ivari Compensation for Advisors Software User Guide

Compensation guide
for Advisors
August 2023

Compensation for Advisors Software

IMPORTANT: DISCLOSURE REQUIREMENTS FOR ADVISORS
You are required to provide a Conflict of Interest Disclosure to every client in advance of submitting an application for insurance. A copy of this Disclosure must also be kept in your client file. A conflict of interest would include any situation where your personal interest may conflict, or interfere, with your client’s interests. As a licensed independent insurance advisor, it is your responsibility to provide clients with this disclosure and to ensure that they understand it fully. It is also your responsibility to provide, in writing, to your client and to ivari, any real, perceived or potential conflicts of interest as soon as a conflict of interest is noted. Your clients must understand you will be receiving compensation (commission) from ivari when the sale of insurance is complete.

Your advisor compensation guide
ivari offers one of the best compensation plans in the industry today.
This guide contains detailed information about compensation for:

• life products, including universal life and term
• critical illness products
• investment products and segregated funds, including Guaranteed Lifetime Withdrawal Benefit products, and guaranteed interest accounts, daily interest accounts and annuities

Please take the time to read and understand the information contained within this guide. At ivari, we offer you more than a top-notch compensation package. You can count on us for a comprehensive portfolio of great products, responsive advisor support and the backing of a strong financial company.
If you have questions about the information in this guide, please call your distributor office.
This compensation guide applies only to the plans noted in this guide. ivari has made reasonable efforts to ensure the accuracy of this guide and reserves the right to correct any errors or omissions contained in these materials.
The information contained within this document is current to the date of publication and is subject to change.

LIFE AND CRITICAL ILLNESS INSURANCE PRODUCTS

Universal life insurance

For a listing of terminology used in the universal life commission information, please refer to “Definition of terms,” page 6.

First-year and renewal commission rates

Tier 1
Commissionable minimum premium| 65%| 60%| 5%
Tier 2
Tier 1 to commissionable maximum premium| 5.%
Tier 3
Tier 2 to maximum premium estimate| 1.%
Excess of maximum premium estimate| Side account: 0.25% annually, paid on calendar quarterly basis
Asset-based commission| Begins in year 6, 1/12 of 0.125% of total net fund value, paid monthly based on the policy effective date
Service fee based on COI” and policy fee| Begins in year 11,1% of monthly COI and policy fee paid monthly based on the policy effective date

† First-Year Commission.
†† Cost of Insurance.

monthly
Universal Life Riders ‡| Policy year
---|---
Term Select™ Riders| 1| 2-5| 6+
T10| 40%| 3%| 3%
T20| 50%
T30| 50%
TERM Select 10 Exchange Program: T10 to T20.| 25%| 3%| 3%
TERM Select 10 Exchange Program: T10 to T30*| 25%| 3%| 3%

• Only available if the exchange occurs on or after the 1st policy anniversary and up to and including the 5th policy anniversary and in accordance with program rules. Term Exchange is done at attained age. At the time of the exchange, regular Term 20 and Term 30 maximum issue ages apply. Commission is based on the entire T20 or T30 annual premium.
  ‡ Commission for the Universal Life Riders is paid based on the sum of the annual cost of insurance, annual table extra ratings and permanent premium ratings applicable to the riders.

Critical Illness
Protection Riders
25 conditions & 4 conditions| 1| 2+
T10| 45%| 3.%
T20| 45%
T65| 45%
T100•| 30%

‡ Commission for the Universal Life Riders is paid based on the sum of the annual cost of insurance, annual table extra ratings and permanent premium ratings applicable to the riders.

• Only available on conversion

Waiver and Payor Waiver
– Waiver of Monthly Deductions
– Waiver of Planned Premiums
– Payor Waiver of Planned Premium
– Payor Waiver of Monthly Deductions| 37.50%| 5%| 5%| 0%

How universal life commissions are paid

First-Year Commissions (FYC) – at issue

• When a policy is put in force, commissions are advanced for the total anticipated annualized Planned Periodic Premiums (PPP), up to and including Tier 3.
• Once the amount of advanced commissions equals the amount of earned commissions, ivari will pay additional FYC on an as-earned basis, up to and including Tier 3.
• If, by the end of the first policy year, ivari receives premiums that are less than the amount on which we advanced commission, an unearned chargeback will apply (see “First-year anniversary reconciliation chargeback of advanced commissions,” page 5).
• FYC may be eligible for a bonus.

