Canada Life: Vanishing Premiums

SETTLEMENT AGREEMENT

GERALD L. GIBBS, DAVID ALAN JARVIS, MATTHEW COPE and GEOFFREY BLAIR GODDING, in their capacity as proposed class representatives (the “Plaintiffs”), and the Defendant, the Canada Life Assurance Company (“Canada Life”), hereby enter into this Agreement (hereinafter defined) providing for settlement of the proposed premium offset insurance class actions in Canada, subject to the approval of the Ontario Superior Court of Justice, the Quebec Superior Court, and the Supreme Court of British Columbia;

WHEREAS, a Statement of Claim proposing a class proceeding issued on July 11, 1997 has been served on Canada Life in Ontario by Gerald L. Gibbs and David Alan Jarvis, a Motion for Authorization of a Class Action proposing a class proceeding issued on November 10, 1997, has been served on Canada Life in Quebec by Matthew Cope, and a Statement of Claim proposing a class proceeding issued on September 30, 1997 has been served on Canada Life in British Columbia by Geoffrey Blair Godding (collectively, “the Class Proceedings”);

WHEREAS, Plaintiffs’ counsel in Ontario, namely the law firm of Scarfone Hawkins LLP, Plaintiff’s counsel in Quebec, namely the law firm of Lauzon Bélanger and Plaintiff’s counsel in British Columbia, namely the law firm of Poyner, Baxter, Poyner have conducted settlement negotiations with Canada Life and its Ontario and Québec counsel, namely the law firm of McCarthy Tétrault, and its British Columbia counsel, namely the law firm of Branch MacMaster;

WHEREAS, Canada Life, notwithstanding this Agreement, has denied and continues to deny the Plaintiffs’ claims in these actions and in other similar actions in these and other jurisdictions, has denied and continues to deny any wrongdoing or liability of any kind anywhere to the Plaintiffs or the Class Members (hereinafter defined) they seek to represent and has raised and intends to continue to raise numerous defences;

WHEREAS, Canada Life values its relations with its Policy Owners and intends to extend benefits as set forth in this Agreement for business and competitive reasons;

WHEREAS, based upon an analysis of the facts and the law applicable to claims of the Class (hereinafter defined) taking into account the extensive burdens and expense of litigation, including the risks and uncertainties associated with the proposed certification or authorization of class actions, protracted trials and appeals, as well as the fair and cost-effective method of resolving with claims of the Class provided for in this Agreement, the Plaintiffs and the Plaintiffs’ counsel have concluded that this Agreement provides substantial benefits to the Class and is fair, reasonable, adequate and in the best interests of the Class;

WHEREAS, Canada Life and its counsel have similarly concluded that this Agreement is desirable in order to avoid the time, risk and expense of defending multiple and protracted litigation, and to resolve finally and completely the pending and potential claims in relation to the applicable Class Policies owned by Class Members under the terms of this Agreement;

WHEREAS, the Parties intend by this Agreement to resolve all of the claims for or relating to representations, misrepresentations or omissions by Canada Life or their agents, directors, officers and employees, that occurred in relation to the applicable Class Policies owned by Class Members under the terms of this Agreement;

WHEREAS, the Parties agree that this Agreement, the certification or authorization of these Class Actions for settlement purposes, and any approval of the Agreement by the Courts will not constitute any admission by Canada Life of liability or damages, or be used as evidence against any of the said companies, or for any other purposes in any other proceeding or matter.

NOW THEREFORE, subject to the Courts’ approval in Ontario, British Columbia and Quebec, this Agreement embodies the provisions for the resolution of the proposed premium offset insurance class actions brought against Canada Life in the Provinces of Ontario, British Columbia and Quebec, and similar claims and disputes in any other provinces and territories in Canada relating to Class Policies.

This Agreement includes Notices, Orders and related documents submitted to the Courts for approval.

1. Definitions

“Agreement” means this agreement, including any appendices hereto, except as modified by further written agreement among the Parties.

