Unassociated Document

485BPOS 1 file.htm Unassociated Document

Registration No. 333-59662

811-09137

As Filed with the Securities and Exchange Commission on April 25, 2007

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-6

REGISTRATION UNDER THE SECURITIES ACT OF 1933 [ X ]

Pre-Effective Amendment No. ____ [ ]

Post-Effective Amendment No.__9__ [ X ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No.__33__ [ X ]

Sun Life of Canada (U.S.) Variable Account I

Registrant

Sun Life Assurance Company of Canada (U.S.)

Depositor

One Sun Life Executive Park

Wellesley Hills, Massachusetts 02481

Depositor's Address

1-800-700-6554

Depositor's Telephone Number

Bruce Teichner

Assistant Vice President and Senior Counsel

Sun Life Assurance Company of Canada (U.S.)

One Sun Life Executive Park

Wellesley Hills, Massachusetts 02481

Name and Address of Agent For Service

It is proposed that this filing will become effective (check appropriate box)

[X ] immediately upon filing pursuant to paragraph (b) of Rule 485.

[ ] on May 1, 2007 pursuant to paragraph (b) of Rule 485.

[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.

[ ] on May 1, 2007 pursuant to paragraph (a)(1) of Rule 485.

[ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

PART A

		Futurity Accumulator Variable Universal Life Insurance
			Sun Life of Canada (U.S.) Variable Account I
	A Flexible Premium Combination Fixed and Variable Universal Life Insurance Policy
Prospectus
April 25, 2007

This prospectus describes a combination fixed and variable universal life insurance policy (the "Policy") issued by Sun Life Assurance Company of Canada (U.S.) ("we", "us" or "Company"), a member of the Sun Life Financial group of companies, through Sun Life of Canada (U.S.) Variable Account I, one of our separate accounts. The Policy is being offered, depending on the circumstances, as either an individual policy or as a certificate under a group policy. The substantive terms of a certificate under a group policy will be identical to those of an individual policy. In this prospectus, unless stated otherwise, the term "Policy" will include individual policies, group policies and certificates issued under group policies. This prospectus contains important information you should understand before purchasing a Policy. We use certain special terms which are defined in Appendix A. You should read this prospectus carefully and keep it for future reference.

You may choose among a number of Subaccounts and a Fixed Account Option. The Subaccounts in the Variable Account invest in shares of the following Funds:

ASSET ALLOCATION	LARGE CAP EQUITY
MFS/Sun Life Total Return Series (Initial Class)	AIM V.I. Capital Appreciation Fund (Series I Shares)
EMERGING MARKETS BOND	AIM V.I. Core Equity Fund (Series I Shares)*
PIMCO VIT Emerging Markets Bond Portfolio (Administrative Class)	Alger American Growth Portfolio (Class O)***
HIGH YIELD BOND	Alger American Income & Growth Portfolio (Class O)***
MFS/Sun Life High Yield Series (Initial Class)	AllianceBernstein VP Growth and Income Portfolio (Class B)
PIMCO VIT High Yield Portfolio (Administrative Class)	Fidelity VIP Contrafund® Portfolio (Service Class)
INFLATION-PROTECTED BOND	Fidelity VIP Growth Portfolio (Service Class)
PIMCO VIT Real Return Portfolio (Administrative Class)	Fidelity VIP Index 500 Portfolio (Service Class)
INTERMEDIATE TERM BOND	Goldman Sachs VIT Structured U.S. Equity Fund
MFS/Sun Life Government Securities Series (Initial Class)	MFS/Sun Life Capital Appreciation Series (Initial Class)*
PIMCO VIT Total Return Portfolio (Administrative Class)	MFS/Sun Life Emerging Growth Series (Initial Class)*
Sun Capital Investment Grade Bond Fund ® (Initial Class)	MFS/Sun Life Massachusetts Investors Growth Stock Series (Initial Class)
INTERNATIONAL/GLOBAL EQUITY	MFS/Sun Life Massachusetts Investors Trust Series (Initial Class)
AIM V.I. International Growth Fund (Series I Shares)	MFS/Sun Life Value Series (Initial Class)
Fidelity VIP Overseas Portfolio (Service Class)	Oppenheimer Capital Appreciation Fund/VA (Non-Service Shares)
Templeton Foreign Securities Fund (Class 2)	SC^SM Davis Venture Value Fund (Initial Class)
Templeton Growth Securities Fund (Class 2)	SC^SM FI Large Cap Growth Fund (Initial Class)
MID CAP EQUITY	T. Rowe Price Blue Chip Growth Portfolio
AIM V.I. Dynamics Fund (Series I Shares)*	Van Kampen LIT Growth and Income Portfolio (Class I Shares)
Alger American MidCap Growth Portfolio (Class O)	REAL ESTATE EQUITY
Delaware VIP Growth Opportunities Series (Standard Class)	Sun Capital Real Estate Fund ®
Dreyfus MidCap Stock Portfolio (Initial Shares)	SHORT TERM BOND
Goldman Sachs VIT Mid Cap Value Fund**	PIMCO VIT Low Duration Portfolio (Administrative Class)
Lord Abbett Series Fund - Mid-Cap Value Portfolio (Class VC)	SMALL CAP EQUITY
SC^SM Blue Chip Mid Cap Fund (Initial Class)	AIM V.I. Small Cap Equity Fund (Series I Shares)*^
MONEY MARKET	Alger American Small Capitalization Portfolio (Class O)***
Fidelity VIP Money Market Portfolio	DWS Dreman Small Mid Cap Value VIP Portfolio (Class A)
MULTI CAP EQUITY	DWS Small Cap Index VIP Fund (Class B)
Sun Capital^SM All Cap Fund (Initial Class)	MFS/Sun Life New Discovery Series (Initial Class)
SPECIALTY/SECTOR EQUITY	SC^SM Oppenheimer Main Street Small Cap Fund (Initial Class)
AllianceBernstein VP Global Technology Portfolio (Class B)*
MFS/Sun Life Utilities Series (Initial Class)
AIM Advisors, Inc. advises the AIM Funds. Fred Alger Management, Inc. advises the Alger American Portfolios. Alliance Capital Management L.P. advises the AllianceBernstein Portfolios. Delaware Management Company advises the Delaware VIP Growth Opportunities Series. Dreyfus Corporation advises the Dreyfus MidCap Stock Portfolio. Deutsche Asset Management, Inc. advises the DWS Small Cap Index VIP Fund. Deutsche Investment Management Americas Inc. advises the DWS Dreman Small Mid Cap Value VIP Portfolio. Fidelity Management & Research Company advises the Fidelity Portfolios. Goldman Sachs Asset Management, L.P. advises the Goldman Sachs Funds. Lord, Abbett & Co. LLC advises the Lord Abbett Series Funds. Massachusetts Financial Services Company, our affiliate, advises the MFS/Sun Life Series. OppenheimerFunds, Inc. advises the Oppenheimer Capital Appreciation Fund/VA. Pacific Investment Management Company LLC advises the PIMCO Portfolios. Sun Capital Advisers, LLC, our affiliate, advises the Sun Capital Funds. Davis Select Advisers, L.P. subadvises SC^SM Davis Venture Value Fund. Pyramis Global Advisors, LLC subadvises the SC^SM FI Large Cap Growth Fund. OppenheimerFunds, Inc. subadvises SC^SM Oppenheimer Main Street Small Cap Fund. Wellington Management Company, LLP subadvises SC^SM Blue Chip Mid Cap Fund. Templeton Investment Counsel, LLC advises Templeton Foreign Securities Fund. Templeton Global Advisors Limited advises Templeton Growth Securities Fund. T. Rowe Price Associates, Inc. advises T. Rowe Price Blue Chip Growth Portfolio. Van Kampen Asset Management advises Van Kampen LIT Growth and Income Portfolio.
On and after August 6, 2004, AIM V.I. Core Equity Fund, AllianceBernstein VP Global Technology Portfolio, AIM V.I. Dynamics Fund, AIM V.I. Small Cap Equity Fund, MFS/Sun Life Capital Appreciation Series and MFS/Sun Life Emerging Growth Series are not open to new premium or transfers. On and after May 1,2006, Goldman Sachs Mid Cap Value Fund is closed to new premium or transfers. *On and after May 1, 2002, Alger American Growth Portfolio, Alger American Income & Growth Portfolio and Alger American Small Capitalization Portfolio are not open to new premium or transfers. ^On May 1, 2007, AIM V.I. Small Cap Growth Fund was reorganized into AIM V.I. Small Cap Equity Fund.*

Sun Life Assurance Company of Canada (U.S.)

One Sun Life Executive Park

Wellesley Hills, Massachusetts 02481

(800) 700-6554

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.

	Table of Contents
Topic		Page
Risk/Benefit Summary of Policy		5
Sun Life Assurance Company of Canada (U.S.)		11
The Variable Account		11
The Funds		11
Fees and Expenses of the Funds		12
Our General Account		12
Investment Programs		12
Dollar Cost Averaging		12
Asset Rebalancing		13
Asset Allocation		13
About the Policy		13
Policy Application, Issuance and Initial Premium		13
Right of Return Period		14
Premium Payments		14
Premium		14
Net Premiums		15
Allocation of Net Premium		15
Planned Periodic Premiums		15
Death Benefit		15
Changes in Specified Face Amount		16
Minimum Changes		16
Increases		16
Decreases		17
Accessing Your Account Value		17
Surrenders and Surrender Charges		18
Partial Withdrawals		18
Policy Loans		19
Short-Term Trading		19
The Funds’ Harmful Trading Policies		20
Transfer Privileges		21
Account Value		21
Account Value of the Sub-Accounts		21
Net Investment Factor		22
Insufficient Value		22
Minimum Premium Test (No-Lapse Guarantee)		23
Grace Period		23
Splitting Units		23
Charges and Deductions		23
Expense Charges Applied to Premium		23
Mortality and Expense Risk Charge		23
Monthly Expense Charge		23
Monthly Cost of Insurance		24
Monthly Cost of Insurance Rates		24
Other Charges and Deductions		24
Waivers and Reduced Charges		24
Supplemental Benefits		25
Accelerated Benefits Rider		25
Accidental Death Benefit Rider		25
Waiver of Monthly Deductions Rider		25
Payment of Stipulated Amount Rider		25
Supplemental Insurance Rider		25
Termination of Policy		26
Reinstatement		26

Topic	Page
Deferral of Payment	26
Rights of Owner	26
Rights of Beneficiary	27
Other Policy Provisions	27
Addition, Deletion or Substitution of Investments	27
Entire Contract	27
Alteration	27
Modification	27
Assignments	27
Nonparticipating	27
Misstatement of Age or Sex (Non-Unisex Policy)	27
Suicide	28
Incontestability	28
Report to Owner	28
Performance Information	28
Portfolio Performance	28
Adjusted Non-Standardized Portfolio Performance	29
Other Information	29
Federal Income Tax Considerations	29
Our Tax Status	30
Taxation of Policy Proceeds	30
Withholding	33
Tax Return Disclosure	33
Distribution of Policy	33
Voting Rights	34
Other Information	35
State Regulation	35
Legal Proceedings	35
Experts	35
Registration Statements	35
Financial Statements	35
Appendix A - Glossary of Terms	36
Appendix B - Table of Death Benefit Percentages	38
Appendix C - Privacy Policy	39

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 Funds. We have not authorized anyone to provide you with information that is different.

Risk/Benefit Summary of Policy

Right of Return Period

You may return the Policy and receive a refund within 10 days from the date of receipt of the Policy. A longer period may apply in some states.

Premium Payments

-	Generally, you must make a minimum Initial Premium payment equal to two Minimum Monthly Premiums. The minimum Initial Premium is shown in the illustration for the Policy and is shown in the Policy.

- -	You choose the amount and timing of subsequent premium payments, within certain limits. You may allocate your net premium payments among the Policy's available Investment Options.

CONTRACT BENEFITS

Account Value

Account Value is the sum of the amounts in each Sub-Account and the Fixed Account Option with respect to the Policy.

The Policy's Account Value will reflect-

the premiums you pay;

the investment performance of the Sub-Accounts you select, and/or the interest credited to the Fixed Account Option;

any loans or partial withdrawals;

the charges we deduct under the Policy.

Accessing the Policy’s Account Value

You may borrow from us using your Account Value as collateral.

You may surrender the Policy for its Cash Surrender Value. Cash Surrender Value is Account Value minus any surrender charges and the amount of any Policy Debt. The surrender charge period ends 9 years after you purchase the Policy or increase the Specified Face Amount of the Policy.

You may make a partial withdrawal of some of the Policy’s Cash Surrender Value after the Policy has been in force for one year. A partial withdrawal will cause a decrease in the Specified Face Amount of the Policy if your death benefit option is the Specified Face Amount. Reducing the Cash Surrender Value with a partial withdrawal may increase the risk of Policy lapse.

Death Benefit

If the Policy is in force at the time we receive due proof of the Insured's death, we will pay the beneficiary an amount based on the death benefit option in effect, plus any supplemental benefits added to the Policy, less Policy Debt and any overdue monthly deductions.

Specified Face Amount is the minimum amount of life insurance in the Policy.

-	You have a choice of two death benefit options-

-	the Specified Face Amount; or
-
-	the sum of the Specified Face Amount and the Account Value of the Policy.

- -	For each option, the death benefit may be greater if necessary to satisfy federal tax laws. After the first Policy Year, you may

change your death benefit option; or

increase the Specified Face Amount.

-	After the fourth Policy Year, you may decrease the Specified Face Amount to a level not less than the minimum specified in the Policy.

CONTRACT RISKS

The Variable Account

We have established a variable separate account to fund the variable benefits under the Policy.

The assets of the variable separate account are free from our general creditor's claims.

The variable separate account is divided into Sub-Accounts.

Each Sub-Account invests exclusively in shares of a corresponding mutual fund.

When you choose Sub-Accounts in the variable separate account, your benefits will fluctuate based on certain economic conditions. These conditions include, but are not limited to

inflationary forces,

changes in rates of return available from different types of investments,

changes in employment rates and

the presence of international conflict.

With such Sub-Accounts, you assume all investment risk. Investment risk is the risk of poor investment performance. Poor investment performance can result in a loss of all or some of your investment.

A comprehensive discussion of the risks of such Sub-Accounts may be found in the underlying Fund's prospectus.

It is unsuitable to purchase a life insurance policy as a short-term savings vehicle because investment risk is best borne over a number of years. Surrender charges may also be imposed if surrender occurs in the early Policy Years.