Ratings
Ratings are classified in three ways.

• Table extra ratings (or multiple extra ratings): FYC is payable based on Tier 1 commission rates.
  A) Rated level COI policies: Tier 1 commissionable minimum premium (“Tier 1 premium”) is increased by the amount of the rated level premium.
  B) Rated Annual Renewable Term (ART) COI policies: Tier 1 premium is increased by 150% of the rated ART premium.

• Flat extra ratings of duration greater than five years: FYC is payable based on Tier 1 commission rates.

• Flat extra ratings of duration less than or equal to five years: FYC is payable based on Tier 2 commission rates.

Commission premium sequencing
In situations where there is more than one insurance coverage on a policy, the allocation of commissionable premium is determined by the proportion of:

• Tier 1 premium for each UL coverage
• the rider/optional benefit premium for each applicable coverage in comparison with the total amount of commissionable minimum premium

FYC for coverages added after issue
First-year annualized commission is payable when a new coverage is added to an existing universal life policy.
Commissions will be generated and advanced based on anticipated premiums. The commission is based on the sequencing and the allocation of commissionable premium. A first-year reconciliation chargeback will apply if sufficient premiums are not received within the first year after the increase in coverage.

Example:
The following example illustrates how ivari will pay commissions when an ART coverage is added after issue. This example breaks down what portion of annualized premium receives FYC and what portion receives renewal commissions. For the purpose of this example, $6,000 of premium is received, the policy is in its third year when the new coverage is added, and the commissionable minimum premium is $1,000 for the existing coverage and $3,000 for the new coverage.

| Commissionable
**minimum premium*| Commissionable
premium allocation %| How a $6,000 premium
payment is allocated| Commission**
---|---|---|---|---
UL existing coverage –
in policy year 3| $1,000| 25%| $1,500|  $75  renewal
($1,500 x 0.05)
UL new coverage –
at issue| $3,000| 75%| $4,500|  $2,025 FYC
($3,000 x 0.65) = $1,950
($1,500 x 0.05) = $75
Total| $4,000| 100%| $6,000| $2,100

• Tier 1 for universal life coverages or rider/optional benefit premium.

Renewal commissions

• Renewal commissions are paid when renewal premiums are received, and will be paid on an as-earned basis.
• Renewal commissions will be paid at the policy anniversary upon transfer of funds from the Side Account to an applicable universal life policy.

Service fees
Service fees are paid as a percentage of the COI and policy fee which have been deducted as part of the monthly deductions. Service fees are not contingent on a premium payment. They are paid monthly based on the policy effective date.

Universal life chargebacks and adjustments

First-year anniversary reconciliation chargeback of advanced commissions

• If the premiums paid in the first policy year are less than the anticipated PPP, 100% of the unearned FYC will be charged back at the first policy anniversary.
• Chargebacks will also apply to any bonuses paid.

Second-year anniversary commission chargeback

• The first-year anniversary reconciliation chargeback of advanced commissions is applied before the second-year anniversary commission chargeback calculation.
• On the second policy anniversary, if the average commissionable premium paid during the first two policy years is:
  – greater than or equal to the Tier 1 premium for the first policy year, no second-year commission chargeback will be applied; or
  – less than the Tier 1 premium and the premium on which FYC was paid, a chargeback will be applied.
  The amount of the chargeback will be determined according to the following formula:

Chargeback = (A – B) x C
A = commissionable premium paid up to Tier 1 in the first year
B = average commissionable premium received in the first two policy years
C = applicable commission rate (e.g., 65% for ivari Universal ART coverage Tier 1 commissions)

Example:

| First-year paid premium| Second-year paid premium
---|---|---
Tier 1| $4,000| $2,200
Tier 2| $200| $0
Tier 3| $0| $0
Average premium in first two years of coverage: ($6,400 ÷ 2) = $3,200
Chargeback = (A – B) x C ($4,000 – $3,200) = $800 $800 x 65% = $520

• Chargebacks will also apply to any bonuses paid.