“British Columbia Class” means all Class Members whose Class Policy(ies) were applied for in British Columbia and who are not now resident in Ontario or Quebec on the Classification Date, or who applied for the Policy(ies) in Canada and are now resident in British Columbia on the Classification Date.

“Class” and Classes” means the Ontario, British Columbia and Quebec classes as defined herein.

“Class Counsel” means the law firms of Lauzon Belanger; Poyner, Baxter, Poyner; and Scarfone Hawkins LLP.

“Class Member” means a member of the British Columbia, Ontario or Quebec classes as defined herein who does not opt out.

“Class Policy” or “Class Policies” means a participating whole life insurance policy issued by Canada Life in Canada between January 1, 1980 and December 31, 1997, inclusive, which is in force as of the Classification Date (a “Current Class Policy”) or which has become a Lapsed Policy between January 1, 1992 and the Classification Date (a “Lapsed Class Policy”). Policies issued by New York Life Insurance Company, New York Life Insurance Company of Canada or Crown Life Insurance Company are not Class Policies.

“Classification Date” is the first day of the month in which this Agreement is executed by Canada Life.

“Courts” shall mean the Ontario, British Columbia, and Quebec courts that have jurisdiction over the Class Actions, namely:

In Ontario: the Superior Court of Justice and the Honourable Mr. Justice Cumming, or his successor;

In British Columbia: the Supreme Court of British Columbia and the Honourable Chief Justice Brenner or his successor;

In Quebec: the Quebec Superior Court and the Honourable Mr. Justice Crête or his successor.

“Court Approval Date” means the latest of the three dates on which the orders of each of the Superior Court of Justice in Ontario, the Supreme Court of British Columbia and the Quebec Superior Court approving the Agreement becomes final. For purposes of the Agreement, an order becomes final when the time for appealing or seeking leave to appeal the order has expired without an appeal being taken or leave to appeal being sought or, in the event an appeal is taken or leave to appeal is sought, when such appeal or leave to appeal and such further appeals or leave applications as may be taken have been disposed of and the time for further appeal, if any, has expired.

“Current Class Policy” has the meaning set out in the definition of Class Policy.

“Forecast Dividend Scale” means the Canada Life dividend scale projected with the mortality & expense assumptions in effect on January 1, 2001 but with the future interest rate assumption that will apply if current reinvestment rates continue into the future.

“Forecast Offset Date” means the Premium Offset Date determined as of the Classification Date applying the forecast dividend scale.

“Former Owner” means a person who owned a Lapsed Class Policy as of the date the policy lapsed or was surrendered.

“Independent Adjudicator” means the person or persons, approved by the Courts for the Independent Review Process described in section 3 herein.

“Lapsed Class Policy” has the meaning set out in the definition of Class Policy.

“Lapsed Policy” means a policy which is no longer in force as a result of surrender or non-payment of premiums.

“Offset Delay” means the difference in years between the Forecast Offset Date and the Original Offset Date.

“Ontario Class” means all Policy Owners and Former Owners whose Class Policy(ies) were applied for in Canada, but in a province or territory other than British Columbia or Quebec, and who are not now resident in British Columbia or Quebec on the Classification Date.

“Original Offset Date” means the Premium Offset Date determined as of the date of issue for the Class Policy, applying the then current dividend scale.

“Policy Owner” means the named individual or entity shown as policy owner for the Class Policy on the Classification Date, on the records for the Class Policy as held by Canada Life.

“Premium Offset Date” means the date according to Canada Life’s illustration software when dividends accumulated within the Class Policy to that date together with the projected future dividends on a specified dividend scale to be paid on the Class Policy, will be sufficient to pay all future premiums that will fall due and owing for the Class Policy, assuming that the specified dividend scale being applied to the Class Policy continues in effect indefinitely.

“Quebec Class” means all Class Members whose Class Policy(ies) were applied for in Quebec and who are not now resident in Ontario or British Columbia on the Classification Date, or who applied for the Policy(ies) in Canada and are now resident in Quebec on the Classification Date.

“Sales Representative” means, for the purpose of this Agreement only, a person who, being an agent or market intermediary, sold a Class Policy as defined in this Agreement.

