Using accumulated cash surrender values
As a policyowner, you can use your policy’s accumulated cash surrender values (guaranteed or non-guaranteed) at any time.
You have multiple options:18
1
Withdraw the non-guaranteed cash surrender value19
You can withdraw some or all of the non-guaranteed cash surrender value generated by paid-up additions. The amount you withdraw reduces the cash surrender value accordingly. The death benefit generated by the paid-up additions is reduced by the same proportion as the withdrawal you requested.
2
Request a partial or total surrender19
Partial surrender of basic insurance is permitted; the guaranteed death benefit is reduced by the same proportion as the guaranteed cash surrender value requested.
Total surrender of the policy is possible by terminating your insurance.
3
Apply for a policy loan19
You can request a loan of up to 100% of your policy’s cash surrender values, less one year’s interest on the loan requested. The available cash surrender value correspond to total cash surrender value less any outstanding loan balance.
Loan repayments can be made at any time. Outstanding policy loans, including interest20, will be deducted from the amount payable upon death or the payment on surrender.
4
Ask for premium payments to stop and get reduced paid-up insurance
If you choose to stop paying premiums, you could use the guaranteed cash surrender value to purchase reduced paid-up insurance that would allow you to keep coverage for life for a lower amount than the initial coverage. The cash surrender values are then used as a single premium for this new insurance amount. The reduced paid-up insurance amounts are shown in the policy.
You may be entitled to dividends under the reduced paid-up insurance. These dividends are credited based on the dividend scale in effect at the time. The reduced paid-up insurance amounts associated with the basic insurance are guaranteed and vary by product.
How your dividend option changes when you purchase reduced paid-up insurance:
- The enhanced insurance dividend option is replaced by the paid-up additions option.
- The annual premium reduction dividend option is replaced by the dividend on deposit option.
- The additional deposit option is no longer available. Therefore, you won’t be able to continue making deposits.
Taxation
The death benefit is generally non-taxable for the beneficiary (under Canada’s Income Tax Act). A test is conducted every year to make sure the policy will maintain its tax-exempt status. Desjardins Insurance reserves the right to take the necessary measures, such as surrendering paid-up additions, refusing or adjusting the amount of deposits made using the additional deposit option, or denying any changes you may request. Once these measures are no longer needed, deposits can resume based on the scheduled or eligible amount, without losing tax exemption status.
18 Possible uses vary based on the product or dividend option chosen. 19 There may be tax consequences. 20 The rate is variable.