Chargebacks for surrenders, lapses and exchanges
See page 9.

Definition of terms

Bonus(es) – any amount paid to the advisor in excess of commissions payable pursuant to the “First-year and renewal commission rates” sections of this guide. The eligibility requirements and the amount of any bonus are determined by an agreement between the advisor and the distributor, to which ivari is not a party.
Commissionable minimum premium varies by cost of insurance (COI) option (ART versus level COI), smoker classification and by rate band and includes:

• the annual policy fee
• annual table extra rating deductions (level or Annual Renewable Term (ART) depending on COI option)
• annual flat extra deductions for a period greater than five years

Commissionable maximum premium varies by cost of insurance (COI) option (ART versus level COI), smoker classification and by rate band and is the maximum commissionable amount for Tier 2. This amount is lower than the maximum premium estimate.

Maximum premium estimate is calculated when the policy is issued, at the beginning of each policy year and when a material change is made to a policy. In addition to being the amount that is used to determine how much premium may be accepted into a universal life policy as premiums are received throughout the year, the maximum premium estimate is also the maximum commissionable amount for Tier 3. The maximum premium estimate is based on the then-current tax-exempt testing requirements, the policy status and the projected accumulation rate for the total fund value.
Tier(s) – the predetermined split of the maximum premium estimate used to allocate annualized policy premium for different commission rates.

Traditional life insurance

First-year and renewal commission rates

| Policy year
---|---
| FYC| Years 2+
TermSelect (base & rider)| T10: 40%
T20: 50%
T30 with SelectOptions: 50%| 3%
3%
3%
TermSelect 10 Exchange Program: T10 to T20| 25%| 3%
TermSelect 10 Exchange Program: T10 to T30| 25%| 3%

Only available if the exchange occurs on or after the 1st policy anniversary and up to and including the 5th policy anniversary and in accordance with program rules. Term Exchange is done at attained age. At the time of the exchange, regular Term 20 and Term 30 maximum issue ages apply. Commission is based on the entire T20 or T30 annual premium.
Note:** TermSelect 30 with SelectOptions is only available as a rider on a TermSelect 30 with SelectOptions base policy.

| Policy year
---|---
Optional Benefits| FYC| FYC
TermSelect 10
**Exchange Program*| Renewal
2–3| Renewal
4–5| Renewal
6+
Accidental Death and Dismemberment| 37.50%| 0.50%| 15%| 10%| 0%
Children’s Insurance Rider| 38%| 1%| 15%| 10%| 0%
Payor Waiver of Premiums| 38%| N/A| 5%|  5%| 0%
Waiver of Premiums| 37.50%| N/A|  5%|  5%| 0%**

• The issue date for any optional benefits included in the new coverage under the TermSelect 10 exchange program resets to the date of exchange.
  ** Does not apply to TermSelect 10 Exchange Program.

How traditional life insurance commissions are paid
First-Year Commissions (FYC)

• When a policy is put in force, commissions are advanced for the total annualized premium.
• If, by the end of the first policy year, ivari receives premiums that are less than the amount we advanced commissions on, an unearned chargeback will apply. (See page 9.)
• FYC may be eligible for a bonus.

Renewal commissions

• Renewal commissions are paid when renewal premiums are received, and will be paid on an as-earned basis.

Premium ratings
(also referred to as “Flat” or “Multiple Extras” or “Table Ratings”)

• Permanent ratings that apply for greater than five years: full FYC is paid on these premiums.
• Temporary ratings that apply for less than or equal to five years: no commission is paid on these premiums.

FYC for coverages added after issue

• First-year annualized commission is payable when a new coverage is added to an existing TermSelect policy.
  This commission is payable when a new premium payment is received.