2. General Benefits

2.1 Current Class Policies – The following General Benefits will be applied to all Current Class Policies at the three policy anniversaries following December 31, 2001 and as long as the policy remains in force.

A dividend supplement reflecting an addition of 0.25% to the rate of interest used to calculate the dividend on the basic policy and also on any paid-up additions at credit. This dividend supplement is to be applied in the same manner and on the same basis as the regular dividend.

For Current Class Policies with the Enhanced Coverage option, and any other Current Class Policy where the applicable dividend option at the Classification Date involves the purchase of one year term Insurance, the applicable one year term Rate will be reduced by 10% of the rate otherwise payable by the Policy Owner according to the Canada Life rate scale in effect on January 1, 2001.

2.2 Lapsed Class Policies – A Former Owner may apply for a new individual life insurance policy of any type currently offered by Canada Life with a total face amount not more than the death benefit of the Lapsed Class Policy. There will be a discount of 50% applied to the first year’s premium. In the case of Universal Life policies, this will be based on the minimum premium. Standard Canada Life underwriting and issue requirements must be met. The new policy will be based on the insured’s current attained age, Canada Life’s current premiums, and all Canada Life standard terms. This benefit will not apply if the Class Policy has been replaced by another Canada Life policy.

3. Independent Review Process

3.1 Class Members who allege misrepresentation by the Sales Representative which was relied on in the purchase or sale of a Class Policy will be entitled to have their claims reviewed and assessed in an Independent Review Process (“IRP”), subject to the following conditions:

a. Class Members who elect to have their claim reviewed in the IRP will waive the right to opt out of this settlement.

b. Class Members who were, at the time of the purchase of the Class Policy, licensed life insurance agents or brokers, their spouses, and their children of whatever age, corporations controlled by licensed life insurance agents or brokers, are not eligible to apply for IRP benefits.

c. Class Members who have exercised contractual rights or made changes to a Class Policy as set out in Appendix A which adversely affect the Forecast Offset Date must restore the policy to the position it would have been in if the change had not taken place. The cost of restoring each policy must be paid by the Class Member before any benefit is received under the IRP.

d. Class Members who have previously submitted a claim or complaint to Canada Life and who did not receive a remedy of the Original Offset Date are eligible for IRP benefits only upon waiving any benefits awarded previously and restoring the policy to the position it would have been in if the remedy had not been awarded. In addition to paying the cost of restoring each policy, such Class Members will also be required to pay an administrative fee of $200.00 per policy to Canada Life, before any benefit is received under the IRP.

e. Former Owners will be entitled to receive IRP benefits only where:

(i) the Former Owner establishes that the policy lapsed or surrendered as a direct consequence of reliance by the Former Owner on a Misrepresentation of a Sales Representative as defined in Appendix B; and

(ii) The Former Owner restores the policy in accordance with the standard requirements of Canada Life and at the expense of the Former Owner.

f. Former Owners who participate in the IRP after restoring a Class Policy will not be eligible for any benefit, award or payment of any kind by Canada Life except as specifically provided in the terms of the policy or as awarded in the IRP.

3.2 Claims submitted by Class Members will be assessed by the Independent Adjudicator according to the procedures, criteria, standards and relief set out in Appendix “B”.

3.3 A Class Member who has submitted a claim in the IRP but is not satisfied with the assessment and relief awarded by the Independent Adjudicator may appeal to the Courts or the Courts’ designate solely on the question of whether the decision of the Independent Adjudicator is patently unreasonable. The Rules of the Court shall apply to any appeals.

3.4 Class Members will be responsible for the cost of any legal representation which they choose to obtain or any other costs they may incur in relation to their individual claim, other than consultation with Class Counsel in submitting claims to the Independent Adjudicator.

4.0 Court Approval

4.1 The terms of the Agreement are subject to and conditional upon a final judgment or Court approval in Ontario, British Columbia and Quebec. Unless so approved by all three Courts, the Agreement is of no force and effect.

4.2 On the Court Approval Date, the Agreement will be binding on all Class Members except those Class Members who opt out as provided in this Agreement.

