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the Trust
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
4. You agree promptly to notify the Trust of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with this
14
<PAGE>
Agreement, the issuance or sale of the Contracts, with respect to the operation
of the Account, or the sale or acquisition of shares of the Trust.
8. NOTICES
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth in Schedule G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. TERMINATION
(a) This Agreement may be terminated by any party in its entirety
or with respect to one, some or all Portfolios for any reason by sixty (60) days
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
(b) This Agreement may be terminated immediately by us upon
written notice to you if:
1. you notify the Trust or the Underwriter that the
exemption from registration under Section 3(c) of the 1940 Act no
longer applies, or might not apply in the future, to the unregistered
Accounts, or that the exemption from registration under Section 4(2) or
Regulation D promulgated under the 1933 Act no longer applies or might
not apply in the future, to interests under the unregistered Contracts;
or
2. either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that you have suffered a material adverse change in your
business, operations, financial condition or prospects since the date
of this Agreement or are the subject of material adverse publicity; or
3. you give us the written notice specified above in
Section 3(c) and at the same time you give us such notice there was no
notice of termination outstanding under any other provision of this
Agreement; provided, however, that any termination under this Section
9(b)(3) shall be effective forty-five (45) days after the notice
specified in Section 3(c) was given; or
4. upon your assignment of this Agreement without our
prior written approval.
(c) If this Agreement is terminated for any reason, except as
required by the Shared Funding Order or pursuant to Section 9(b)(1), above, we
shall, at your option, continue to make available additional shares of any
Portfolio and redeem shares of any Portfolio pursuant to all of the terms and
conditions of this Agreement for all Contracts in effect on the effective date
of termination of this Agreement. If this Agreement is terminated as required by
the Shared Funding Order, its provisions shall govern.
15
<PAGE>
(d) The provisions of Sections 2 (Representations and Warranties)
and 7 (Indemnification) shall survive the termination of this Agreement. All
other applicable provisions of this Agreement shall survive the termination of
this Agreement, as long as shares of the Trust are held on behalf of Contract
owners in accordance with Section 9(c), except that we shall have no further
obligation to sell Trust shares with respect to Contracts issued after
termination.
(e) You shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to your assets held in the
Account) except: (i) as necessary to implement Contract owner initiated or
approved transactions; (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"); or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, you shall promptly furnish to us the opinion of your counsel (which
counsel shall be reasonably satisfactory to us) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
you shall not prevent Contract owners from allocating payments to a Portfolio
that was otherwise available under the Contracts without first giving us ninety
(90) days notice of your intention to do so.
10. MISCELLANEOUS
(a) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions of this
Agreement or otherwise affect their construction or effect.
(b) This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) This Agreement shall be construed and its provisions
interpreted under and in accordance with the laws of the State of California. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder, to any orders of the SEC on behalf of the
Trust granting it exemptive relief, and to the conditions of such orders. We
shall promptly forward copies of any such orders to you.
(e) The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
(f) Each party to this Agreement shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, the NASD, and state insurance regulators) and shall permit such
authorities reasonable access to its books and records
16
<PAGE>
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
(g) Each party to this Agreement shall treat as confidential all
information reasonably identified as confidential in writing by any other party
to this Agreement, and, except as permitted by this Agreement or as required by
legal process or regulatory authorities, shall not disclose, disseminate, or use
such names and addresses and other confidential information until such time as
they may come into the public domain, without the express written consent of the
affected party. Without limiting the foregoing, no party to this Agreement shall
disclose any information that such party has been advised is proprietary, except
such information that such party is required to disclose by any appropriate
governmental authority (including, without limitation, the SEC, the NASD, and
state securities and insurance regulators).
(h) The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties to this Agreement are
entitled to under state and federal laws.
(i) The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided above in
Section 3(c).
(j) Neither this Agreement nor any rights or obligations created
by it may be assigned by any party without the prior written approval of the
other parties.
(k) No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties.
17
<PAGE>
IN WITNESS WHEREOF, each of the parties have caused their duly
authorized officers to execute this Agreement.
The Company: SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
The Trust: FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
By:
--------------------------------------------------
Name: Karen L. Skidmore
Title: Assistant Vice President, Assistant
Secretary
The Underwriter: FRANKLIN TEMPLETON DISTRIBUTORS, INC.