Critical Illness Protection Standalone

First-year and renewal commission rates

| Policy year
---|---
| FYC| Years 2+
Critical Illness Protection
25 conditions & 4 conditions
(base & additional coverages)| CIP T10: 45%
CIP T20: 45%
CIP T65: 45%
CIP T100*: 30%| 2.5%
2.5%
2.5%
2.5%

• Only available on conversion.

| Policy year
---|---
Optional Benefits| FYC| Renewal 2–3| Renewal 4–5| Renewal 6+
Payor Waiver of Premiums| 37.50%| 5%| 5%| 0%
Waiver of Premiums| 38%| 5%| 5%| 0%

How critical illness protection commissions are paid
First-Year Commissions (FYC) ) – at issue

• When a policy is put in force, commissions are advanced for the total annualized premium.
• If, by the end of the first policy year, ivari receives premiums that are less than the amount we advanced commissions on, an unearned chargeback will apply. (See page 9.)
• FYC may be eligible for a bonus.

Renewal commissions

• Renewal commissions are paid when renewal premiums are received, and will be paid on an as-earned basis.

Premium ratings
(also referred to as “Flat” or “Multiple Extras” or “Table Ratings”)

• Permanent ratings that apply for greater than five years: full FYC is paid on these premiums.
• Temporary ratings that apply for less than or equal to five years: no commission is paid on these premiums.

FYC for coverages added after issue

• First-year annualized commission is payable when a new coverage is added to an existing Critical Illness
  Protection policy. This commission is payable when a new premium payment is received.

General information for all life and critical illness plans

Chargebacks for surrenders, lapses and exchanges

• A chargeback of FYC will apply to all coverages that are surrendered, exchanged and/or lapsed within the first 24 months of the effective date of the applicable coverage. For any policies exchanged under the TermSelect 10 exchange program, there is no chargeback of T10 compensation that was paid.
• Within the first 12 months from issuance of the coverage, the chargeback is 100% of the unearned annualized FYC and a percentage of the first-year earned commission at the rate specified below in the Earned Commission Chargeback Schedule.
• Between the 13th and 24th months from issuance of the coverage, the chargeback is a percentage of the first-year earned commission at the rate specified below in the Earned Commission Chargeback Schedule.
• Chargebacks will also apply to any bonuses paid.

Earned Commission Chargeback Schedule
All universal life plans

Months (in force)
premium paid| Chargeback as a
percentage of first-year
earned commission| Months (in force)
premium paid| Chargeback as a
percentage of first-year
earned commission
---|---|---|---
1 to 5| 100%| 15| 85%
6| 100.00%| 1600%| 80%
7| 100%| 1700%| 75%
8| 100%| 1800%| 70%
9| 100.00%| 19| 65%
10| 100%| 20| 60%
11| 100%| 21| 55%
12| 100%| 22| 50%
13| 95%| 23| 45%
14| 90%| 24| 0%

Earned Commission Chargeback Schedule
All Term and Critical Illness plans

Months (in force)
premium paid| Chargeback as a
percentage of first-year
earned commission| Months (in force)
premium paid| Chargeback as a
percentage of first-year
earned commission
---|---|---|---
1 to 5| 100%| 15| 50%
6| 95.00%| 1600%| 45%
7| 90%| 1700%| 40%
8| 85%| 1800%| 35%
9| 80.00%| 19| 30%
10| 75%| 20| 25%
11| 70%| 21| 25%
12| 65%| 22| 25%
13| 60%| 23| 25%
14| 55%| 24| 0%

Adjustments and policy changes

Commission adjustments for decreased face amount/benefit

• Commission adjustments will be carried out when a reduction in face amount/benefit takes place within the first 24 months following the effective date of the applicable coverage.
• The adjustment is equal to the difference between the FYC paid and FYC that would have been paid had the reduced face amount/benefit been issued originally, multiplied by the applicable rates as specified in the preceding Earned Commission Chargeback Schedule.

Conversions and replacements
Commissions will be adjusted per the below table.

Conversion from term to permanent plans

Old policy months in force| Percentage of FYC and bonus chargeback on old policy| FYC paid on new policy
---|---|---
0 to 25 months*| Per chargeback schedule under which the policy was sold| Full commission

25 months| N/A| Full commission

• Critical Illness Protection Riders may be converted to a new standalone policy of eligible critical illness insurance commencing on the 2nd coverage anniversary.