4.3 In consideration of the entitlement to the General Benefits under this Agreement or the right to pursue a claims review and appeal in the Independent Review Process under this Agreement, Class Members shall, on their own behalf and on behalf of their heirs, administrators, successors and assigns be deemed to have forever released and discharged The Canada Life Assurance Company, Canada Life Financial Corporation, their respective predecessors, representatives, parent companies, subsidiaries and affiliates, along with the officers, directors, employees, shareholders, agents, Sales Representatives, successors and assigns of all such entities, from any and all claims, causes of action, actions, manner of actions, and costs, arising out of or connected directly or indirectly with any allegations in any of the Class Proceedings, including but not limited to claims for or relating to representations, misrepresentations or omissions by Canada Life or its agents, directors, officers and employees, that occurred in relation to the applicable Class Policies owned by Class Members under the terms of this Agreement.

4.4 Notwithstanding the provisions of section 4.3, a Class Member who is awarded benefits under the Independent Review Process and who makes an assignment of rights against a Sales Representative to Canada Life will not be deemed to have released and discharged any claim which may be asserted by Canada Life as part of the assignment of rights.

5. Notice of Approval

5.1 Canada Life will send a copy of the Court ordered Notice of Certification and Approval of Settlement Agreement (Notice of Approval), a Class Member Election Form and an explanatory booklet prepared by Canada Life in consultation with Class Counsel, by mail to the last known address of the Policy Owner or if there is more than one owner of a Class Policy to the last known address as shown on the records of Canada Life within seventy-five (75) days of the Court Approval Date.

5.2 For the purposes of this Agreement, a Class Member will be deemed to have received their Notice of Approval five (5) days after the date on which their Notice of Approval is sent by ordinary mail to the Class Member’s last known address as shown on the records of Canada Life.

6. Opting Out

6.1 A Class Member who wishes to be excluded from this Agreement must complete the Opting Out section on the Class Member Election Form and return the Form to Canada Life within forty-five (45) days of the Class Member receiving their Notice of Approval.

6.2 Any Class Member who opts out of this settlement will not be entitled to any of the benefits or relief set out in this Agreement.

7. Fraud

In addition to any other remedy available at law or equity to Canada Life or its agents, should any Class Member swear to or affirm a false affidavit or knowingly submit false evidence in support of any claim pursuant to the Agreement, such Class Member will be disentitled to any benefits under this Agreement.

8. Effect of The Agreement not being Approved by the Courts

If the Agreement is not approved as set out in Section 4:

(a) the Agreement will be null and void and will have no force or effect, and no party to the Agreement will be bound by any of its terms, except for the terms of this Section and the terms of Section 1 as are applicable;

(b) the Agreement, and all of its provisions, and all negotiations, statements and proceedings relating to it shall be without prejudice to the rights of Canada Life, the British Columbia Class, the Ontario Class, the Quebec Class and Class Counsel, all of whom will be restored to their respective positions existing immediately before the Agreement was entered into;

(c) the Agreement, the fact of its negotiation and execution, the authorization/certification of the British Columbia, Ontario, and/or Quebec Class and any approval of the Agreement by any Court shall not constitute any admission by Canada Life or Canada Life Financial Corporation or be used as evidence against the said companies and/or their respective predecessors, representatives, parent companies, subsidiaries and affiliates, along with the officers, directors, employees, shareholders, agents, successors and assigns of all such entities for any purposes or in any other proceedings; and

(d) to the extent they have not already been publicly disclosed, the existence and terms of this Agreement, the fact and terms of its negotiation and execution or the fact of any settlement will remain confidential, except to the extent to which such must be disclosed to legal advisors, actuaries and accountants to the extent necessary to receive professional advice, and then only if such persons are expressly made aware of this confidentiality provision and agree to be bound hereby, notwithstanding being obligated by law or professional ethical standards to maintain the confidentiality of such information.