Investment Options

You may allocate your net premium payments among the Sub-Accounts and the Fixed Account Option.

You may transfer amounts from one Sub-Account to another or to the Fixed Account Option, subject to any limits that we or the Funds may impose. We will notify you in writing of any such limitations.

You may transfer amounts from the Fixed Account Option, subject to our transfer rules in effect at time of transfer.

What If Charges and Deductions Exceed Cash Surrender Value?

Unless the No-Lapse Guarantee applies, the Policy will terminate if the Cash Surrender Value at the beginning of any Policy Month is less than the charges and deductions then due.

We will send you notice and allow you a 61 day Grace Period.

If, within the Grace Period, you do not make a premium payment sufficient to cover all charges and deductions due, the Policy will terminate at the end of the Grace Period.

If the Policy terminates, all coverage ceases and no benefits are payable.

No-Lapse Guarantee

The Policy will not terminate during the No-Lapse Guarantee Period if the premiums paid less partial withdrawals less Policy Debt exceed the sum of Minimum Monthly Premiums from the Policy Date to the Valuation Date. The No-Lapse Guarantee Period is based on the Insured's age. It may vary in length by state but may not exceed 20 years.

Reinstatement

If the Policy terminates due to insufficient value, we will reinstate it within three years at your request, subject to certain conditions.

Federal Tax Considerations

Purchase of, and transactions under, the Policy may have adverse or unfavorable tax consequences that you should consider. You may wish to consult a qualified tax professional prior to purchase regarding tax treatment of death benefits, loans and surrenders.

Supplemental Benefits

-	You may supplement the Policy with the following riders where available-

- - - - -		accelerated benefits accidental death benefit waiver of monthly deductions payment of stipulated amount supplemental insurance
-	We will deduct the cost, if any, of the rider(s) from the Policy's Account Value on a monthly basis.

The following tables describe the fees and expenses that you will pay when buying, owning and surrendering the Policy. The first table describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy or transfer amounts between Investment Options.

TRANSACTION FEES
Charge	When Charge is Deducted	Amount Deducted
Expense Charge Applied to Premium	Upon premium receipt	Maximum: Minimum:	7.25% 5.25%
Surrender Charge Minimum and Maximum Charge	Upon policy surrender before the tenth Policy Year and upon surrender of a Policy increase before nine years have elapsed from the increase effective date	(Per $1000 of Specified Face Amount)
		Maximum: Minimum:	$26.84¹ 0.63¹
Representative Owner Charge²		$10.50
Transfer Fee	Upon transfers in excess of 12 in a Policy Year	Maximum: Minimum:	$15.00 $0.00

The next table describes the fees and expenses that you will pay periodically during the time you own the Policy, not including Fund fees and expenses.

PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES
Charge	When Charge is Deducted	Amount Deducted
Cost of Insurance Minimum and Maximum Charge	At the beginning of a Policy Month	(Per $1000 of Policy Net Amount at Risk)
		Maximum: Minimum:		$1000.00³ $0.42³
Representative Owner Charge⁴		Maximum: Minimum:		$4.55 $1.31
Mortality and Expense Risk Charge⁵	At the beginning of a Policy Month	(On the assets allocated to the Investment Options in the Variable Account)
		Maximum: Minimum:			0.60% per year 0.20% per year
Monthly Expense Charge⁶ Minimum and Maximum Charge	At the beginning of a Policy Month	Maximum: Minimum:	$96.00 per year plus $8.40 per $1000 of Specified Face Amount $96.00 per year plus $0.36 per $1000 of Specified Face Amount
Representative Owner Charge⁷		$96.00 per year plus $1.92 per $1000 of Specified Face Amount
Loan Interest⁸	At the end of each Policy Year	(as a percentage of Policy Debt)
		Maximum:		4.0%
Flat Extra Charge	At the end of a Policy Month	Maximum: Minimum:				$20.00 $1.00

The next table describes the charges you will pay periodically during the time you own any riders attached to the Policy.

OPTIONAL CHARGES
Charge	When Charge is Deducted	Amount Deducted
Accidental Death Benefit Rider Minimum and Maximum Charge	At the beginning of a Policy Month	(Per $1000 of Accidental Death Benefit)
		Maximum: Minimum:	$1.56⁹ $0.72⁹
Representative Owner Charge¹⁰		$0.72
Waiver of Monthly Deductions Rider Minimum and Maximum Charge	At the beginning of a Policy Month	(Per $1000 of Policy Net Amount at Risk)
		Maximum: Minimum:	$2.22¹¹ $0.14¹¹
Representative Owner Charge¹²		$0.84
Payment of Stipulated Amount Rider Minimum and Maximum Charge	At the beginning of a Policy Month	(Per $100 of Stipulated Amount¹³)
		Maximum: Minimum:	$9.50¹⁴ $1.66¹⁴
Representative Owner Charge¹⁵		$5.51
Supplemental Insurance Rider (This charge is in addition to the Policy Cost of Insurance Charge.) Minimum and Maximum Charge	At the beginning of a Policy Month	(Per $1000 of Rider Net Amount at Risk)
		Maximum: Minimum:	$1000.00¹⁶ $0.42¹⁶
Representative Owner Charge¹⁷		Maximum: Minimum:	$4.55 $0.83

The next item shows the minimum and maximum total operating expenses charged by the Funds that you may periodically during the time you own the Policy. More detail concerning each Fund's fees and expenses is contained in the prospectus for each Fund.

TOTAL ANNUAL FUND OPERATING EXPENSES (deducted by each Fund of the average daily net asset value of each Fund)	Minimum	Maximum
Total Annual Fund Expenses (expenses that are deducted from Fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses)	0.20%	2.47%

¹The $26.84 is the maximum surrender charge possible and represents the per $1000 of Specified Face Amount charge for an Insured female, issue age 72, Policy Year 1. The $0.63 is the minimum surrender charge possible and represents the per $1000 of Specified Face Amount charge for an Insured female, issue age 20, Policy Year 9. The surrender charge varies based on the Specified Face Amount, the length of time the Policy has been in force, the Insured's age and sex.

²A Representative Owner is a male, issue age 45, Policy Year 1. It is assumed the Owner and the Insured are the same person.

³The numbers are annualized charges although deducted on a monthly basis. The $1000.00 is the annual maximum cost of insurance charge possible and represents the charge for an Insured male, current age 99. The $0.42 is the annual minimum cost of insurance charge possible and represents the charge for an Insured female, preferred, non-tobacco, issue age 20, Policy Year 20. The maximum cost of insurance charges vary based on the Insured's attained age and sex. The minimum cost of insurance charges vary based on the length of time the Policy has been in force and the Insured's issue age, sex and rating class.

⁴ For the maximum annual cost of insurance charge calculation, a Representative Owner is a male, current age 45. For the minimum annual cost of insurance charge calculation, a Representative Owner is a male, preferred, non-tobacco, issue age 45, Policy Year 1. It is assumed the Owner and the Insured are the same person.

⁵The annual rate is shown in the table. The monthly percentage for Policy Years 1-10 is 0.05%. The monthly percentage for Policy Years 11+ is 0.0167%. The charge is deducted in all Policy Years.

⁶The maximum monthly expense charge is $96.00 in all Policy Years plus $8.40 per $1000 of Specified Face Amount for the first 10 Policy Years following the date of issue and for the first 10 Policy Years following the date of any increase in Specified Face Amount. The $8.40 per $1000 of Specified Face Amount represents the charge for an Insured male, issue age 75. The minimum monthly expense charge is $96.00 in all Policy Years plus $0.36 per $1000 of Specified Face Amount for the first 10 Policy Years following the date of issue and the date of any increase in Specified Face Amount. The $0.36 per $1000 of Specified Face Amount represents the charge for an Insured female, issue age 20. The monthly expense charge varies based on the Insured's age and sex.

⁷A Representative Owner is a male, issue age 45. It is assumed the Owner and the Insured are the same person. The $96.00 charge applies in all Policy Years and the $1.92 per $1000 of Specified Face Amount charge applies for the first 10 Policy Years following the date of issue and for the first 10 Policy Years following the date of any increase in Specified Face Amount.

⁸ Loan Interest is charged as a percentage of Policy Debt and is added to Policy Debt. It is 4.0% in Policy Years 1-10 and 3.0% thereafter.

⁹The numbers are annualized charges although deducted on a monthly basis. The $1.56 is the annual maximum cost of insurance charge possible and represents the per $1000 of Accidental Death Benefit charge for an Insured, issue age 65. The $0.72 is the annual minimum cost of insurance charge possible and represents the per $1000 of Accidental Death Benefit charge for an Insured, issue age 20. Charges vary by issue age only.

¹⁰A Representative Owner is issue age 45. It is assumed the Owner and the Insured are the same person.

¹¹The numbers are annualized charges although deducted on a monthly basis. The $2.22 is the annual maximum charge possible and represents the per $1000 of Policy Net Amount at Risk charge for an Insured, issue age 55. The $0.14 is the annual minimum charge possible and represents the per $1000 of Policy Net Amount at Risk charge for an Insured, issue age 20. Charges vary by issue age only.

¹²A Representative Owner is issue age 45. It is assumed the Owner and the Insured are the same person.

¹³To increase the variety of Stipulated Amounts electable, the charge imposed is per $100 of Stipulated Amount.

¹⁴The numbers are annualized charges although deducted on a monthly basis. The $9.50 is the annual maximum charge possible and represents the per $100 of Stipulated Amount charge for an Insured male, issue age 55, benefit payable to age 70. The $1.66 is the annual minimum charge and represents the per $100 of Stipulated Amount charge for an Insured male, issue age 20, benefit payable to age 65. Charges vary based on the Insured's age, sex and duration of payment option.

¹⁵A Representative Owner is an Insured male, issue age 45, benefit payable to age 70. It is assumed the Owner and the Insured are the same person.

¹⁶The numbers are annualized charges although deducted on a monthly basis. The $1000.00 is the maximum rider charge per $1000 of Rider Net Amount at Risk and represents the charge for an Insured male, current age 99. The $0.42 is the minimum rider charge per $1000 of Rider Net Amount at Risk and represents the charge for an Insured female, preferred, non-tobacco, issue age 20, Policy Year 20. The maximum rider charges vary based on the Insured's sex and attained age. The minimum rider charges vary based on the length of time the rider has been in force and the Insured's sex, issue age and rating class.

¹⁷The Representative Owner for the maximum charge is a male, current age 45. The Representative Owner for the minimum charge is a male, preferred, non-tobacco, issue age 45, Policy Year 1. It is assumed the Owner and the Insured are the same person.

Sun Life Assurance Company of Canada (U.S.)

We are a stock life insurance company incorporated under the laws of Delaware on January 12, 1970. We do business in 49 states, the District of Columbia and the Virgin Islands. We have an insurance company subsidiary that does business in New York. Our executive office mailing address is One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481. We are ultimately controlled by Sun Life Financial Inc. ("Sun Life Financial"). 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 and Philippine stock exchanges.

The Variable Account

We established Sun Life of Canada (U.S.) Variable Account I in accordance with Delaware law on December 1, 1998. The Variable Account may also be used to fund benefits payable under other life insurance policies issued by us. We are obligated to pay all benefits payable under the Policy.

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.

We will at all times maintain assets in the Variable Account with a total market value at least equal to the reserves and other liabilities relating to the variable benefits under all policies participating in the Variable Account and the Variable Account is fully funded for the purpose of Federal securities laws. The assets of the Variable Account are insulated from our general liabilities and may not be charged with our liabilities from our other business. Our obligations under those policies are, however, our general corporate obligations.

The Variable Account is registered with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit investment trust. Registration under the 1940 Act does not involve any supervision by the SEC of the management or investment practices or policies of the Variable Account.

The Variable Account is divided into Sub-Accounts. Each Sub-Account invests exclusively in shares of a corresponding investment portfolio of a registered investment company (commonly known as a mutual fund). We may in the future add new or delete existing Sub-Accounts. The income, gains or losses, 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. All amounts allocated to a Sub-Account will be used to purchase shares of the corresponding mutual fund. The Sub-Accounts will at all times be fully invested in mutual fund shares. The Variable Account may contain certain sub-accounts which are not available under the Policy.

The Funds

The Policy offers a number of Fund options shown on page 1. Each Fund is a mutual fund registered under the Investment Company Act of 1940, or a separate series of shares of such a mutual fund. More comprehensive information, including a discussion of potential risks, is found in the current prospectuses for the Funds (the "Fund Prospectuses"). The Fund Prospectuses should be read in connection with this prospectus. A copy of each Fund Prospectus may be obtained without charge by calling (800) 700-6554, or writing to Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

Although the investment objectives and policies of the Funds may be similar to those of other mutual funds managed by the Funds' investment advisers, the investment results of the Funds can differ significantly from those of such other mutual funds.

Some of the Funds' investment advisers may compensate us for administering the Funds as investment options under the Policy. Such compensation is paid from advisers' assets.

The Funds may also be available to separate accounts offering variable annuity and variable life products of other affiliated and unaffiliated insurance companies, as well as our other separate accounts. Although we do not anticipate any disadvantages in this, there is a possibility that a material conflict may arise between the interests of the Variable Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of policyowners and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect policyowners, including withdrawal of the Variable Account from participation in the Funds which are involved in the conflict or substitution of shares of other Funds.

Fees and Expenses of the Funds

Fund shares are purchased at net asset value, which reflects the deduction of investment management fees and certain other expenses. The management fees are charged by each Fund's investment adviser for managing the Fund and selecting its portfolio of securities. Other Fund 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.

The Fund expenses are assessed at the Fund level and are not direct charges against Variable Account assets or reductions from Cash Values. These expenses are taken into consideration in computing each Fund's net asset value, which is the share price used to calculate the Unit Values of the Variable Account. Thus, you indirectly bear the fees and expenses of the Funds you select. The table presented earlier shows annual expenses paid by the Funds as a percentage of average net assets.

The management fees and other expenses of the Funds are more fully described in the Fund Prospectuses. The information relating to the Fund expenses was provided by the Fund and was not independently verified by us.

Our General Account

Our general account consists of all of our assets other than those in our variable separate accounts. Subject to applicable law, we have sole discretion over the investment of our general account assets.

The Fixed Account Option is not a security and the general account is not an investment company. Interests in our general account offered through the Fixed Account Option have not been registered under the Securities Act of 1933 and our general account has not been registered as an investment company under the Investment Company Act of 1940.