Replacements

old policy*
37 to 48 months| Reduction of FYC on new policy by 66.7%
49 to 60 months| Reduction of FYC on new policy by 33.3%

60 months| Full commission

• If a TermSelect 10 exchange occurred prior to the replacement, the ”FYC earned on old policy” will consist of the original Term 10 policy FYC plus the exchanged Term 20 or Term 30 policy FYC. If the difference between the full FYC on the new policy and the FYC earned on the old policy is negative, no commission will be charged back.

Vesting

• Please note that compensation for life and critical illness products is vested. Upon receipt of an authorized client request for a new servicing advisor, ivari will process the requested change, and future compensation will continue to be paid to the original writing advisor. A change for servicing only will be processed for the new advisor.
• Subject to the advisor’s contract, renewal commissions are at the rates indicated in this compensation guide will continue to be paid to the advisor after termination of the advisor’s contract.
• To reassign commissions, the signature of both the original advisor and the new advisors are required to ensure acceptance of responsibility.

Note: Subject to the advisor’s contract, changes to compensation rates may be made with written notification.

Split of the Critical Illness Protection Rider and Additional Coverage from the base insurance policy

• Please note that no first year compensation will be paid upon the split of the Critical Illness Protection Rider from the base life product or the split of a Critical Illness Protection Additional Coverage from the base critical illness standalone product.

TermSelect 10 Exchange Program

• If the exchange is done within the chargeback period of the Term 10 coverage, there is no chargeback of
  Term 10 compensation that was paid.

• The subsequent Term 20 or Term 30 coverage is subject to the chargeback period. Regular chargeback rules apply if the Term 20 or Term 30 coverage is terminated within 24 months of the exchange.

INVESTMENT PRODUCTS

• All existing segregated fund, Guaranteed Interest Account (GIA) and Daily Interest Account (DIA) products that are available under the investment product line of business:
  – Are closed to new policies/new sales
  – Are closed to additional deposits (including PACs)

• Moving from an ISC unit to a DSC unit is not permitted.

• Transfer/switch between funds are permitted.

• ivari’s Single Premium Immediate Annuity (SPIA) remains available for new sales.

• The imaxxGIF internal transfer program is still available.

Segregated funds

ivari Guaranteed Investment Funds and Five for Life

| Deferred Sales Charge (DSC) For existing DSC Schedules| Initial Sales Charge (ISC)
---|---|---
Deposit commissions*| 3.75% of the value of each deposit| 75% of negotiated ISC, based on deposit amount
Trailer (service fee) commissions
| Deferred Sales Charge (DSC)
For existing DSC Schedules| Initial Sales Charge (ISC)
Money market| N/A| 0.375% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis,
pro-rated daily
Bond| 0.1875% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis, pro-rated daily| 0.5625% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis,
pro-rated daily
All other funds| 0.375% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis, pro-rated daily| 0.75% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis,
pro-rated daily

• ISC is negotiated between advisor and client to a maximum of 5%.
  ** Applicable to fund movement from DSC units to ISC units within the same contract. This will be treated as a sell and a buy. This transaction will impact guarantees. Moving from an ISC unit to a DSC unit is not permitted.

Commissions paid via a dealership will be subject to that dealer’s commission payment grid and may not be the same as the above plan.

imaxxGIF
The imaxxGIF internal transfer program, which is only available for existing registered and locked‐in (i.e. RSP, LIRA, RIF, LIF, PRIF and RLIF) GROWSafe 94, IMS I, II, & III segregated fund contracts, is still available. The internal transfers are processed as a Transfer in Kind (TIK) into a new registered imaxxGIF contract.