9. Final Judgment/Order

9.1 Canada Life and Class Counsel on behalf of the British Columbia Class, Ontario Class and Quebec Class will jointly submit proposed final judgments or orders approving the Agreement. The proposed final judgments or orders will each provide that subject to the terms of the Agreement, the judgment or order grants a full and final release and discharge in favour of Canada Life and Canada Life Financial Corporation, their respective predecessors, representatives, parent companies, subsidiaries and affiliates, along with the officers, directors, employees, shareholders, agents, Sales Representatives, successors and assigns of all such entities, or any other person who might be responsible in fact or in law, for any and all claims or causes of action arising from any allegations in any of the Class Proceedings including but not limited to any representations, misrepresentations or omissions by any of the above-mentioned persons that occurred in relation to the applicable Class Policies owned by Class Members under the terms of this Agreement. The full and final release and discharge will also incorporate the wording of Section 4.4.

9.2 Canada Life and Class Counsel agree not to issue, enter or execute final judgments or orders until such time as the Agreement is approved by all the Courts before which the Class Proceedings were commenced.

10. Termination Clause

Within 15 days of the last day a Class Member may opt out of this Agreement pursuant to Section 6.1 herein, Canada Life may unilaterally terminate the Agreement by giving written notice to Class Counsel if, pursuant to Section 6.1 herein, more than three and one half percent (3.5%) of Class Members who are owners of Current Class Policies as at the Classification Date have, at the time of such notice of termination of this Agreement, opted out of this Agreement pursuant to Section 6.1. If such notice of termination of the Agreement is delivered, the provisions of Section 8 of this Agreement will apply as if this Agreement had not been approved in accordance with Section 4.

11. Effect of Agreement and Final Judgment or Order

Nothing in this Agreement or any Final Judgment or Order will be considered to affect the validity of any Current Class Policies, or the terms and conditions of any Class Policies whether Current, Lapsed or Surrendered, which terms and conditions remain in full force and effect.

In no event shall this Settlement Agreement, any of its provisions or any negotiations, statements or proceedings relating to it in any way, including but not limited to the Final Judgment and Order, be used as or deemed to be evidence or an admission or concession of any kind by Canada Life or Canada Life Financial in any action or other proceeding, except in any proceeding to enforce this Settlement Agreement.

12. Allocation of the Costs of the Agreement

Canada Life will act in good faith in overseeing and implementing this agreement. General Benefits, IRP Benefits, expenses and legal fees relating to this settlement will be paid from funds outside the participating account of Canada Life and hence those amounts will not be included in determining the amount available for distribution as regular policy dividends.

13. Administration of the Agreement

13.1 Canada Life will administer the settlement diligently and in good faith in accordance with the terms of this Agreement.

13.2 Following the approval of this Agreement, Class Counsel will monitor the implementation of this Agreement through the receipt and review of statistical claim data, receipt of IRP decisions and physical auditing of the bilingual telephone information line.

13.3 If in the opinion of Class Counsel, settlement administration is not being performed in a manner consistent with the substance and intent of the Agreement, and Canada Life has not remedied the alleged problem after having been given reasonable notice of it, Class Counsel may bring a motion to the Court for directions.

14. Legal Fees and Disbursements

In addition to the benefits granted under this Agreement, Canada Life agrees to pay the reasonable fees and disbursements of Class Counsel in connection with this Agreement, as mutually agreed or determined by the Courts.

15. Tax Liabilities

Canada Life will not be responsible for any tax liabilities accruing to any Class Member, including any tax arising from the implementation of IRP benefits or any General Benefits provided as a result of this Agreement.

16. Bilingual Telephone Information Line

Canada Life will establish a bilingual (English and French) telephone information line to provide information, but not advice, to Class Members regarding this Agreement and the Independent Review Process.

17. Determination of Residence

The residence of, and policies owned by, Class Members for all purposes under this Agreement will be as shown on Canada Life’s records on the Classification Date, unless and until written evidence to the contrary is provided to Canada Life by the Class Member which evidence must be provided no later than thirty (30) days after the Class Member receives or is deemed to have received the Notice of Approval.

18. Appendices to the Agreement

The Parties have reviewed and approved the form and content of Appendices “A” to “C” and all Schedules attached thereto.