You may allocate net premiums to the Fixed Account Option and may transfer a portion of your investments in the Sub-Accounts to the Fixed Account Option. You may also transfer a portion of your investment in the Fixed Account Option to any of the variable Sub-Accounts. Transfers may be subject to certain restrictions.

An investment in the Fixed Account Option does not entitle you to share in the investment experience of our general account. Instead, we guarantee that your fixed account investment will accrue interest daily at an effective annual rate of at least 3%, without regard to the actual investment experience of our general account. We may, at our sole discretion, credit a higher rate of interest, but are not obligated to do so.

Investment Programs

Dollar Cost Averaging. You may select, at no extra charge, a dollar cost averaging program by allocating a minimum of $5,000 to a Sub-Account designated by us. Each month or quarter, a level amount will be transferred automatically, at no cost, to one or more Sub-Accounts chosen by you, up to a maximum of twelve. The program continues until your Account Value allocated to the program is depleted or you elect to stop the program. The main objective of a dollar cost averaging program is to minimize the impact of short-term price fluctuations. Since the same dollar amount is transferred to other available Sub-Accounts at set intervals, dollar cost averaging allows you to purchase more Units (and, indirectly, more Fund shares) when prices are low and fewer Units (and, indirectly, fewer Fund shares) when prices are high. Therefore, a lower average cost per Unit may be achieved over the long-term. A dollar cost averaging program allows you to take advantage of market fluctuations. However, it is important to understand that a dollar cost averaging program does not assure a profit or protect against loss in a declining market.

Asset Rebalancing. Once your money has been allocated among the Investment Options, the earnings may cause the percentage invested in each Investment Option to differ from your allocation instructions. You can direct us to automatically rebalance the policy among your Sub-Accounts to return to your allocation percentages by selecting our asset rebalancing program. The rebalancing will be on a calendar quarter, semi-annual or annual basis, depending on your instructions. The minimum amount of each rebalancing is $1,000. There is no charge for asset rebalancing. In addition, rebalancing will not be counted against any limit we may place on your number of transfers in a Policy Year. You may not select dollar cost averaging and asset rebalancing at the same time. We reserve the right to modify, suspend or terminate this program at anytime. We also reserve the right to waive the $1,000 minimum amount for asset rebalancing.

Asset Allocation. One or more asset allocation investment programs may be made available in connection with the Policy, at no extra charge. Asset allocation is the process of investing in different asset classes -- such as equity funds, fixed income funds and money market funds -- depending on your personal investment goals, tolerance for risk, and investment time horizon. By spreading your money among a variety of asset classes, you may be able to reduce the risk and volatility of investing, although there are no guarantees, and asset allocation does not insure a profit or protect against loss in a declining market. Currently, you may select one of the asset allocation models, each of which represents a combination of Sub-Accounts with a different level of risk. These asset allocation models, as well as the terms and conditions of the asset allocation program, are fully described in a separate brochure. We may add or delete such programs in the future. If you elect an asset allocation program, we automatically rebalance your premium payments among the Sub-Accounts represented in the model you choose. We rebalance your premium payments on a quarterly basis, without further instruction, until we receive notification that you wish to terminate the program or choose a different model. While the asset allocation models may be reviewed and changed from time to time, we will not change your original percentage allocations among the Sub-Accounts in the model you chose and will discontinue rebalancing at the time of a model change, unless you advise us otherwise. You should consult your financial adviser periodically to consider whether the model you have selected is still appropriate for you or whether you wish to change your percentage allocations.

About the Policy

Policy Application, Issuance and Initial Premium

To purchase a Policy, you must first submit an application to our Principal Office. We may then follow certain underwriting procedures designed to determine the insurability of the proposed Insured. We offer the Policy on a regular (medical) underwriting basis and simplified underwriting basis. We may require medical examinations and

further information before the proposed application is approved. Simplified underwriting is available to certain groups of Insureds, with all Insureds meeting certain other underwriting requirements. We must pre-approve any simplified underwriting arrangement. The cost of insurance rates are higher for healthy individuals when simplified underwriting is used instead of regular underwriting. Proposed Insureds must be acceptable risks based on our underwriting limits and standards. A Policy cannot be issued until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application that does not meet our underwriting requirements or to apply extra charges for the underwriting classification for an Insured which will result in increased Monthly Cost of Insurance charges.

You must specify certain information in the application, including the Specified Face Amount, the death benefit option and supplemental benefits, if any. The Specified Face Amount generally may not be decreased below $100,000—the "Minimum Specified Face Amount."

While your application is being reviewed, we may make available to you temporary life insurance coverage if you have signed a Policy Application and, at that same time, submitted a separate signed application for temporary coverage and made an advance payment. The temporary coverage, if available, begins on the date that separate application for it is signed, has a maximum amount and is subject to other conditions.

Pending approval of your application, any advance payments will be held in our general account. Upon approval of the application, we will issue to you a Policy on the life of the Insured. The Issue Date is the date we produce the Policy on our system and is specified in the Policy. A specified minimum Initial Premium is due and payable as of the Issue Date of the Policy. The Effective Date of Coverage for the Policy will be the later of-

- -	the Issue Date, or the date a premium is paid equal to or in excess of the specified Initial Premium.

If an application is not approved, we will promptly return all advance payments to you.

Right of Return Period

If you are not satisfied with the Policy, it may be returned by delivering or mailing it to our Principal Office or to the representative from whom the Policy was purchased within 10 days from the date of receipt of the Policy (the "Right of Return Period"). A longer period may apply in some states.

A Policy returned under this provision will be deemed void. You will receive a refund equal to the sum of all premium payments made, if the Policy indicates this is your right; otherwise, your refund will equal 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 at our Principal Office; and any fees or charges imposed on amounts allocated to the Variable Account.

Unless the Policy indicates you are entitled to receive a full refund of premiums paid, we will allocate net premium payments to the Investment Options in accordance with your allocation instructions. You bear all of the investment risk during the Right of Return Period. If the Policy indicates you are entitled to receive a full refund of premiums paid, we will allocate the net premium payments to the money market Sub-Account or to our general account, whichever we specify in the Policy. Upon expiration of the number of days in the Right of Return Period, as measured from the Issue Date, plus five days, the Account Value in that Sub-Account or in the general account, as applicable, will be transferred to the Investment Options in accordance with your allocation instructions.

Policies delivered in Connecticut, Maryland and North Carolina only. During the first eighteen months (twenty-four months in North Carolina), the Policy is in force, You may exchange it for a flexible premium adjustable life insurance policy issued by Us or an affiliate, the benefits of which do not vary with the investment performance of a separate account. The Account Value of the Policy will be transferred to the new policy. We will not require evidence of insurability for the exchange. To effect an exchange, You must give Us written notice at Our Principal Office within this eighteen-month (or twenty-four month) period.

Premium Payments

All premium payments must be made payable to Sun Life Assurance Company of Canada (U.S.) and mailed to our Principal Office. The Initial Premium will be due and payable as of the Policy's Issue Date. The minimum Initial Premium is, generally, two Minimum Monthly Premiums. Additional premium payments may be paid to us subject to the limitations described below.

Premium. We reserve the right to limit the number of premium payments we accept in a year. No premium payment may be less than $50 without our consent, although we will accept a smaller premium payment if necessary to keep the Policy in force. We reserve the right to reject a premium payment that, if accepted, would cause the Policy, at its current death benefit, to no longer meet the definition of ålife insuranceæ under the Internal Revenue Code. If you provide satisfactory evidence of insurability, we can retain the premium and increase the death benefit while maintaining the Policy’s ålife insuranceæ status under the Internal Revenue Code.

We will not accept premium payments that would, in our opinion, cause the Policy to fail to qualify as life insurance under applicable federal tax law. If a premium payment is made in excess of these limits, we will accept only that portion of the premium within those limits, and will refund the remainder to you.

After the policy anniversary on which the Insured is Attained Age 100, we will not accept any more premium payments for the Policy.

Net Premiums. The net premium is the amount you pay as the premium less the Expense Charges Applied to Premium. The Expense Charges Applied to Premium is a sales load and covers Federal and State tax liabilities related to premium.

Allocation of Net Premium. Except as otherwise described herein, net premium will be allocated in accordance with your allocation percentages. You must allocate at least 1% of net premium to any Investment Option you choose. Percentages must be in whole numbers. We reserve the right to limit the number of Investment Options to which you may allocate your Account Value to not more than 20 Investment Options.

You may change your allocation percentages at any time by telephone or written request to our Principal Office. 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 the 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 to identify yourself by name and a personal identification number for transactions initiated by telephone. An allocation change will be effective as of the date we accept receipt of the request for that change.

Planned Periodic Premiums. While you are not required to make additional premium payments according to a fixed schedule, you may select a planned periodic premium schedule and corresponding billing period, subject to our limits We will send you reminder notices for the planned periodic premium at each billing period as specified in the Policy, 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 the planned periodic premium 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 the Policy in force, and you may need to change your planned payment schedule or make additional payments in order to prevent termination of the Policy. We will suspend reminder notices at your written request, and 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.

Death Benefit

If the Policy is in force at the time of the Insured's death, we will pay the beneficiary an amount based on the death benefit option in effect once we have received Due Proof of the Insured's death. The amount payable will be:

- - - -	the amount of the selected death benefit option, plus any amounts payable under any supplemental benefits added to the Policy, minus the value of any Policy Debt on the date of the Insured's death, minus any overdue monthly deductions if death occurs during a grace period.
We will pay this amount to the beneficiary in one lump sum, unless we and the beneficiary agree on another form of settlement. You may select between two death benefit options. You may change the death benefit option after the first Policy Year.

Option A. Under this option, the death benefit is-

- -	the Policy's Specified Face Amount on the date of the Insured's death; or, if greater, the Policy's Account Value on the date of death multiplied by the applicable percentage shown in the table set forth in Appendix B.

This death benefit option should be selected if you want the death benefit to remain level over time.

Option B. Under this option, the death benefit is-

- -	the sum of the Specified Face Amount and Account Value of the Policy on the date of the Insured's death; or, if greater, the Policy's Account Value on the date of death multiplied by the applicable percentage shown in the table set forth in Appendix B.

This death benefit option should be selected if you want your death benefit to change with the Policy's Account Value. There is no charge related to the election of Option B.

As Option B includes the Policy's Account Value, the death benefit will be impacted in a positive or negative manner by the premiums you pay, the investment performance of the Sub-Accounts you select, the interest credited to the Fixed Account Option, any loans, partial withdrawals and the charges we deduct under the Policy. For example, the death benefit may be less if there is

minimum premium funding,

poor investment performance of the Sub-Accounts you select,

minimum interest credited to the Fixed Account Option,

an unpaid loan,

a partial withdrawal and/or

maximum charge deductions.

If you change from Option B to Option A, the Specified Face Amount will be increased by an amount equal to the Policy's Account Value on the effective date of change. If you change from Option A to Option B, the Specified Face Amount will be decreased by an amount equal to the Policy's Account Value on the effective date of the change.

Changes in Specified Face Amount

You may increase or decrease the Specified Face Amount of the Policy within certain limits.

Minimum Changes. Each increase in the Specified Face Amount must be at least $50,000. We reserve the right to change the minimum amount by which you may change the Specified Face Amount.

Increases. After the first policy anniversary, you may request an increase in the Specified Face Amount. You must provide satisfactory evidence of the Insured's insurability. The cost of insurance charges applicable to an increase in Specified Face Amount may be higher or lower than those charged on the original sums if the Insured’s health has changed to a degree that qualifies the Insured for a different risk classification. Additional policy specification pages will be provided to show the applicable guaranteed maximum cost of insurance charges applicable to any increase. Once requested, an increase will become effective at the next policy anniversary following our approval of your request. The Policy does not allow for an increase if the Insured's Attained Age is greater than 80 on the effective date of the increase.

Decreases. The Specified Face Amount can be decreased after the fourth policy anniversary. A decrease will become effective at the beginning of the next Policy Month following our approval of your request. The Specified Face Amount after the decrease must be at least $100,000. Surrender charges will apply to decreases in the Specified Face Amount during the surrender charge period except for decreases in the Specified Face Amount resulting from a change in the death benefit option or a partial withdrawal.

For purposes of determining surrender charges and later cost of insurance charges, we will apply a decrease in Specified Face Amount in the following order-

first, to the most recent increase;

second, to the next most recent increases, in reverse chronological order; and

finally, to the initial Specified Face Amount.

Accessing Your Account Value

Surrenders and Surrender Charges

You may surrender the Policy for its Cash Surrender Value at any time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate. If you surrender the Policy and receive its Cash Surrender Value, you may incur surrender charges, taxes and tax penalties.

Cash Surrender Value is the Policy's Account Value less the sum of-

- -	the outstanding balance of any Policy Debt; and any surrender charges.

We will deduct surrender charges from your Account Value if you surrender the Policy or request a decrease in the Specified Face Amount during the surrender charge period. There are separate surrender charges for the initial Specified Face Amount and any increase in the Specified Face Amount you request. The surrender charge period will start on the Policy's Issue Date and on the effective date for the increase, respectively.

We will determine your Cash Surrender Value at the next close of business on the New York Stock Exchange after we receive your written request for surrender at our Principal Office.

If you surrender the Policy in the first 9 years or within the first 9 years after an increase in the Specified Face Amount, we will apply a surrender charge to the initial Specified Face Amount and to each increase in the Specified Face Amount other than an increase resulting from a change in the death benefit option. The surrender charge will be calculated separately for the initial Specified Face Amount and each increase in the Specified Face Amount. The surrender charge will be an amount based on certain factors, including the Policy's Specified Face Amount and the Insured's age and sex.

The following are examples of surrender charges at representative Issue Ages.

First Year Surrender Charges Per $1,000 of Specified Face Amount (Non-tobacco Male)
Issue Age 25 $5.23	Issue Age 35 $6.62	Issue Age 45 $10.50
Issue Age 55 $21.00	Issue Age 65 $25.20	Issue Age 75 $24.90

The surrender charge will be calculated based on the surrender charge percentages for the initial Specified Face Amount and each increase in the Specified Face Amount as shown in the table below.

Year	Surrender Charge (as a Percentage of the First Year Surrender Charge)
1	100.0
2	100.0
3	100.0
4	85.7
5	71.4
6	57.1
7	42.9
8	28.6
9	14.3
10+	0

A surrender charge will be applied for each decrease in the Specified Face Amount except for decreases in the Specified Face Amount resulting from a change in death benefit option or partial withdrawal. These surrender charges will be applied in the following order:

first, to the most recent increase;

second, to the next most recent increases, in reverse chronological order; and

third, to the initial Specified Face Amount.