imaxx Guaranteed Investment Funds (GIFs)

| Deferred Sales Charge (DSC)
For existing DSC Schedules| Initial Sales Charge (ISC)
---|---|---
Deposit commissions*| 3.75% of the value of each deposit| 75% of negotiated ISC, based on deposit amount
Trailer (service fee) commissions| 0.375% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis; pro-rated daily| 0.75% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis;
pro-rated daily

ivari CI Guaranteed Investment Portfolios (GIPs)

| Deferred Sales Charge (DSC)
For existing DSC Schedules| Initial Sales Charge (ISC)
---|---|---
Deposit commissions*| 4.50% of the value of each deposit| 75% of negotiated ISC, based on deposit amount
Trailer (service fee) commissions| 0.375% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis;
pro-rated daily| 0.75% of the unit value, per year, while the
contract is in force; paid on calendar quarter basis;
pro-rated daily

• ISC is negotiated between advisor and client to a maximum of 5%.
  Deposit maturity top-up will be defaulted to the imaxxGIF Money Market fund ISC 0%. Applicable for transfer of assets from GIA, DIA to another investment option (i.e. Segregated Fund) within the same contract (imaxxGIF contracts up to 2009 provide for Segregated Fund, DIA or a GIA under the same contract).
  Note:** Fund movement from DSC units to ISC units within the same contract is processed as a sell and a buy. This transaction will impact guarantees. Moving from an ISC unit to a DSC unit is not permitted.

Commissions paid via a dealership will be subject to that dealer’s commission payment grid and may not be the same as the above plan.
For more information on your compensation, please contact your compensation administrator.

Compensation Reversals

• If the client exercises the right to rescind a particular allocation, transfer or investment decision, a 100% reversal of the compensation for that allocation will apply.
• This process may also apply to other reversals.

Guaranteed Interest Accounts and Daily Interest Accounts

• Guaranteed Interest Account (GIA) commission is paid on each renewal 1.

| Interest Accumulation contract| Harvest contract 2
---|---|---
| Commission rate of the value of renewal 1| Commission rate of the value of renewal 1
| Investment term| Redeemable| Non-redeemable| Investment term| Redeemable 2
Guaranteed Interest
Account| 6 month
Years 1–5
Years 6–10
Years 11–25| 0.2%
0.4%
0.1%
0.033%| 0.1%
0.2%
0.05%
0.0165%| Years 1–5
Years 6–10| 0.4%
0.2%
Daily Interest Account| N/A| N/A| N/A| N/A| N/A

1. Under the following scenario, commission is also payable: transfer of assets from Segregated Funds to another investment option (GIA, DIA) within the same contract. Note: Some contracts may not provide for Segregated Funds, DIA or a GIA under the same contract.
2. The Harvest contract is only available as a non-registered and redeemable plan.
   The total commission on a Guaranteed Interest Account is the sum of the rates relating to the applicable investment period. (See example below.)

Examples:

Interest Accumulation GIA (redeemable) for
10 years: (5 x 0.4%) + (5 x 0.1%) = 2.5%
Interest Accumulation GIA (non-redeemable)
for 10 years: (5 x 0.2%) + (5 x 0.05%) = 1.25%| Interest Accumulation GIA (redeemable) for 20 years:
(5 x 0.4%) + (5 x 0.1%) + (10 x 0.033%) = 2.83%
Harvest contract for 7 years:
(5 x 0.4%) + (2 x 0.2%) = 2.4%

Single Premium Immediate Annuity (SPIA)

General information for all investment products

Funds sold via dealerships
Commissions paid via dealership will be subject to that dealer’s commission payment grid and may not be the same as the above plan.
Investment product compensation is non-vested. Compensation is payable to the distributor/advisor servicing the client’s accounts as of the date of compensation disbursement.

Registered and non-registered plans
The investment commission rates apply to GIAs, DIAs, SPIAs and segregated funds, whether held in registered or non-registered plans.

Vesting
Please note that investment products are not vested for compensation purposes. Upon receipt of an authorized client request for a new servicing advisor, ivari will process the requested change, and future compensation, including deposit commissions, and service fees, will become payable to the new designated advisor, either directly or via a dealership.
Note: Subject to the advisor’s contract, changes to compensation rates may be made with written notification.

P.O. Box 4241, Station A, Toronto, ON M5W 5R3 • Telephone: 1-800-846-5970
™ ivari and the ivari logos are trademarks of ivari Holdings ULC. ivari is licensed to use such marks.
DCC138 08/23

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