19. French Version

19.1 The parties have expressly requested that this Agreement and any related Appendices or documents be drafted in the English language.

19.2 Les parties ont expressément convenu que la présente entente ainsi que tous documents ou annexes s’y rattachant soient rédigés en anglais.

19.3 This Agreement, in terms identical to the English version, will be translated into French after the time it is executed in English.

20. Interpretation

In the event of a conflict between the provisions of this Agreement and any of the Appendices or documents thereto, the terms of this Agreement will prevail. Matters of interpretation of this Agreement shall be determined by the Courts.

21. Governing Law

This Agreement shall be interpreted in accordance with the law of the Province of the Class to which the Class Member belongs.

22. Continuing Jurisdiction of Courts

The Courts shall retain exclusive and continuing jurisdiction over the class action claims and the Class Members, of their respective Classes.

23. Change of Name/Successor Companies

The Parties agree that this Agreement shall apply to successor companies of Canada Life and any reference in this Agreement and any Appendices attached to this Agreement will be amended to reflect such successor company or companies.

24. Counterparts

This Agreement may be executed in any number of counterparts. Each executed counterpart of each such agreement shall be deemed to be an original. All executed counterparts taken together shall constitute one agreement.

DATED at TORONTO, , 2001

McCARTHY TÉTRAULT
as counsel in Ontario to
The Canada Life Assurance Company

SCARFONE, HAWKINS
as counsel in Ontario to
Gerald L. Gibbs and David Alan Jarvis

DATED at VANCOUVER, , 2001

POYNER, BAXTER, POYNER
as counsel in British Columbia to
Geoffrey Blair Godding

BRANCH, MacMASTER
as counsel in British Columbia to
The Canada Life Assurance Company

DATED at MONTREAL, , 2001

LAUZON, BELANGER
as counsel in Quebec to
Matthew Cope

McCARTHY TÉTRAULT
as counsel in Quebec to
The Canada Life Assurance Company

APPENDIX A

List of Contractual Rights and Changes
Under Settlement Agreement Paragraph 3.1 (c)

1. Having a policy loan balance exceeding the cash value guaranteed under the policy.

2. Adding an Enhanced Coverage Rider or increasing the amount of insurance under the Rider.

3. Adding or increasing supplementary benefits such as Total Disability Waiver of Premium, Accidental Death Benefit, Accidental Waiver of Premium, Accidental aiver Premium Total Disability.

4. Adding or increasing a Term Rider, Child Rider, Guaranteed Insurability Rider.

5. Cancellation of a Paid Up Additions Rider or reduction in the amount of the Rider.

6. All changes in the type of plan of insurance that lead to an increase in the premium rate per thousand of face amount or decrease in the dividends per thousand of face amount.

7. Deregistration of policy under the Income Tax Act.

8. Changing from one year or five year policy fee to an annual or monthly policy fee basis.

9. Changing the dividend option other than to paid-up additions.

APPENDIX B
INDEPENDENT REVIEW PROCESS

A. PROCEDURE

1. A Class Member wishing to have a claim reviewed must complete the Independent Review Process section of the Class Member Election Form (the “Election Form”) and file it with Canada Life within forty-five (45) days of the Class Member receiving it.

2. Canada Life will send an Independent Review Package to all Class Members who have filed the Election Form as specified above.

3. Class Members must file a sworn Policy Owner Form with Canada Life within 30 days of the date they receive an Independent Review Package.

4. After receiving the completed Policy Owner Form, Canada Life will send a letter and Sales Representative Form to the last known address of the Sales Representative.

5. If Canada Life has not received a sworn Sales Representative Form from the Sales Representative within thirty (30) days of sending it out, Canada Life will send a Sales Representative Form to the Class Member together with the Sales Representative’s last known address where permitted. The Class Member will then have thirty (30) days from the date of Canada Life mailing the letter, to file with Canada Life the Sales Representative Form completed and sworn by the Sales Representative.

6. The Independent Adjudicator will review the Policy Owner Form, the Sales Representative Form (if any) and any other relevant material submitted to it and make a decision applying the Independent Review Criteria and Assessment Categories set out in parts B and C below.