On a decrease in the initial Specified Face Amount, you will pay a proportion of the full surrender charge based on the ratio of the face amount decrease to the initial Specified Face Amount. The surrender charge you pay on a decrease that is less than the full amount of an increase in Specified Face Amount will be calculated on the same basis. Future surrender charges will be reduced by any applicable surrender charges for a decrease in the Specified Face Amount.

You may allocate any surrender charges resulting from a decrease in the Specified Face Amount among the Investment Options. If you do not specify the allocation, then the surrender charges will be allocated proportionally among the Investment Options in excess of any Policy Debt.

Partial Withdrawals

You may make a partial withdrawal of the Policy once each Policy Year after the first Policy Year by written request to us. Each partial withdrawal must be for at least $500, and no partial withdrawal may be made-

- -	During Policy Years 2-10 for more than 20 percent of your Cash Surrender Value at the end of the first Valuation Date after we receive your request or Thereafter for more than your Cash Surrender Value.

If the applicable death benefit option is Option A and you make a partial withdrawal, the Specified Face Amount will be decreased by the amount of the partial withdrawal. We will apply the decrease to the initial Specified Face Amount and to each increase in Specified Face Amount in the following order-

first, to the most recent increase;

second, to the next most recent increases, in reverse chronological order; and

third, to the initial Specified Face Amount.

Unless you specify otherwise, the partial withdrawal will be allocated proportionally among the Investment Options in excess of any Policy Debt. We will not accept requests for a partial withdrawal if the Specified Face Amount remaining in force after the partial withdrawal would be less than the minimum Specified Face Amount. We will effect a partial withdrawal at the next close of business on the New York Stock Exchange after we receive your written request. A partial withdrawal may result in taxes and tax penalties.

Policy Loans

Using the Policy as collateral, you may request a policy loan of up to 90% of the Policy's Cash Value, decreased by the amount of any outstanding Policy Debt on the date the policy loan is made. The Policy will terminate for no value subject to a grace period if the Policy Debt exceeds the Cash Value. During the no-lapse guarantee period, however, the Policy will not terminate if it satisfies the minimum premium test.

You may allocate the policy loan among the Investment Options. If you do not specify the allocation, then the policy loan will be allocated proportionally among the Investment Options in excess of any Policy Debt. Loan amounts allocated to the Sub-Accounts will be transferred to the Fixed Account Option. We will periodically credit interest at an effective annual rate of 3% on the loaned values of the Fixed Account Option.

Interest on the policy loan will accrue daily at 4.0% annually during Policy Years 1 through 10 and 3.0% annually 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 will be assessed in the same manner as the prior policy loan.

There is no definitive guidance concerning the tax treatment of a policy loan when the interest rate credited to the loan is the same as the interest rate charged against the loan. You should consult your tax adviser regarding loan amounts in Policy Years 11 and thereafter.

The Cash Surrender Value and the Policy Proceeds are reduced by the amount of any outstanding Policy Debt.

All funds we receive from you will be credited to the Policy as premium unless we have received written notice, in a form satisfactory to us, that the funds are for loan repayment. In the event you have a loan against the Policy, it is

generally advantageous to repay the loan rather than make a premium payment because premium payments incur expense charges whereas 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 reserve the right to repay any loans from the Fixed Account Option prior to loans from the Variable Account.

A policy loan, whether or not repaid, will affect the Policy Proceeds payable upon the Insured's death and the Account Value because the investment results of the Sub-Accounts will apply only to the non-loaned portion of the Account Value. The longer a loan is outstanding, the greater the effect is likely to be and, depending on the investment results of the Sub-Accounts or the Fixed Account Option while the loan is outstanding, the effect could be favorable or unfavorable.

Short-Term Trading

The Policy is not designed for short-term trading. If you wish to employ such strategies, do not purchase a Policy. Transfer limits and other restrictions, described below, are subject to our ability to monitor transfer activity. Some Owners and their third party intermediaries engaging in short-term trading may employ a variety of strategies to avoid detection. Despite our efforts to prevent short-term trading, there is no assurance that we will be able to identify such Owners or intermediaries or curtail their trading. A failure to detect and curtail short-term trading could result in adverse consequences to Owners. Short-term trading can increase costs for all Owners as a result of excessive portfolio transaction fees. In addition, short-term trading can adversely affect a Fund's performance. If large amounts of money are suddenly transferred out of a Fund, the Fund's investment adviser cannot effectively invest in accordance with the Fund's investment objectives and policies.

The Variable Account has policies and procedures to discourage frequent transfers of Account Value. As described below under "Transfer Privileges," the Policy includes limiting the number and timing of certain transfers, subject to exceptions described in that section and exceptions designed to protect the interest of individual Owners. The Company also reserves the right to charge a fee for transfers.

Short-term trading activities whether by an individual, a firm or a third party authorized to initiate transfer requests on behalf of Owner(s) may be subject to other restrictions as well (including transfers to and from the Fixed Account Option). For example, we reserve the right to take actions against short-term trading which restrict your transfer privileges more narrowly than the policies described under "Transfer Privileges", such as requiring transfer requests to be submitted in writing through regular first-class U.S., mail (e.g., no overnight, priority or courier delivery allowed), and refusing any and all transfer instructions.

If we determine that a third party acting on your behalf is engaging (alone or in combination with transfers effected by you directly) in a pattern of short-term trading, we may refuse to process certain transfers requested by such a third party. In particular, we will treat as short-term trading activity and refuse to process any transfer that is requested by an authorized third party within 30 days of a previous transfer (whether the earlier transfer was requested by you or a third party acting on your behalf). We may also impose special restrictions on third parties that engage in reallocations of Policy values by limiting the frequency of the transfer and reallocating or exchanging 100% of the values in the redeeming subaccounts.

We reserve the right to waive short-term trading restrictions, where permitted by law and not adverse to the interest of the relevant underlying Fund and other of the Company’s contract owners and Owners, in the following instances:

- when a new broker of record is designated for the Policy;

- when the Owner changes;

- when control of the Policy passes to the designated beneficiary upon the death of the Insured;

- when necessary in our view to avoid hardship to an Owner;

- when underlying Funds are dissolved, merged or substituted.

If short-term trading results as a consequence of waiving the restrictions against short-term trading, it could expose Owners to certain risks. The short-term trading could increase costs for all Owners as a result of excessive portfolio transaction fees. In addition, the short-term trading could adversely affect a Fund's performance. If large amounts of money are suddenly transferred out of a Fund, the Fund's investment adviser cannot effectively invest in accordance with the Fund's investment objectives and policies. Unless the short-term trading policy and the permitted waivers of that policy are applied uniformly, some Owners may experience a different application of the policy and therefore may experience some of these risks. Too much discretion on our part in allowing the waivers of short-term trading policy could result in an unequal treatment of short-term traders by permitting some short-term traders to engage in short-term trading while prohibiting others from doing the same.

The Funds’ Harmful Trading Policies. In addition to the restrictions that we impose (as described above under Short-Term Trading and below under Transfer Privileges), most of the Funds have adopted restrictions or other policies about transfers or other purchases and sales of the Funds’ shares. These policies (the åFunds’ Harmful Trading Policiesæ) are intended to protect the Fund from short-term trading or other trading practices that are potentially harmful to the Fund. The Funds’ Harmful Trading Policies may be more restrictive in some respects than the restrictions that we otherwise would impose, and the Funds may modify their Harmful Trading Policies from time to time.

We are legally obligated to provide (at the Funds’ request) information about each amount you cause to be deposited into a Fund (including by way of premium payments and transfers under your Policy) or removed from the Fund (including by way of withdrawals and transfers). If a Fund identifies you as having violated the Fund’s Harmful Trading Policies, we are obligated, if the Fund requests, to restrict or prohibit any further deposits or exchanges by you (or a third party acting on your behalf) in respect of that Fund. Any such restriction or prohibition may remain in place indefinitely.

Accordingly, if you do not comply with any Fund’s Harmful Trading Policies, you (or a third party acting on your behalf) may be prohibited from directing any additional amounts into that Fund or directing any transfers or other exchanges involving that Fund. You should review and comply with each Fund’s Harmful Trading Policies, which are disclosed in the Funds’ current prospectuses.

Funds may differ significantly as to such matters as: (a) the amount, format and frequency of information that the Funds request from us about transactions that our customers make; and (b) the extent and nature of any limits or restrictions that the Funds request us to impose upon such transactions. As a result of these differences, the costs borne by us and (directly or indirectly) by our customers may be significantly increased. Any such additional costs may outweigh any additional protection that would be provided to our customers, particularly in view of the protections already afforded by the trading restrictions that we impose as described above under Short-Term Trading and below under Transfer Privileges. Also, if a Fund imposes more strict trading restrictions than are reasonably necessary under the circumstances, you could be deprived of potentially valuable flexibility to make transactions with respect to that Fund. For these and other reasons, we may disagree with the timing or substance of a Fund’s requests for information from us or with any transaction limits or restrictions that the Fund requests us to impose upon our customers. If any such disagreement with respect to a Fund cannot be satisfactorily resolved, the Fund might be restricted or, subject to obtaining any required regulatory approval, replaced as an investment option.

Transfer Privileges

Subject to the above special restrictions and to our rules as they may exist from time to time and to any limits that may be imposed by the Funds, you may at any time transfer to another Sub-Account all or a portion of the Account Value allocated to a Sub-Account. There is usually no charge imposed on transfers; however, we reserve the right to impose a transfer charge of $15 for each transfer above 12 transfers in any Policy Year. We will make transfers pursuant to an authorized written or telephone request to us. 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 the 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. For transactions initiated by telephone, you will be required to identify yourself by name and a personal identification number.

Transfers may be requested by indicating the transfer of either a specified dollar amount or a specified percentage of the Fixed Account Option or the Sub-Account's value from which the transfer will be made. If you request a transfer based on a specified percentage of the Fixed Account Option or the Sub-Account's value, that percentage will be converted into a request for the transfer of a specified dollar amount based on application of the specified percentage to the Fixed Account Option or the Sub-Account's value at the time the request is received. We reserve the right to limit the number of Sub-Accounts to which you may allocate your Account Value to not more than 20 Investment Options.

An acceptable transfer request will be processed as of the date our Principal Office receives your request provided that it is received on a Valuation Date before the close of the NYSE. An åacceptable transfer requestæ is one that is authorized by a person with proper authority, provides clear instruction to the Company, as administrator of the Variable Account, and is for a transaction that is not restricted by policies and procedures of the Variable Account or the Fund. If an acceptable transfer request is received on a day that is not a Valuation Date or after the close of the NYSE on a Valuation Date, it will be processed effective on the next Valuation Date.

Transfer privileges are subject to our consent. We reserve the right to impose limitations on transfers, including, but not limited to: (1) the minimum amount that may be transferred; (2) the frequency of transfers; and (3) the minimum amount that may remain in a Sub-Account following a transfer from that Sub-Account. We will notify you in writing of any such limitations.

Transfers from the Fixed Account Option to the Sub-Accounts are limited to one transfer annually equaling 25% of the value of the Fixed Account Option at the end of the prior Policy Year or $5,000, whichever is greater.

We reserve the right to restrict amounts transferred to the Fixed Account Option from the Variable Account.

Account Value

Your Account Value is the sum of the values in each Sub-Account of the Variable Account with respect to the Policy, plus the value of the Fixed Account Option. The Account Value varies depending upon the Premiums paid, Expense Charges Applied to Premium, Mortality and Expense Risk Charges, Monthly Expense Charges, Monthly Cost of Insurance charges, partial withdrawals, fees, policy loans and the net investment factor (described below).

The minimum guaranteed interest rate applicable to the values in the Fixed Account Option is 3% annually. Interest in excess of the guaranteed rate may be applied in such a manner as we may determine, based on our expectations of future interest, mortality costs, persistency, expenses and taxes. Interest credited will be computed on a compound interest basis.

Account Value of the Sub-Accounts. We measure the amounts in the Sub-Accounts in terms of Units and Unit Values. On any given date, 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. Amounts allocated to a Sub-Account will be used to purchase Units of that Sub-Account. Units are redeemed when you make partial withdrawals, undertake policy loans or transfer amounts

from a Sub-Account, and for the payment of Monthly Expense Charges, Monthly Cost of Insurance charges, Mortality and Expense Risk Charges and other fees. The number of Units of each Sub-Account purchased or redeemed is determined by dividing the dollar amount of the transaction by the Unit Value for the Sub-Account. A Valuation Date is any day on which the NYSE is open for business and valuation will occur at the close of the NYSE. The NYSE historically closes on weekends and the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Washington’s Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. For the first Valuation Date of each Sub-Account, the Unit Value is established at $10.00. The Unit Value for any subsequent Valuation Date is equal to the Unit Value for the preceding Valuation Date multiplied by the net investment factor (determined as provided below). 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. The Valuation Period is the period of time from one determination of Unit Values to the next.

If accompanied by proper allocation instructions, a premium received at our Principal Office is credited to the Policy on the same date it is received unless that date is not a Valuation Date or receipt is after the close of the NYSE on a Valuation Date. In those instances, the premium will be credited on the next Valuation Date. The Investment Start Date is the date we apply your first premium payment, which will be the later of the Issue Date, the policy date or the Valuation Date we receive a premium equal to or in excess of the initial premium.

The Account Value on the Investment Start Date equals:

- -	the net premium received, minus the monthly deductions due on the policy date and subsequent Monthly Anniversary Days through the Investment Start Date charged to the Sub-Accounts and the Fixed Account Option.

The Account Value on subsequent Valuation Dates is equal to:

- - - - -	the values on the previous Valuation Date, plus any additional premium we have received, plus or minus the investment experience of the Investment Options you have selected, minus policy charges and deductions, minus any partial withdrawals you have made.
Net Investment Factor. The net investment factor for each Sub-Account for any Valuation Period is the quotient of (1) divided by (2) where: (1) is the net result of-

the net asset value of a 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

a per share credit or charge with respect to any taxes reserved for by us, or paid by us if not previously reserved for, during the Valuation Period which are determined by us to be attributable to the operation of the Sub-Account; and

(2) is the net asset value of a Fund share held in the Sub-Account determined as of the end of the preceding Valuation Period.

The net investment factor may be greater or less than one.

