SIP and TIP - Surrender Values

The cash surrender value is determined using a formula that varies depending on the term selected. The penalty applicable to the surrender depends on the remaining period until maturity and the GIC rate offered for a term equal to the remaining period. The value of the penalty, which corresponds to a market value adjustment, cannot be negative.
 

• Surrender Value Formula
• Example 1
• Example 2
• Fee Free Periodic Payments
   

The following formula is used to determine the cash surrender value:

SIP and TIP, contracts of less than 7 years
Surrender value current value [(Compound interest rate on deposit with similar remaining term* 1.5 % -2.4 %) number of years to maturity remaining current value]

* Rounded up to the next term available

SIP and TIP, contracts of seven years or more
Surrender value current value [(Compound interest rate on deposit with similar remaining term* 1.5 % -2.6 %) number of years to maturity remaining current value]

* Rounded up to the next term available

Example 1

Investment of $1,000 in the campaign of January 1, 2002, 5½-year term, surrendered on February 15, 2005.

Date	Current Value	Remaining Period	3-year GIC Rate
January 1, 2002	$1,000	5,5	-
January 1, 2005	$1,200	2,5	-
February 15, 2005	$1,220	2,375	3,5%

Surrender value on February 15, 2005:

$1,220  [(0.035  0.015  0.024)  2,375) 1,220)  $1,144.67

Example 2

Investment of $1,000 in the campaign of January 1, 2002, 8-year term, surrendered on
February 15, 2005.

Date	Current Value	Remaining Period	3-year GIC Rate
January 1, 2002	$1,000	8	-
January 1, 2005	$1,210	5	-
February 15, 2005	$1,240	4,875	3,8%

Surrender value on February 15, 2005:

$1,240  [(0.038  0.015  0.026)  4.875)  1,240)  $1,076.79

Fee Free Periodic Payments

As of April 1, 2005, periodic payments from a RRIF or a LIF, up to an annual maximum of 12% for SIP and TIP, are not subjected to a market value adjustment.

To calculate the maximum periodical payments from a RRIF or a LIF, we use:
 

• For the first year: 12% of the initial deposit value
• For subsequent years: 12% of the current value as at January 1
   

One must note that these annual maxima are non-cumulative and are not adjusted to account for any deposit made during the calendar year.

Specific surrender rules apply to these periodic payments:
 

• according to the product priority order:
   

1. daily interest fund
2. guaranteed interest fund
3. SIP / TIP / AAP
4. special daily interest (pending a transfer)
    

• then, within each product category, the "first in, first out" (FIFO) method is used, according to deposit/campaign dates (terms are not taken into consideration).
   

Fee Free Periodic Payments
   13 pages - 177 kb

Here are some additional examples which illustrate how the fee-free periodic payments are calculated.

Periodic payments (examples)
   4 pages - 139 kb