7. The decision of the Independent Adjudicator with brief reasons will be sent to the Class Member and the Sales Representative. Where the decision is other than category A (top relief), a copy of the decision will also be sent to Class Counsel.

8. Where the Independent Adjudicator’s decision is other than Category A, the Class Member may appeal the decision at his or her own expense to the Courts or the Courts’ designate solely on the question of whether the decision of the Independent Adjudicator is patently unreasonable. The Rules of the Courts shall apply to any appeal.

9. A form or document will be deemed to have been received by a Class Member five days after the date on which it is sent by ordinary mail to the Class Member’s last known address as shown on the records of Canada Life. A form or document will be deemed to have been filed with Canada Life on the date it is postmarked.

B. INDEPENDENT REVIEW CRITERIA

Claims will be assessed based on the criteria set out below:

1. Policy Owner Form, sworn by the Policy Owner, stating that a Misrepresentation was made and relied on in purchasing the Class Policy (“Policy Owner Form”).

2. Written evidence which clearly and unambiguously confirms the alleged Misrepresentation (“Clear Confirming Evidence”).

3. Plus Factors (tending to support a claim of Misrepresentation).

4. Written evidence which clearly and unambiguously contradicts the alleged Misrepresentation (“Clear Contradicting Evidence”).

5. Minus Factors (tending to contradict a claim of Misrepresentation).

For the purposes of assessing a claim:

“Misrepresentation” means a misstatement made to the Policy Owner by a Sales Representative prior to the sale of a Class Policy or at any time up to 10 days following delivery of the Class Policy, that the Premium Offset Date, the abridgement date or the number of out of pocket premium payments required to fully pay the Class Policy were fixed and could not change, which was relied upon by the Policy Owner in the purchase of the Class Policy or the retention of the Class Policy following its delivery to and review by the Policy Owner.

“Written evidence” or “written representation” means evidence in writing provided to the Policy Owner by the Sales Representative prior to the sale of a Class Policy or at any time up to 6 months following the date of issue of the Class Policy. Unaltered original standard form illustrations and sales materials produced by or authorized by Canada Life shall not constitute a “Misrepresentation” or “Written Evidence” or a “Written Representation”.

“Original standard form illustration” means an illustration:

  a) created on Canada Life software which contained all of the Canada Life head office mandated footnotes and explanatory wording for that product illustration at the time of the generation of the illustration and its presentation to the proposed life insured; and

  b) containing the calculations based upon the dividend scale and interest rate for dividends on deposit in effect at the time of generation of the illustration and its presentation to the proposed life insured.

Plus and Minus Factors are shown at Appendix C.

Claims will be assessed on a standard of proof on a balance of probabilities. The onus of proof of a factor lies upon the party asserting it.

C. ASSESSMENT CATEGORIES AND FORMS OF RELIEF

As a condition of receiving any relief under the IRP, any claim must have the following :

i) a completed Policy Owner Form, and
ii) no Clear Contradicting Evidence.

The Assessment Category to be determined for a particular claim will depend on the additional criteria set out below and will entitle the Policy Owner to the corresponding relief shown:

Category	Additional Criteria	Relief (Guaranteed Offset Date)
A	Clear Confirming Evidence, or Plus Factors -Minus Factors is greater than or equal to 3	Original Offset Date
B	Plus Factors – Minus Factors = 2	Original Offset Date increased by 30% of the Offset Delay
C	Plus factors – Minus Factors = 1	Original Offset Date increased by 70% of the Offset Delay
D	Plus Factors – Minus Factors is less than 1, or there is clear contradicting evidence, or, there is an incomplete, or inadequate policy owner form.	No Guaranteed Offset Date

The Guaranteed Offset Date as described in the chart above will be determined according to Canada Life’s usual methods and procedures and is subject to the following adjustment.

Where more than 1000 Variable Shares have been awarded as a demutualization benefit in respect to a Class Policy, the Guaranteed Offset Date determined above will be increased by the Demutualization Adjustment.