Insufficient Value. The Policy will terminate for no value, subject to a grace period described below if, on a Processing Date

- -	the Policy's Cash Surrender Value is equal to or less than zero or the Policy Debt exceeds the Cash Value.

During the no-lapse guarantee period, a Policy will not terminate by reason of insufficient value if it satisfies the "minimum premium test" described below.

Minimum Premium Test (No-Lapse Guarantee). A Policy satisfies the minimum premium test if the premiums paid less any partial withdrawals less any Policy Debt exceed the sum of the "Minimum Monthly Premiums" which applied to the Policy in each Policy Month from the policy date to the Valuation Date.

The applicable Minimum Monthly Premiums are specified in the Policy. We may revise the Minimum Monthly Premiums as a result of any of the following changes to a Policy:

- -	change in Specified Face Amount change in supplemental benefit

The revised minimum monthly premiums will be effective as of the effective date of the change to the Policy and will remain in effect until again revised by any of the above changes.

The no-lapse guarantee period will be different based on the Insured's age. It may also vary in some states, but in no case will it be greater than 20 years.

Grace Period. If, on a Valuation Date, the Policy will terminate by reason of insufficient value, we will allow a grace period. This grace period will allow 61 days from that Valuation Date for the payment of a premium sufficient to keep the Policy in force. Notice of premium due will be mailed to your last known address and the last known address of any assignee of record. We will assume that your last known address is the address shown on the Policy Application (or notice of assignment), unless we receive written notice of a change in address in a form satisfactory to us. If the premium due is not paid within 61 days after the beginning of the grace period, then the Policy and all rights to benefits will terminate without value at the end of the 61 day period. The Policy will continue to remain in force during this grace period. If the Policy Proceeds become payable by us during the grace period, then any overdue monthly deductions will be deducted from the amount payable by us.

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.

Charges and Deductions

The monthly deductions described below are the Mortality and Expense Risk Charges, Monthly Expense Charges, Monthly Costs of Insurance and the charges for any supplemental benefits.

There are no monthly deductions after the policy anniversary on which the Insured is Attained Age 100.

Expense Charges Applied to Premium. We will deduct a charge from each premium payment as a sales load and for our federal, state and local tax obligations, which we will determine from time to time. The current charge is 5.25%. The maximum charge is guaranteed not to exceed 7.25%.

Mortality and Expense Risk Charge. This charge is for the mortality and expense risks we assume with respect to the Policy. It is a percentage of the Account Value of the Sub-Accounts and, unless you direct otherwise, is deducted from the Account Value of the Investment Options each month. We may realize a profit from this charge. åMortality and Expense Risk Chargeæ is referred to as åProduct Risk Chargeæ in Maryland policies.

The Mortality and Expense Risk Charge percentage is 0.60% (.05% monthly) annually for Policy Years 1 through 10 and 0.20% (.0167% monthly) annually 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 our costs of issuing and administering Policies may be more than we estimated.

Monthly Expense Charge. We will deduct from your Account Value monthly a charge of $8.00 in all years and a monthly charge based on the Specified Face Amount for the first 10 Policy Years following the issuance of the Policy and for the first 10 Policy Years following the effective date of each increase in the Specified Face Amount, if any, based on the amount of the increase. The Monthly Expense Charge is based on the age and sex of the Insured. Unless you direct otherwise, the Monthly Expense Charges will be deducted proportionally from the amounts in the Investment Options in excess of any Policy Debt and covers administration expenses and issuance costs.

Monthly Cost of Insurance. We deduct a Monthly Cost of Insurance charge from your Account Value to cover anticipated costs of providing insurance coverage. We may realize a profit from this charge. Unless you direct otherwise, the Monthly Cost of Insurance deduction will be charged proportionally to the amounts in the Investment Options in excess of any Policy Debt.

The Monthly Cost of Insurance equals the sum of (1), (2) and (3) where:

(1)

(2)

(3)

is the cost of insurance charge equal to the Monthly Cost of Insurance rate (described below) multiplied by the net amount at risk divided by 1,000;

is the monthly rider cost for any riders which are a part of the Policy; and

is any additional insurance charge calculated, as specified in the Policy, for substandard risk classifications.

The net amount at risk equals:

- -	the death benefit divided by 1.00247; minus your Account Value on the Processing Date prior to assessing the monthly deductions.

The net amount at risk is affected by the performance of the investment options to which premium is allocated, the cumulative premium paid, any Policy Debt, any partial withdrawals, transaction fees and periodic charges.

If there are increases in the Specified Face Amount other than increases caused by changes in the death benefit option, the cost of insurance charge described above is determined separately for the initial Specified Face Amount and each increase in the Specified Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the initial death benefit and then to each increase in the Specified Face Amount in the order in which the increases were made.

Monthly Cost of Insurance Rates. The Monthly Cost of Insurance rates (except for any such rate applicable to an increase in the Specified Face Amount) are based on the length of time the Policy has been in force and the Insured's sex (in the case of non-unisex Policies), Issue Age and rating class. The Monthly Cost of Insurance rates applicable to each increase in the Specified Face Amount are based on the length of time the increase has been in force and the Insured's sex (in the case of non-unisex Policies), Issue Age and rating class. The Monthly Cost of Insurance rates will be determined by us from time to time based on our expectations of future experience with respect to mortality costs, persistency, interest rates, expenses and taxes, but will not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates based on the 1980 Commissioner's Standard Ordinary Mortality Tables.

Other Charges and Deductions. Interest charged on outstanding loans as well as the interest credited to loaned values of the Fixed Account Option is more fully described at page 19. Additionally, a flat extra charge may apply if an Insured is a substandard risk. A definition of åflat extraæ is provided in the Glossary.

Waivers and Reduced Charges

We may reduce or waive the sales load or surrender charge in situations where selling and/or maintenance costs associated with the Policies are reduced, sales of large Policies, and certain group or sponsored arrangements. In addition, we may waive charges in connection with Policies sold to our affiliates' officers, directors and employees.

We also reserve the right to reduce the Expense Charge Applied to Premium, Monthly Expense Charge and Mortality and Expense Risk Charge. We will provide you prompt notice of any reduction. Reductions will be based on uniformly applied criteria that does not discriminate unfairly against any person.

Supplemental Benefits

The following supplemental benefit riders are available. There is no charge for the accelerated benefits rider. An additional cost of insurance will be charged for each of the other riders which is in force as a part of the Monthly Cost of Insurance charge. Each rider is subject to certain limitations and termination provisions. For information in addition to that presented below, please ask your financial advisor.

Accelerated Benefits Rider. Under this rider, we will pay you, at your written request in a form satisfactory to us, an "accelerated benefit" if the Insured is terminally ill. An Insured is considered "terminally ill" if the Insured has a life expectancy of 12 months or less due to illness or physical condition. (This time period may be more or less in some states.)

The accelerated benefit payment will be equal to that portion of the Policy's death benefit requested by you, not to exceed the lesser of (a) 75% of the amount of the death benefit or (b) $250,000 (the "Accelerated Amount"), subject to certain adjustments. There is no charge for this rider.

Accidental Death Benefit Rider. Under this rider, we will pay the accidental death benefit specified in the Policy when we receive due proof of the Insured's accidental death and that death occurred while this rider was in force, on or after the Insured's first birthday and within ninety days after the date of the accident. The annual rider charge, deducted monthly from the Account Value, is based on the issue age of the Insured.

Waiver of Monthly Deductions Rider. Under this rider, we will waive the monthly deductions under the Policy retroactive to the date of total disability when the Insured suffers a total disability, if the Insured's total disability commences while this rider is in force and continues for six months. We will continue to waive the monthly deduction for as long as the disability continues. We must receive written notice and due proof before we will waive the monthly deductions. We may require from time to time additional proof that the disability is continuing, but not more frequently than once per year after the disability has continued for two years. The rider charge, deducted monthly from the Account Value, is based on the issue age of the Insured.

Payment of Stipulated Amount Rider. Under this rider, we will make a monthly payment of the "stipulated amount" when the Insured suffers a total disability, if the Insured's total disability commences while this rider is in force and continues for six months. We will continue to make a payment of that amount for as long as the disability continues but no later than the duration of the payment option elected (Insured's age 65 or 70). We must receive written notice and due proof before we will make a payment. We may require from time to time additional proof that the disability is continuing, but not more frequently than once per year after the disability has continued for two years. The rider charge, deducted monthly from the Account Value, is based on the age and sex of the Insured and the duration of the payment option elected.

Supplemental Insurance Rider

This rider provides for additional insurance on the life of the Insured by combining term coverage with the underlying variable universal life ("base policy") coverage. This rider has separate charges associated with it. At this time, those charges are lower than base policy charges for the same coverage.

By combining coverage under this rider with base policy coverage, you may be able to buy the same amount of death benefit for less premium than if you had purchased an all base policy. If this rider is combined with base policy coverage, the same amount of premium paid for the combined coverage as for an all base policy will generate faster cash value accumulation within the base policy.

At issue, the base policy may have a no-lapse guarantee period as long as 20 years. However, this rider's no-lapse guarantee period is limited to five years. This rider will terminate at the policy anniversary on which the Insured reaches Attained Age 100. Base policy coverage will continue beyond Attained Age 100 provided there is cash value in the Policy when the Insured reaches Attained Age 100. If a key objective is guarantees, supplementing the Policy with this rider may therefore not be appropriate.

The Cost of Insurance rates used to determine the monthly rider charge deduction from the Account Value are based on the length of time the rider has been in force and the Insured's sex (in the case of non-unisex Policies), Issue Age and rating class. The rates will be determined by us from time to time based on our expectations of future experience with respect to mortality costs, persistency, interest rates, expenses and taxes, but will not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates based on the 1980 Commissioner's Standard Ordinary Mortality Tables.

Termination of Policy

The Policy will terminate on the earlier of the date we receive your request to surrender, the expiration date of the Grace Period without payment of premium due or the date of death of the Insured.

Reinstatement

Before the Insured's death, we may reinstate the Policy provided that the Policy has not been surrendered and you-

make a request for reinstatement within three years from the date of termination;

submit satisfactory evidence of insurability to us; and

pay an amount, as determined by us, sufficient to put the Policy in force.

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 satisfactory to us giving rise to such payment or, in the case of death of the Insured, Due Proof of such death. Payment is subject to our rights under the Policy's incontestability and suicide provisions. Payment of any amount payable from the Variable Account on death, surrender, partial withdrawal or policy loan may be postponed whenever:

the New York Stock Exchange is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted;

the Securities and Exchange Commission, by order, permits postponement for the protection of policyowners; or

an emergency exists as determined by the Securities and Exchange Commission, 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.

We may defer payment from the Fixed Account Option for a period up to six months.

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;

exercise all other rights in the Policy;

increase or decrease the Specified Face Amount, subject to the other provisions of the Policy;

change the death benefit option, subject to the other provisions of the Policy.

When you transfer your rights to a new owner, you automatically revoke any prior contingent owner designation. When you want to change or revoke a prior beneficiary designation, you have to specify that action. You do not affect a prior beneficiary when you merely transfer ownership, or change or revoke a contingent owner designation.

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 satisfactory to us of the requested action. Your request will then, except as otherwise specified herein, be effective as of the date you signed the form, subject to any action taken before we received it.

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.

Other Policy Provisions

Addition, Deletion or Substitution of Investments. We may decide to add new Sub-Accounts at any time. Also, shares of any or all of the Funds may not always be available for purchase by the Sub-Accounts of the Variable Account, or we may decide that further investment in any such shares is no longer appropriate. In either event, 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, provided that these

substitutions have been approved by the Securities and Exchange Commission, to the extent necessary. 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 in this paragraph, we will notify you and make any appropriate amendments to the Policy to reflect the substitution.

Entire Contract. Your entire contract with us consists solely of the Policy, including the attached copy of the Policy Application and any attached copies of supplemental applications and any riders and endorsements.

Alteration. Sales representatives do not have any authority to either alter or modify the 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.

Modification. Upon notice to you, we may modify the Policy if such a 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.

When required, approval of the Securities and Exchange Commission will be obtained.

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 amendments to the Policy to reflect such modification.

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 Principal Office and must be in written form satisfactory to us. The assignment will then be effective as of the date you signed the form, subject to any action taken before we acknowledge receipt. We are not responsible for the validity or legal effect of any assignment.

Nonparticipating. The Policy does not pay dividends. The Policy does not share in our profits or surplus earnings.

Misstatement of Age or Sex (Non-Unisex Policy). If the age or sex (in the case of a non-unisex Policy) of the Insured is stated incorrectly, the amounts payable by us will be adjusted as follows:

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 (for a non-unisex Policy).

Misstatement discovered prior to death-Your Account Value will be recalculated from the policy date using the Monthly Cost of Insurance Rates based on the correct age or sex (for a non-unisex Policy).

Suicide. If the Insured, whether sane or insane, commits suicide within two years after the Policy's Issue Date, we will not pay any part of the Policy Proceeds. We will refund the premiums paid, less the amount of any Policy Debt and any partial withdrawals.

If the Insured, whether sane or insane, commits suicide within two years after the effective date of an increase in the Specified Face Amount, then our liability as to that increase will be the cost of insurance for that increase.

Incontestability. All statements made in the application or in a supplemental application are representations and not warranties. We relied and will rely on those statements when approving the issuance, increase in face amount, increase in death benefit over premium paid, change in death benefit option or reinstatement of the Policy. No statement can be used by us in defense of a claim unless the statement was made in the application or in a supplemental application. In the absence of fraud, after the 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 face amount which is effective after the Issue Date will be incontestable only after such increase has been in force during the

lifetime of the Insured for two years from the Effective Date of Coverage of such increase. Any increase in death benefit over premium paid or increase in 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. Any reinstatement will be incontestable after the reinstated Policy has been in force during the lifetime of the Insured for two years from the effective date of the reinstatement.

Report to Owner. 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 such loans. There is no charge for this report. Additionally, confirmations of individual transactions (e.g. premium payments, allocations, transfers) in the Policy will be sent at the time of the transaction.

Performance Information

We may sometimes publish performance information related to the Fund, the Variable Account or the Policy in advertising, sales literature and other promotional materials. This information is based on past investment results and is not an indication of future performance.

Portfolio Performance

We may publish a mutual fund portfolio's total return or average annual total return. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains. Average annual total return is a hypothetical rate of return that, if achieved annually, would have produced the same total return over a stated period if performance had been constant over the entire period. Average annual total returns smooth variations in performance, and are not the same as actual year-by-year results.