By:
--------------------------------------------------
Name: [ ]
Title: [ ]
18
<PAGE>
SCHEDULE A
THE COMPANY
Sun Life Assurance Company of Canada (U.S.)
[address]
A life insurance company organized as a corporation under Delaware law.
19
<PAGE>
SCHEDULE B
ACCOUNTS OF THE COMPANY
1. Name: Separate Account G
Date Established July 1996
SEC Registration Number: 811-____
20
<PAGE>
SCHEDULE C
AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST; INVESTMENT ADVISERS
<TABLE>
<CAPTION>
Franklin Templeton Variable Insurance Products Trust Investment Adviser
- ---------------------------------------------------- ------------------
<S> <C>
Templeton Growth Securities Fund Templeton Global Advisors Limited
</TABLE>
21
<PAGE>
SCHEDULE D
CONTRACTS OF THE COMPANY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT Sun Life Corporate VUL
NAME
- -------------------------------------------------------------------------------------------
REGISTERED(Y/N)
- -------------------------------------------------------------------------------------------
SEC REGISTRATION
NUMBER
- -------------------------------------------------------------------------------------------
REPRESENTATIVE FORM VUL-COLI-97
NUMBERS
- -------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Separate Account G/
NAME/DATE July 1996
ESTABLISHED
- -------------------------------------------------------------------------------------------
SEC REGISTRATION
NUMBER
- -------------------------------------------------------------------------------------------
PORTFOLIOS AND Templeton Growth
CLASSES-ADVISER Securities Fund Class 1-
Templeton Global
Advisors Limited
- -------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
SCHEDULE E
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
[names of other portfolios]
23
<PAGE>
SCHEDULE F
RULE 12b-1 PLANS
24
<PAGE>
SCHEDULE G
ADDRESSES FOR NOTICES
To the Company: Sun Life Assurance Company of Canada (U.S.)
[address]
[address]
Attention: [name, title]
To the Trust: Franklin Templeton Variable Insurance Products Trust
777 Mariners Island Boulevard
San Mateo, California 99404
Attention: Karen L. Skidmore
[title]
To the Underwriter: Franklin Templeton Distributors, Inc.
777 Mariners Island Boulevard
San Mateo, California 99404
Attention: [name, title]
25
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SCHEDULE H
SHARED FUNDING ORDER
26
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[LOGO] SUN LIFE One Sun Life Executive Park
OF CANADA (U.S.) Wellesley Hills, MA 02481
Tel: (781) 237-6030
April 26, 2000
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Re: Registration Statement of Sun Life of Canada (U.S.)
Variable Account G on Form S-6, File No. 333-13087
Dear Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 6 to the above-referenced registration statement (the
"Registration Statement") of Sun Life of Canada (U.S.) Variable Account G (the
"Variable Account"), a separate account of Sun Life Assurance Company of Canada
(U.S.), a Delaware corporation (the "Company"), with respect to the proposed
sale of an indefinite amount of flexible premium variable universal life
insurance policies (the "Policies") described in the prospectus (the
"Prospectus") contained in the Registration Statement.
I have examined all such corporate records of the Company and such other
documents and laws as I consider necessary as a basis for this opinion. On the
basis of such examination, it is my opinion that:
1. The Company is a corporation in good standing duly organized and validly
existing under the laws of the state of Delaware.
2. The Variable Account has been duly established by the Company under the
laws of the State of Delaware.
3. Assets allocated to the Variable Account will be owned by the Company,
and the Policies provide that the portion of the assets of the Variable Account
equal to the reserves and other Policy liabilities with respect to the Variable
Account will not be chargeable with liabilities arising out of any other
business the Company may conduct.
4. When issued and sold as described in the Prospectus, the Policies will
be duly authorized and will constitute validly issued and binding obligations of
the Company in accordance with their terms.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Roy P. Creedon
Roy P. Creedon
Assistant Vice President and Senior Counsel
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Exhibit 6
[Letterhead of Sun Life of Canada]
April 28, 2000
Gentlemen:
In my capacity as Product Officer for Sun Life Assurance Company of Canada, I
have provided actuarial advice concerning: (a) the preparation of a
post-effective amendment to the registration statement for Sun Life of Canada
(U.S.) Variable Account G filed on Form S-6 with the Securities Exchange
Commission under the Securities Act of 1933 (the "Registration Statement")
regarding the offer and sale of flexible premium variable universal life
insurance policies (the "Policies"); and (b) the preparation of policy forms
for the Policies described in the Registration Statement.