Definitions

The Demutualization Adjustment for a Class Policy means the number of months equal to the Variable Shares, less 1000, multiplied by the Closing Share Price and divided by one-twelfth of the Class Policy’s annual premium.

Offset Delay means the difference between the Forecast Offset Date and the Original Offset Date.

Variable Shares with respect to a Class Policy means the number of Canada Life Financial Corporation shares identified for the Class Policy on the Client Share Allocation report prepared in connection with the demutualization of Canada Life.

Closing Share Price means the closing share price on the Toronto Stock Exchange for Canada Life Financial Corporation shares as of the Court Approval Date. If any of the Variable Shares were sold prior to the Court Approval Date, the Closing Share Price for those shares will be determined as of the date they were sold.

CONDITIONS FOR RECEIVING GUARANTEED OFFSET DATE

Prior to receiving the relief described above for categories A to C, the Policy Owner will be required to sign an agreement which will include:

a) A confirmation that premiums will be paid in cash by the Policy Owner, until the Guaranteed Offset Date, thereafter from dividends and dividend values to the extent possible, and in the event they are insufficient, then by way of an additional dividend paid by Canada Life. Any premiums paid in cash by the Policy Owner beyond the Guaranteed Offset Date will be repaid to the Policy Owner, out of the dividend values.

b) A confirmation that Canada Life’s agreement to provide the Guaranteed Offset Date will terminate if the Policy Owner does any of the following:

  (i) withdraws, surrenders or borrows against the cash values of paid up additions or cash accumulations, or

  (ii) assigns the policy, changes the dividend option or makes any other changes to the policy other than changing the beneficiary, without the consent of Canada Life, or

  (iii) fails to pay premiums when due up to the Guaranteed Offset Date, and

c) An assignment of rights against the Sales Representative in favour of Canada Life.

Fraud

If Canada Life determines that a Sales Representative has knowingly sworn or affirmed a false affidavit or knowingly submitted false evidence in connection with a claim, the claim will be assessed without regard to that affidavit or evidence. If the same Sales Representative submits an affidavit or evidence in any other claim which Canada Life in its sole discretion determines is substantially the same as the affidavit or evidence that was found to be knowingly false in the previous claim, Canada Life will assess the new claim without regard to that affidavit or evidence.

Canada Life Discretion

Canada Life will have the right, but not the obligation, in its sole discretion to improve the relief provided to a Policy Owner or to award category A relief in any claim without reference to the Independent Adjudicator.

APPENDIX C

Plus and Minus Factors

In assessing a Policy Owner’s claim, each Plus Factor category satisfied will be scored as 1 and each Minus Factor category satisfied will be scored as –1. Multiple instances of evidence within a particular Factor category will not be given multiple points. A single piece of evidence will not be taken to satisfy more than one Factor category.

The provision to a Policy Owner of an unaltered, original Canada Life standard form illustration, and/or sales materials will neither constitute a Plus nor Minus Factor with respect to the specifically alleged Misrepresentation.

Plus Factors

a) written representation made to the Policy Owner by a Sales Representative which tends to support but does not clearly and unambiguously confirm the alleged Misrepresentation.

b) sworn Sales Representative form confirming that he or she made the alleged Misrepresentation.

c) affidavit from a third party witness present at the sales presentation, which independently establishes that the alleged Misrepresentation was made.

d) the premiums payable up to the Original Offset Date were prepaid at the time of issue or within six (6) months thereafter.

e) the Canada Life original standard form illustration was materially altered by the Sales Representative prior to the issue of a Class Policy or at any time up to six (6) months thereafter.

Minus Factors

f) written representation made to the Policy Owner which tends to contradict, but does not clearly and unambiguously contradict, the alleged Misrepresentation;

g) sworn Sales Representative form denying that he or she made the alleged Misrepresentation

h) affidavit of a third party witness present at the sales presentation, denying the alleged Misrepresentation.

i) prior to purchasing the Class Policy, the Policy Owner received advice with respect to the cost and value of the policy from an accounting, tax, legal, financial, insurance, actuarial or estate advisor not associated with Canada Life.

j) the Policy Owner received more than one illustration which differ only with respect to the dividend scale.