We may also publish a mutual fund portfolio's yield. Yield refers to the income generated by an investment in a portfolio over a given period of time, expressed as an annual percentage rate. When a yield assumes that income earned is reinvested, it is called an effective yield. Seven-day yield illustrates the income earned by an investment in a money market fund over a recent seven-day period.

Total returns and yields quoted for a mutual fund portfolio include the investment management fees and other expenses of the portfolio, but do not include charges and deductions attributable to the Policy. These expenses would reduce the performance quoted.

Adjusted Non-Standardized Portfolio Performance

We may publish a mutual fund portfolio's total return and yields adjusted for charges against the assets of the Variable Account. We may publish total return and yield quotations based on the period of time that a mutual fund portfolio has been in existence. The results for any period prior to any Policy being offered will be calculated as if the Policy had been offered during that period of time, with all charges assumed to be those applicable to the Policy.

Other Information

Performance information may be compared, 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 variable 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 expenses.

We may provide Policy information on various topics of interest to you and other prospective policyowners. These 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, 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 a Policy and the characteristics of, and market for, such financial instruments.
		Federal Income 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 åCodeæ), 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. However, due to IRS Rev. Rul. 2004-75, as amplified by Rev. Rul. 2004-97, we will treat Puerto Rico Policy distributions and withdrawals occurring on and after January 1, 2005 as U.S.-source income that is subject to U.S. income tax withholding and reporting. 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.

In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of company assets, including separate account assets that are treated as company assets under applicable income tax law. These benefits, which reduce our overall corporate income tax liability, may include dividends received deductions and foreign tax credits which can be material. We do not pass these benefits through to the Variable Account, principally because: (i) the great bulk of the benefits results from the dividends received deduction, which involves no reduction in the dollar amount of dividends that the Variable Account receives and (ii) under applicable income tax law, policyowners are not the owners of the assets generating the benefits.

Taxation of Policy Proceeds

Section 7702 of the Code provides certain tests for whether a policy will be treated as a ålife insurance contractæ for tax purposes. Provided that the policyowner of the 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 generally be eligible for exclusion from the gross income of the beneficiary under Section 101 of the Code, and the policyowner will not be deemed to be in 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 and the Fixed Account, until actual receipt thereof.

However, you may be taxed on all of the accumulated income under the Policy on its maturity date and there can be no assurance that an election to extend the maturity date of the Policy will avoid that result. In addition, a corporate owner may be subject to alternative minimum tax on the annual increases in Cash Surrender Values and on the portion of the Death Benefit under the Policy that exceeds its Cash Surrender Value.

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 åreasonable mortality chargeæ requirements set forth in the Code, and other charges reasonably expected to be actually paid that are specified in the Policy. 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 åsub-standard risksæ) 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.

The IRS has stated that satisfaction of the diversification requirements described above by itself does not prevent a contract owner from being treated as the owner of separate account assets under an "owner control" test. If a contract owner is treated as the owner of separate account assets for tax purposes, the contract owner would be subject to taxation on the income and gains from the separate account assets. In published revenue rulings through 1982 and then again in 2003, the IRS has stated that a variable contract owner will be considered the owner of separate account assets if the owner possesses incidents of ownership in those assets, such as the ability to exercise control over the investment of the assets. In Rev. Rul. 2003-91, the IRS considered certain variable annuity and variable life insurance contracts and concluded that the owners of the variable contracts would not be considered the owners of the contracts underlying assets for federal income tax purposes.

Rev. Rul. 2003-91 states that the determination of whether the owner of a variable contract possesses sufficient incidents of ownership over the assets underlying the variable contract so as to be deemed the owner of those assets for federal income tax purposes will depend on all the facts and circumstances. We do not believe that the differences between the Policy and the contracts described in Rev. Rul. 2003-91 with respect to the number of investment choices and the ability to transfer among investment choices should prevent the holding in Rev. Rul. 2003-91 from applying. Nevertheless, you should consult with a competent tax adviser on the potential impact of the investor control rules of the IRS as they relate to the investment decisions and activities you may undertake with respect to the Policy.

The guidelines in Rev. Rul. 2003-91 do not address the treatment of a policyholder which is, or which is affiliated with, an investment manager. Any investment manager or affiliate who purchases a Policy assumes the risk that it may be treated as the owner of the investments underlying the Policy under the "owner control" rules because of the investment manager's control over assets held under the Policy. However, because the diversification rules would permit an investment manager (or its affiliate) to hold a direct investment in an investment option under the Policy, we do not believe that the application of the "owner control" rules to an investment manager (or its affiliate) should affect you.

In the future, the IRS and/or the Treasury Department may issue new rulings, interpretations or regulations on this subject. Accordingly, we reserve the right to modify the Policy as necessary to attempt to prevent you from being considered the owner, for tax purposes, of the underlying assets. We also reserve the right to notify you if we determine that it is no longer practicable to maintain the Policy in a manner that was designed to prevent you from being considered the owner of the assets of the Variable Account. You bear the risk that you may be treated as the owner of Variable Account assets and taxed accordingly.

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 åmaterial changeæ 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 the 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 åInvestment in the Policyæ and then as a distribution of the income earned under the Policy, which is subject to ordinary income 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 ordinary income tax up to the amount equal to the excess of the Account Value (which includes unpaid policy loans) immediately before the distribution over the Investment in the Policy (as defined below). 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 policyowner’s becoming disabled, or is part of a series of substantially equal periodic payments for the life (or life expectancy) of the policyowner or the joint lives (or joint life expectancies ) of the policyowner and the policyowner’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 to the same policyowner during any calendar year are treated as one Modified Endowment Contract.

There are substantial limits on the deductibility of policy loan interest. You should consult a qualified tax adviser regarding such deductions.

Upon the complete maturity, surrender or lapse of the Policy, the amount by which the sum of the Policy’s Cash Surrender Value and any unpaid Policy Debt exceeds the policyowner’s åInvestment in the Policyæ (as defined below) is treated as ordinary income subject to tax and the 10% additional tax discussed above may apply also. Any loss incurred upon surrender generally is not deductible. Any corporation that is subject to the alternative minimum tax will also have to make a separate computation of the Investment in the Policy and the gain resulting from the maturity of the Policy, or a surrender or lapse of the Policy for purposes of that tax.

The term åInvestment in the Policyæ means-

the aggregate amount of any premiums or other consideration paid for a Policy, minus

the aggregate amount received under the Policy which is excluded from the owner’s gross income (other than loan amounts), plus

the amount of any loan from, or secured by, the Policy that is a Modified Endowment Contract (as defined above) to the extent that such amount is included in the policyowner’s gross income.

The åInvestment in the Policyæ is increased by any unpaid Policy Debt on a Policy that is a Modified Endowment Contract in order to prevent double taxation of income. Since the Policy Debt was treated as a taxable distribution at the time the Policy Debt was incurred, the failure to increase the åInvestment in the Policyæ by the Policy Debt would cause such amount to be taxed again upon a Policy surrender or lapse.

The amount realized that is taken into account in computing the gain on the complete surrender or lapse of a Policy will include any unpaid Policy Debt on a Policy that is a Modified Endowment Contract even though that amount has already been treated as a taxable distribution.

If a Policy is not a Modified Endowment Contract, then the Investment in the Policy is not affected by the receipt of a loan from, or secured by a Policy.

Whether or not the Policy is a Modified Endowment Contract, however, no payment of the principal of, or the interest due under, any loan from or secured by a Policy will affect the amount of the Investment in the Policy.

A policyowner 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 policyowner 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 policyowner’s Investment in the Policy.

A transfer of the Policy, a change in the policyowner, a change in the beneficiary, certain other changes to the Policy and particular uses of the Policy (including use in a so called åsplit-dollaræ 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 the Policy or designate a new policyowner 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.

The Pension Protection Act of 2006 added a new section to the Code that denies the tax-free treatment of death benefits payable under an employer-owned life insurance contract unless certain notice and consent requirements are met and either (1) certain rules relating to the insured employee’s status are satisfied or (2) certain rules relating to the payment of the åamount received under the contractæ to, or for the benefit of, certain beneficiaries or successors of the insured employee are satisfied. The new rules apply to life insurance contracts owned by corporations (including S corporations), individual sole proprietors, estates and trusts and partnerships that are engaged in a trade or business. Any business contemplating the purchase of a Policy on the life of an employee should consult with its legal and tax advisors regarding the applicability of the new legislation to the proposed purchase.

A tax adviser should also be consulted with respect to the 2003 split dollar regulations if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. Any business contemplating the purchase of a new life insurance contract or a change in an existing contract should consult a tax adviser. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the federal corporate alternative minimum tax, if the policyowner is subject to that tax.

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.

Withholding

We will withhold and remit to the U.S. Government a part of the taxable portion of each distribution unless, prior to the distribution, the Owner provides us his or her taxpayer identification number and instructs us (in the manner prescribed) not to withhold. The Owner may credit against his or her federal income tax liability for the year of distribution any amounts that we withhold.

Tax Return Disclosure

We believe that the purchase of a Policy is not currently subject to the tax return disclosure requirements of IRC Section 6011 and Treasury Regulation Section 1.6011-4. However, it is your responsibility, in consultation with your tax and legal counsel and advisers, to make your own determination as to the applicability of the disclosure requirements of IRC Section 6011 and Treasury Regulation Section 1.6011-4 to your federal tax return.

Under IRC Section 6111 and Temporary Treasury Regulation Section 301.6111, we are required to register with the IRS any offerings or sales of Policies that are considered tax shelters. We believe that registration would not be required under current regulations with respect to sales of the offering or sale of a Policy.

We believe that the customer list requirements of IRC Section 6112 and Treasury Regulation Section 301.6112-1 are not currently applicable to such offerings and sales.

Distribution of Policy

The Policy is offered on a continuous basis. The Policy is sold by licensed insurance agents ("Selling Agents") in those states where the Policy may be lawfully sold. Such Selling Agents will be registered representatives of affiliated and unaffiliated broker-dealer firms ("Selling Broker-Dealers") registered under the Securities Exchange Act of 1934 who are members of the National Association of Securities Dealers, Inc. and who have entered into selling agreements with the Company and our general distributor, Clarendon Insurance Agency, Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481. Clarendon is a wholly-owned subsidiary of the Company, is registered with the SEC under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc.

The Company (or its affiliates, for the purposes of this section only, collectively, "the Company"), pays the Selling Broker-Dealers compensation for the promotion and sale of the Policy. The Selling Agents who solicit sales of the Policy typically receive a portion of the compensation paid by the Company to the Selling Broker-Dealers in the form of commissions or other compensation, depending on the agreement between the Selling Broker-Dealer and their Selling Agent. This compensation is not paid directly by the Policy Owner or the Variable Account. The Company intends to recoup this compensation through fees and charges imposed under the Policy, and from profits on payments received by the Company for providing administrative, marketing, and other support and services to the Funds.

The amount and timing of commissions the Company may pay to Selling Broker-Dealers may vary depending on the selling agreement but is not expected to be more, in the first year, than 95% of target premium, which will vary based on the Insured's age, sex and rating class, plus 4% of any excess premium payments. In Policy Years two through ten, commissions will not exceed 4% of premium paid and will not exceed 1% of premium paid in Policy Years eleven and thereafter. In Policy Year three and thereafter, 0.10% of the Account Value of the Sub-Accounts per annum will be paid to Selling Broker-Dealers.

The Company may pay or allow other promotional incentives or payments in the form of cash or other compensation to the extent permitted by NASD rules and other applicable laws and regulations.

The Company also pays compensation to wholesaling broker-dealers, including payments to affiliates of the Company, in return for wholesaling services such as providing marketing and sales support and product training to the Selling Agents of the Selling Broker-Dealers. These allowances may be based on a percentage of premium and/or a percentage of Account Value.

In addition to the compensation described above, the Company may make additional cash payments or reimbursements to Selling Broker-Dealers in recognition of their marketing and distribution, transaction processing and/or administrative services support. These payments are not offered to all Selling Broker-Dealers, and the terms of any particular agreement governing the payments may vary among Selling Broker-Dealers depending on, among other things, the level of and type of marketing and distribution support provided. Marketing and distribution support services may include, among other services, placement of the Company's products on the Selling Broker-Dealer's preferred or recommended list, access to the Selling Broker-Dealer's registered representatives for purposes of promoting sales of the Company's products, assistance in training and education for the Selling Agents, and opportunities for the Company to participate in sales conferences and educational seminars.

You should ask your Selling Agent for further information about what commissions or other compensation he or she, or the Selling Broker-Dealer for which he or she works, may receive in connection with your purchase of the Policy.

	Voting Rights

We are the legal owner of all shares of the Funds held in the Sub-Accounts of the Variable Account, and as such have the right to vote upon matters that are required by the Investment Company Act of 1940 to be approved or ratified by the shareholders of the Funds and to vote upon any other matters that may be voted upon at a shareholders' meeting. We will, however, vote shares held in the Sub-Accounts in accordance with instructions received from policyowners who have an interest in the respective Sub-Accounts. As a result of proportional voting, the instructions of a small number of policyowners could determine the outcome of a proposal subject to shareholder vote.

We will vote shares held in each Sub-Account for which no timely instructions from policyowners are received, together with shares not attributable to a Policy, in the same proportion as those shares in that Sub-Account for which instructions are received. Should the applicable federal securities laws change so as to permit us to vote shares held in the Variable Account in our own right, we may elect to do so.

The number of shares in each Sub-Account for which a policyowner may give instructions is determined by dividing the portion of the Account Value derived from participation in that Sub-Account, if any, by the value of one share of the corresponding Fund. We will determine the number as of a date we choose, but not more than 90 days before the shareholders' meeting. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the shareholders' meeting.

We may, if required by state insurance regulators, disregard voting instructions if those instructions would require shares to be voted so as to cause a change in the sub-classification or investment policies of one or more of the Funds, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the investment policies or investment adviser, provided that we reasonably disapprove of those changes in accordance with applicable federal regulations. If we disregard voting instructions, we will advise you of that action and our reasons for it in our next communication to policyowners.

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 a material adverse 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 Georges C. Rouhart, FSA, MAAA, Product Officer.

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 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 should refer to the registration statement for further information concerning the Variable Account, Sun Life of Canada (U.S.), the mutual fund investment options and the Policy.

Financial Statements

Our financial statements, provided in the Statement of Additional Information, 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 Fund shares held in the Variable Account. Instructions on how to obtain the Statement of Additional Information are provided on the last page of this prospectus.