It is my professional opinion that:
the illustrations of cash surrender values, account values, death
benefits and accumulated premiums in the Appendix to the prospectus
contained in the Registration Statement, are based on the assumptions
stated in the illustrations, and are consistent with the provisions of
the Policies. The rate structure of the Policies has not been designed
so as to make the relationship between premiums and benefits, as shown
in the illustrations, appear to be more favorable to prospective
purchasers of Policies aged 45 in the rate classes illustrated than to
prospective purchasers of Policies, for males or females, at other ages.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Experts" in the
prospectus.
Very truly yours,
/s/ JOHN E. COLEMAN
John E. Coleman, FSA, MAAA
Product Officer
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INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 6 to Registration
Statement No. 333-13087 of Sun Life of Canada (U.S.) Variable Account G on
Form S-6 of our report dated February 10, 2000 accompanying the financial
statements of Sun Life of Canada (U.S.) Variable Account G, and to the use of
our report dated February 10, 2000 accompanying the statutory financial
statements of Sun Life Assurance Company of Canada (U.S.), which includes
explanatory paragraphs relating to the use of statutory accounting practices
which differ from generally accepted accounting principles, appearing in the
Prospectus, which is part of such Registration Statement, and to the
incorporation by reference of our report dated February 10, 2000, appearing
in the Annual Report on Form 10-K of Sun Life Assurance Company of Canada
(U.S.) for the year ended December 31, 1999, which includes explanatory
paragraphs relating to the use of statutory accounting practices which differ
from generally accepted accounting principles.
We also consent to the reference to us under the heading "Accountants" in
such Prospectus.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 2000
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SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that William W. Stinson, whose signature
appears below, constitutes and appoints Edward M. Shea, Sandra DaDalt, Ellen B.
King, Peter F. Demuth, C. James Prieur, and James A. McNulty, III, and each
of them, his attorneys-in-fact, each with the power of substitution, for him
in any and all capacities, to sign:
(i) the Registration Statements of Sun Life Assurance Company of
Canada (U.S.), and any amendments thereto, under the Securities Act
of 1933;
(ii) the Registration Statements under the Securities Act of 1933 and
the Investment Company Act of 1940 of any of Sub Life of Canada
(U.S.) Variable Account C, Sun Life of Canada (U.S.) Variable
Account D, Sun Life of Canada (U.S.) Variable Account F, and Sun
Life of Canada (U.S.) Variable Account I or any other variable
account established by Sun Life Assurance Company of Canada (U.S.)
(the "Company"), and
(iii) any and all instruments, including applications for exemptions from
such Acts, which said attorneys-in-fact deem necessary and
advisable to enable the Company or any variable account of the
Company to comply with the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and the rules and
regulations and requirements of the Securities and Exchange
Commission in respect thereof;
and to file the same, with exhibits thereto, and other amendments in
connection therewith with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact of his
substitute or substitutes may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
shown.
/s/ William W. Stinson
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Dated: March 20, 2000
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Exhibit 9
Representation of Counsel Pursuant to Rule 485(b)
I, Roy P. Creedon, in my capacity as counsel to Sun Life of Canada
(U.S.) Variable Account G (the "Account"), have reviewed this Post-Effective
Amendment to the Registration Statement which is being filed pursuant to
paragraph (b) of Rule 485 under the Securities Act of 1933. Based upon my review
of this Post-Effective Amendment and such other material relating to the
operation of the Account as I deemed relevant, I hereby certify as of the date
of the filing of this Post-Effective Amendment, that the Post-Effective
Amendment does not contain disclosure which would render it ineligible to become
effective pursuant to paragraph (b) of Rule 485.
I hereby consent to the filing of this representation as a part of this
Post-Effective Amendment to the Registration Statement of the Account.
/s/ ROY P. CREEDON
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Roy P. Creedon
April 25, 2000