		Appendix A
	Glossary of Terms

Account Value-The sum of the amounts in each Sub-Account of the Variable Account and the Fixed Account Option with respect to a Policy. Account Value does not include Policy Debt. Policy Debt, which includes the amount of loans and interest charged, is not deducted from Account Value. It is reflected in the amounts received upon surrender or payment of Policy Proceeds. It is also reflected in the amount of total Account Value that may be borrowed against.

Anniversary-The same day in each succeeding year as the day of the year corresponding to the policy date.

Attained Age-The Insured's Issue Age plus the number of completed Policy Years.

Business Day-Any day that we are open for business.

Cash Value-Account Value less any surrender charges.

Cash Surrender Value-The Cash Value decreased by the balance of any outstanding Policy Debt.

Class-The risk and underwriting classification of the Insured.

Due Proof-Such evidence as we may reasonably require in order to establish that a benefit is due and payable. Generally, evidence will consist of the Insured’s death certificate.

Effective Date of Coverage-Initially, the Investment Start Date; with respect to any increase in the Specified Face Amount, the Anniversary that falls on or next follows the date we approve the supplemental application for that increase; with respect to any decrease in the Specified Face Amount, the Monthly Anniversary Day that falls on or next follows the date we receive your request.

Expense Charges Applied to Premium-A percentage charge deducted from each premium payment.

Fixed Account Option-The portion of the Account Value funded by assets invested in our general account.

Flat Extra-An additional charge imposed if the Insured is a substandard risk. It is a flat dollar charge per $1000 of Specified Face Amount and any Supplemental Insurance Rider Face Amount.

Fund-A mutual fund portfolio in which a Sub-Account invests.

Initial Premium-The amount necessary to put the coverage in force.

Insured-The person on whose life a Policy is issued.

Investment Options-The investment choices consisting of the Sub-Accounts and the Fixed Account Option.

Investment Start Date-The date the first premium is applied, which will be the later of the Issue Date, the policy date or the Valuation Date we receive a premium equal to or in excess of the Minimum Initial Premium.

Issue Age-The Insured's age as of the Insured's birthday nearest the policy date.

Issue Date-The date we produce a Policy from our system as specified in the Policy.

Monthly Anniversary Day-The same day in each succeeding month as the day of the month corresponding to the policy date.

Monthly Cost of Insurance-A deduction made on a monthly basis for the Specified Face Amount and Supplemental Insurance Face Amount provided by the Policy and rider.

Monthly Expense Charge-A per Policy deduction made on a monthly basis for administration and other expenses.

Mortality and Expense Risk Charge-The annual rate deducted monthly from the Account Value for the mortality and expense risk we assume by issuing the Policy.

Policy-The form issued by Sun Life Assurance Company of Canada (U.S.) which evidences the insurance coverage provided and is a contract between the policyowner and the Company.

Policy Application-The application for a Policy, a copy of which is attached to and incorporated in the Policy.

Policy Debt-The principal amount of any outstanding loan against the Policy, plus accrued but unpaid interest on such loan.

Policy Month-A Policy Month is a one-month period commencing on the policy 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 the Policy which is payable at the death of the Insured. This amount is the death benefit, decreased by the amount of any outstanding Policy Debt and any unpaid charges and deductions, and increased by the amounts payable under any supplemental benefits.

Policy Year-A Policy Year is a one-year period commencing on the policy date or any Anniversary and ending on the next Anniversary.

Principal Office-Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts, 02481, or such other address as we may hereafter specify to you by written notice.

Processing Date-The first Valuation Date on or next following a Monthly Anniversary Day.

Specified Face Amount-The amount of life insurance coverage you request as specified in the Policy.

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.

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 the New York Stock Exchange is open for business. We will determine Unit Values for each Valuation Date as of the close of the New York Stock Exchange on that Valuation Date.

Valuation Period-The period of time from one Valuation Date to the next Valuation Date.

Variable Account-Sun Life of Canada (U.S.) Variable Account I.

	Appendix B
	Table of Death Benefit Percentages

Age	Applicable Percentage	Age	Applicable Percentage
20	250%	60	130%
21	250%	61	128%
22	250%	62	126%
23	250%	63	124%
24	250%	64	122%
25	250%	65	120%
26	250%	66	119%
27	250%	67	118%
28	250%	68	117%
29	250%	69	116%
30	250%	70	115%
31	250%	71	113%
32	250%	72	111%
33	250%	73	109%
34	250%	74	107%
35	250%	75	105%
36	250%	76	105%
37	250%	77	105%
38	250%	78	105%
39	250%	79	105%
40	250%	80	105%
41	243%	81	105%
42	236%	82	105%
43	229%	83	105%
44	222%	84	105%
45	215%	85	105%
46	209%	86	105%
47	203%	87	105%
48	197%	88	105%
49	191%	89	105%
50	185%	90	105%
51	178%	91	104%
52	171%	92	103%
53	164%	93	102%
54	157%	94	101%
55	150%	95+	100%
56	146%
57	142%
58	138%
59	134%

Appendix C

Privacy Policy

Introduction

At the Sun Life Financial group of companies, protecting your privacy is important to us. Whether you are an existing customer or considering a relationship with us, we recognize that you have an interest in how we may collect, use and share information about you.

Sun Life Financial has a long tradition of safeguarding the privacy of its customers’ information. We understand and appreciate the trust and confidence you place in us, and we take seriously our obligation to maintain the confidentiality and security of your personal information.

We invite you to review this Privacy Policy which outlines how we use and protect that information.

Collection of Nonpublic Personal Information by Sun Life Financial

Collecting personal information from you is essential to our ability to offer you high-quality investment, retirement and insurance products. When you apply for a product or service from us, we need to obtain information from you to determine whether we can provide it to you. As part of that process, we may collect information about you, known as nonpublic personal information, from the following sources:

-	Information we receive from you on applications or other forms, such as your name, address, social security number and date of birth;
-	Information about your transactions with us, our affiliates or others, such as other life insurance policies or annuities that you may own; and
-	Information we receive from a consumer reporting agency, such as a credit report.

Limited Use and Sharing of Nonpublic Personal Information by Sun Life Financial

We use the nonpublic personal information we collect to help us provide the products and services you have requested and to maintain and service your accounts. Once we obtain nonpublic personal information from you, we do not disclose it to any third party except as permitted or required by law.

We may share your nonpublic personal information within Sun Life Financial to help us develop innovative financial products and services and to allow our member companies to inform you about them. The Sun Life Financial group of companies provides a wide variety of financial products and services including individual life insurance, individual fixed and variable annuities and group life, disability, and medical stop-loss insurance.

We also may disclose your nonpublic personal information to companies that help in conducting our business or perform services on our behalf, or to other financial institutions with which we have joint marketing agreements. Sun Life Financial is highly selective in choosing these companies, and we require them to comply with strict standards regarding the security and confidentiality of our customers’ nonpublic personal information. These companies may use and disclose the information provided to them only for the purpose for which it is provided, as permitted by law.

There also may be times when Sun Life Financial is required to disclose its customers’ nonpublic personal information, such as when complying with federal, state or local laws, when responding to a subpoena, or when complying with an inquiry by a governmental agency or regulator.

Our Treatment of Information About Former Customers

Our protection of your nonpublic personal information extends beyond the period of your customer relationship with us. If your customer relationship with us ends, we will not disclose your information to nonaffiliated third parties other than as permitted or required by law.

Security of Your Nonpublic Personal Information

We maintain physical, electronic and procedural safeguards that comply with federal and state regulations to safeguard your nonpublic personal information from unauthorized use or improper access.

Employee Access to Your Nonpublic Personal Information

We restrict access to your nonpublic personal information to those employees who have a business need to know that information in order to provide products or services to you or to maintain your accounts. Our employees are governed by a strict code of conduct and are required to maintain the confidentiality of customer information.

The following Sun Life Financial member companies have adopted this Notice. Other Sun Life Financial affiliated companies have adopted their own privacy policies. Please check their websites for details.

Insurance Companies	Distributors/Broker-Dealers/Underwriters

Sun Life Assurance Company of Canada (U.S. Operations)	Clarendon Insurance Agency, Inc.
Sun Life Assurance Company of Canada (U.S.)	Sun Life Financial Distributors, Inc.
Sun Life Insurance and Annuity Company of New York	IFMG of Oklahoma, Inc.
Independence Life and Annuity Company	IFS Agencies, Inc.
	IFS Agencies of Alabama, Inc.
	IFS Agencies of New Mexico, Inc.
	IFS Insurance Agencies of Ohio, Inc.
	IFS Insurance Agencies of Texas, Inc.
	Independent Financial Marketing Group, Inc.
	IFMG Securities, Inc.
	LSC Insurance Agency of Arizona, Inc.

The SAI includes additional information about Sun Life of Canada (U.S.) Variable Account I and is incorporated herein by reference. The SAI and personalized illustrations of death benefits, cash surrender values and cash values are available upon request, at no charge. You may make inquiries about the Policy, request an SAI and request a personalized illustration by calling 1-800-700-6554.

You can review and copy the complete registration statement (including the SAI) which contains additional information about us, the Policy and the Variable Account at the SEC's Public Reference Room in Washington, D.C. To find out more about this public service, call the Securities and Exchange Commission at 202-942-8090. Reports and other information about the Policy and its mutual fund investment options are also available on the SEC's website (www.sec.gov), or you can receive copies of this information, for a duplication fee, by writing the Public Reference Section, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, D.C. 20549-0102.

Securities Act of 1933 File No. 333-59662

Investment Company Act File No. 811-09137

PART B

STATEMENT OF ADDITIONAL INFORMATION

FUTURITY ACCUMULATOR VUL

VARIABLE UNIVERSAL LIFE POLICY

	SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
	SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I

April 25, 2007

This Statement of Additional Information (SAI) is not a prospectus but it relates to, and should be read in conjunction with, the Futurity Accumulator Variable Universal Life Insurance prospectus, dated April 25, 2007. The SAI is incorporated by reference into the prospectus. The prospectus is available, at no charge, by writing Sun Life Assurance Company of Canada (U.S.)("the Company") at One Sun Life Executive Park, Wellesley Hills, MA 02481 or calling 1-800-700-6554.

TABLE OF CONTENTS

THE COMPANY AND THE VARIABLE ACCOUNT	2
CUSTODIAN	2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	2
DISTRIBUTION AND UNDERWRITING OF POLICY	2
THE POLICY	3
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT I	5
FINANCIAL STATEMENTS OF THE COMPANY	44

	THE COMPANY AND THE VARIABLE ACCOUNT
Sun Life Financial Inc. ("Sun Life Financial"), a reporting company under the Securities Exchange Act of 1934 with common shares listed on the Toronto, New York and Philippine stock exchanges, is the ultimate corporate parent of Sun Life Assurance Company of Canada (U.S.). Sun Life Financial ultimately controls Sun Life Assurance Company of Canada (U.S.) through the following intervening holding company subsidiaries: Sun Life of Canada (U.S.) Holdings, Inc., Sun Life Financial (U.S.) Investments LLC, Sun Life Financial (U.S.) Holdings, Inc., Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc., and Sun Life Financial Corp. Sun Life of Canada (U.S.) Variable Account I was established in accordance with Delaware law on December 1, 1998 and is registered as a unit investment trust.
		CUSTODIAN

We are the Custodian of the assets of the Variable Account. We will purchase Fund shares at net asset value in connection with amounts allocated to the Sub-Accounts in accordance with your instructions, and we will redeem Fund shares at net asset value for the purpose of meeting the contractual obligations of the Variable Account and paying charges relative to the Variable Account. The Variable Account will be fully funded at all times for the purposes of Federal securities laws.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The consolidated financial statements of Sun Life Assurance Company of Canada (U.S.) included in the Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing therein (which report, dated March 27, 2007, accompanying such financial statements expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of the American Institute of Certified Public Accountants' Statement of Position 03-01, Accounting and Reporting by Insurance Enterprises of Certain Nontraditional Long-Duration Contracts and for Separate Accounts, effective January 1, 2004, as described in Note 1), and have been so included in their reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The financial statements of Sun Life of Canada (U.S.) Variable Account I that are included in the Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing therein (which report dated April 20, 2007 accompanying the financial statements expresses an unqualified opinion) and has been so included in their reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

DISTRIBUTION AND UNDERWRITING OF THE POLICY

The Company may pay or allow other promotional incentives or payments in the form of cash or other compensation to the extent permitted by NASD rules and other applicable laws and regulations.

THE POLICY

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 and simplified underwriting basis. We may require medical examinations and further information before the proposed application is approved. Simplified underwriting is available to certain groups of insureds, with all Insureds meeting certain other underwriting requirements. We must pre-approve any simplified underwriting arrangements. Proposed Insureds must be acceptable risks based on our underwriting limits and standards. A Policy cannot be issued until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application that does not meet our underwriting requirements or to apply extra charges for the underwriting classification for an Insured which will result in increased Monthly Cost of Insurance charges. The cost of insurance charges are based on the 1980 Commissioner's Standard Ordinary Mortality Table.

Expense Charges Applied to Premium. We deduct charges from each premium payment for our federal, state and local tax obligations. The current charge is 5.25%. The guaranteed maximum charge is 7.25%.

Increase in Face Amount. After the first policy anniversary, you may request an increase in the Specified Face Amount. You must provide satisfactory evidence of the Insured's insurability. Once requested, an increase will become effective at the next policy anniversary following our approval of your request. The Policy does not allow for an increase if the Insured's Attained Age is greater than 80 on the effective date of the increase.

If there are increases in the Specified Face Amount other than increases caused by changes in the death benefit option, the cost of insurance charge is determined separately for the initial Specified Face Amount and each increase in the Specified Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the initial death benefit and then to each increase in the Specified Face Amount in the order in which the increases were made.

FINANCIAL STATEMENTS

The financial statements of the Variable Account and Sun Life Assurance Company of Canada (U.S.) are included in this Statement of Additional Information. The consolidated financial statements of Sun Life Assurance Company of Canada (U.S.) are provided as relevant to its ability to meet its financial obligations under the Policies and should not be considered as bearing on the investment performance of the assets held in the Variable Account.

Sun Life of Canada (U.S.) Variable Account I

Statements of Condition - December 31, 2006

Assets:
Investments in:	Shares	Cost		Value
AIM Variable Insurance Funds, Inc.:
V.I. Capital Appreciation Fund Sub-Account (åAIM1æ)	71,461	$	1,693,600	$	1,873,718
V.I. Growth Fund Sub-Account (åAIM2æ)	-		-		-
V.I. Core Equity Fund Sub-Account (åAIM3æ) [a]	45,896		1,075,603		1,249,292
V.I. International Growth Fund Sub-Account (åAIM4æ)	200,224		4,466,870		5,892,590
V.I. Premier Equity Fund Sub-Account (åAIM5æ)	-		-		-
V.I. Dynamics Fund Sub-Account (åIV1æ) [a]	18,713		202,802		320,935
V.I. Small Cap Growth Fund Sub-Account (åIV2æ) [a]	19,311		253,312		357,259
The Alger American Fund:
Growth Portfolio Sub-Account (åAL1æ)	7,049		252,607		290,576
Income and Growth Portfolio Sub-Account (åAL2æ)	24,094		233,261		267,204
Small Capitalization Portfolio Sub-Account (åAL3æ)	5,020		83,016		142,682
Mid Cap Growth Portfolio Sub-Account (åAL4æ)	17,150		346,823		355,866
Goldman Sachs Variable Insurance Trust:
CORE Small Cap Equity Fund Sub-Account (åGS2æ)	26,770		372,965		386,560
Structured US Equity Fund Sub-Account (åGS3æ)	116,200		1,382,165		1,704,656
Growth and Income Fund Sub-Account (åGS4æ)	40,044		492,358		557,007
International Equity Fund Sub-Account (åGS5æ)	91,611		910,943		1,327,436
Mid Cap Value Fund Sub-Account (åGS8æ) [b]	67,522		1,089,658		1,086,429
MFS/Sun Life Series Trust:
Capital Appreciation Series Sub-Account (åCASæ) [a]	12,764		200,030		261,668
Massachusetts Investors Trust Series Sub-Account (åCGSæ)	53,149		1,430,231		1,801,223
Emerging Growth Series Sub-Account (åEGSæ) [a]	25,787		314,155		475,771
Government Securities Series Sub-Account (åGSSæ)	266,613		3,440,424		3,372,649
High Yield Series Sub-Account (åHYSæ)	471,547		3,192,288		3,267,820
Massachusetts Investors Growth Stock Series Sub-Account (åMISæ)	139,483		1,267,728		1,467,362
New Discovery Series Sub-Account (åNWDæ)	86,921		1,188,123		1,411,591
Total Return Series Sub-Account (åTRSæ)	246,878		4,354,151		4,942,494
Utilities Series Sub-Account (åUTSæ)	72,504		1,316,301		1,685,709
Value Series Sub-Account (åEISæ)	106,461		1,780,431		1,990,815
OCC Accumulation Trust:
Equity Portfolio Sub-Account (åOP1æ)	8,849		303,727		367,064
Mid Cap Portfolio Sub-Account (åOP2æ)	7,904		110,609		123,150
Small Cap Portfolio Sub-Account (åOP3æ)	10,965		321,163		402,870
Managed Portfolio Sub-Account (åOP4æ)	577		22,654		23,948
Sun Capital Advisers Trust:
Sun Capital Money Market Fund Sub-Account (åSCA1æ)	1,963,728		1,963,728		1,963,728
Sun Capital Investment Grade Bond Fund Sub-Account (åSCA2æ)	332,824		3,295,557		3,201,765
Sun Capital Real Estate Fund Sub-Account (åSCA3æ)	182,111		3,212,177		4,479,936
Sun Capital Blue Chip Mid-Cap Fund Sub-Account (åSCA5æ)	189,583		3,262,989		3,609,657
Sun Capital Davis Venture Value Fund Sub-Account (åSCA7æ)	300,292		3,200,230		3,954,847
Sun Capital Oppenheimer Main Street Small Cap Fund Sub-Account (åSCBæ)	137,899		1,938,113		2,071,236
Sun Capital All Cap Fund Sub-Account (åSCMæ)	23,173		275,673		286,649
AllianceBernstein Variable Product Series Fund, Inc.:
VP Global Technology Portfolio Sub-Account (åAN2æ) [a]	10,088		138,714		170,887
VP Growth and Income Portfolio Sub-Account (åAN3æ)	167,218		3,762,394		4,503,178
Fidelity Variable Insurance Products Fund:
Fidelity VIP Index 500 Portfolio Sub-Account (åFL4æ)	90,149		11,818,024		14,503,213
Fidelity VIP Money Market Portfolio Sub-Account (åFL5æ)	10,150,547		10,150,547		10,150,547
Fidelity VIP Contrafund^TM Portfolio Sub-Account (åFL6æ)	214,484		5,979,879		6,730,499
Fidelity VIP Overseas Portfolio Sub-Account (åFL7æ)	260,136		4,481,949		6,206,851
Fidelity VIP Growth Portfolio Sub-Account (åFL8æ)	58,604		1,926,402		2,093,330
Franklin Templeton Variable Insurance Products Trust:
Franklin Templeton Growth Securities Fund Sub-Account (åFTGæ)	115,289		1,543,036		1,836,551
Franklin Templeton Foreign Securities Fund Sub-Account (åFTIæ)	351,392		5,010,515		6,578,061
PIMCO Variable Insurance Trust:
PIMCO High Yield Portfolio Sub-Account (åPHYæ)	164,498		1,349,628		1,371,917
PIMCO Emerging Markets Bond Portfolio Sub-Account (åPMBæ)	167,890		2,243,133		2,343,742
PIMCO Real Return Portfolio Sub-Account (åPRRæ)	138,254		1,756,319		1,649,374
PIMCO Total Return Portfolio Sub-Account (åPTRæ)	540,647		5,569,983		5,471,351
PIMCO Low Duration Fund Sub-Account (åPLDæ)	520,328		5,323,006		5,234,503

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Condition - December 31, 2006 - continued

Assets:
	Shares	Cost		Value
Scudder VIT Funds:
Scudder VIT Small Cap Index Fund Sub-Account (åSSCæ)	208,905	$	2,843,115	$	3,365,461
Scudder Variable Series II:
SVS Dreman Small Cap Value Portfolio Sub-Account (åSCVæ)	85,078		1,722,573		1,950,850
Delaware Variable Insurance Products Trust:
VIP Growth Opportunities Series Sub-Account (åDGOæ)	5,862		109,140		110,853
Dreyfus Investment Portfolios:
MidCap Stock Portfolio Sub-Account (åDMCæ)	237,028		3,953,707		4,121,919
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio Sub-Account (åLA1æ)	52,550		1,469,755		1,541,818
Mid-Cap Value Portfolio Sub-Account (åLA2æ)	70,210		1,493,742		1,529,163
Oppenheimer Variable Account Funds:
Capital Appreciation Fund Sub-Account (åOCFæ)	14,754		569,837		611,245
Van Kampen Life Insurance Trust:
LIT Growth & Income Portfolio Sub-Account (åVGIæ)	33,475		667,526		736,455
T. Rowe Price Equity Series, Inc.:
T.Rowe Price Blue Chip Growth Portfolio Sub-Account (åTBCæ)	290,334		2,534,560		3,054,317
Total Assets:		$	125,663,947	$	142,840,249

(a) This investment option is closed to new premiums or transfers.

(b) Effective May 1, 2006, this investment option is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Condition - December 31, 2006 - continued

Net Assets Applicable to Contract Owners:	Units		Net Assets value
AIM Variable Insurance Funds, Inc.:
V.I. Capital Appreciation Fund Sub-Account (åAIM1æ)	186,833	$	1,873,718
V.I. Growth Fund Sub-Account (åAIM2æ)	-		-
V.I. Core Equity Fund Sub-Account (åAIM3æ) [a]	116,873		1,249,292
V.I. International Growth Fund Sub-Account (åAIM4æ)	351,267		5,892,590
V.I. Premier Equity Fund Sub-Account (åAIM5æ)	-		-
V.I. Dynamics Fund Sub-Account (åIV1æ) [a]	30,465		320,935
V.I. Small Cap Growth Fund Sub-Account (åIV2æ) [a]	34,509		357,259
The Alger American Fund:
Growth Portfolio Sub-Account (åAL1æ)	32,329		290,576
Income and Growth Portfolio Sub-Account (åAL2æ)	25,907		267,204
Small Capitalization Portfolio Sub-Account (åAL3æ)	11,152		142,682
Mid Cap Growth Portfolio Sub-Account (åAL4æ)	23,352		355,866
Goldman Sachs Variable Insurance Trust:
CORE Small Cap Equity Fund Sub-Account (åGS2æ)	19,409		386,560
Structured US Equity Fund Sub-Account (åGS3æ)	144,902		1,704,656
Growth and Income Fund Sub-Account (åGS4æ)	39,319		557,007
International Equity Fund Sub-Account (åGS5æ)	102,983		1,327,436
Mid Cap Value Fund Sub-Account (åGS8æ) [b]	68,934		1,086,429
MFS/Sun Life Series Trust:
Capital Appreciation Series Sub-Account (åCASæ) [a]	31,485		261,668
Massachusetts Investors Trust Series Sub-Account (åCGSæ)	158,329		1,801,223
Emerging Growth Series Sub-Account (åEGSæ) [a]	53,802		475,771
Government Securities Series Sub-Account (åGSSæ)	256,685		3,372,649
High Yield Series Sub-Account (åHYSæ)	219,625		3,267,820
Massachusetts Investors Growth Stock Series Sub-Account (åMISæ)	164,036		1,467,362
New Discovery Series Sub-Account (åNWDæ)	127,257		1,411,591
Total Return Series Sub-Account (åTRSæ)	336,951		4,942,494
Utilities Series Sub-Account (åUTSæ)	99,015		1,685,709
Value Series Sub-Account (åEISæ)	133,384		1,990,815
OCC Accumulation Trust:
Equity Portfolio Sub-Account (åOP1æ)	25,041		367,064
Mid Cap Portfolio Sub-Account (åOP2æ)	4,314		123,150
Small Cap Portfolio Sub-Account (åOP3æ)	16,571		402,870
Managed Portfolio Sub-Account (åOP4æ)	1,829		23,948
Sun Capital Advisers Trust:
Sun Capital Money Market Fund Sub-Account (åSCA1æ)	167,099		1,963,728
Sun Capital Investment Grade Bond Fund Sub-Account (åSCA2æ)	228,845		3,201,765
Sun Capital Real Estate Fund Sub-Account (åSCA3æ)	137,110		4,479,936
Sun Capital Blue Chip Mid-Cap Fund Sub-Account (åSCA5æ)	203,455		3,609,657
Sun Capital Davis Venture Value Fund Sub-Account (åSCA7æ)	284,851		3,954,847
Sun Capital Oppenheimer Main Street Small Cap Fund Sub-Account (åSCBæ)	131,940		2,071,236
Sun Capital All Cap Fund Sub-Account (åSCMæ)	17,353		286,649
AllianceBernstein Variable Product Series Fund, Inc.:
VP Global Technology Portfolio Sub-Account (åAN2æ) [a]	22,621		170,887
VP Growth and Income Portfolio Sub-Account (åAN3æ)	356,895		4,503,178
Fidelity Variable Insurance Products Fund:
Fidelity VIP Index 500 Portfolio Sub-Account (åFL4æ)	1,235,790		14,503,213
Fidelity VIP Money Market Portfolio Sub-Account (åFL5æ)	890,859		10,150,547
Fidelity VIP Contrafund^TM Portfolio Sub-Account (åFL6æ)	414,771		6,730,499
Fidelity VIP Overseas Portfolio Sub-Account (åFL7æ)	421,594		6,206,851
Fidelity VIP Growth Portfolio Sub-Account (åFL8æ)	228,802		2,093,330
Franklin Templeton Variable Insurance Products Trust:
Franklin Templeton Growth Securities Fund Sub-Account (åFTGæ)	84,981		1,836,551
Franklin Templeton Foreign Securities Fund Sub-Account (åFTIæ)	299,049		6,578,061
PIMCO Variable Insurance Trust:
PIMCO High Yield Portfolio Sub-Account (åPHYæ)	82,498		1,371,917
PIMCO Emerging Markets Bond Portfolio Sub-Account (åPMBæ)	112,396		2,343,742
PIMCO Real Return Portfolio Sub-Account (åPRRæ)	133,728		1,649,374
PIMCO Total Return Portfolio Sub-Account (åPTRæ)	455,277		5,471,351
PIMCO Low Duration Fund Sub-Account (åPLDæ)	496,216		5,234,503

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Condition - December 31, 2006 - continued

Net Assets Applicable to Contract Owners:	Units		Net Assets value
Scudder VIT Funds:
Scudder VIT Small Cap Index Fund Sub-Account (åSSCæ)	151,365	$	3,365,461
Scudder Variable Series II:
SVS Dreman Small Cap Value Portfolio Sub-Account (åSCVæ)	116,029		1,950,850
Delaware Variable Insurance Products Trust:
VIP Growth Opportunities Series Sub-Account (åDGOæ)	7,498		110,853
Dreyfus Investment Portfolios:
MidCap Stock Portfolio Sub-Account (åDMCæ)	289,998		4,121,919
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio Sub-Account (åLA1æ)	108,969		1,541,818
Mid-Cap Value Portfolio Sub-Account (åLA2æ)	103,941		1,529,163
Oppenheimer Variable Account Funds
Capital Appreciation Fund Sub-Account (åOCFæ)	47,715		611,245
Van Kampen Life Insurance Trust:
LIT Growth & Income Portfolio Sub-Account (åVGIæ)	49,615		736,455
T. Rowe Price Equity Series, Inc.:
T.Rowe Price Blue Chip Growth Portfolio Sub-Account (åTBCæ)	226,597		3,054,317
Net Assets Applicable to Contract Holders		$	142,840,249

(a) This investment option is closed to new premiums or transfers.

(b) Effective May 1, 2006, this investment option is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Operations - For the Year Ended December 31, 2006

	AIM1			AIM2 [a] [c]			AIM3 [a]
	Sub-Account			Sub-Account			Sub-Account
Income:
Dividend income	$	1,082		$	-		$	9,602

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		101,957			236,959			228,557
Realized gain distributions		-			-			-
Net realized gains (losses)		101,957			236,959			228,557

Change in unrealized appreciation (depreciation) during year		(39,505	)		(186,579	)		(18,548	)

Increase (Decrease) in Net Assets from Operations	$	63,534		$	50,380		$	219,611

	AIM4		AIM5 [a] [c]			IV1 [a]
	Sub-Account		Sub-Account			Sub-Account
Income:
Dividend income	$	55,085	$	7,820		$	-

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		497,710		163,995			15,773
Realized gain distributions		-		-			-
Net realized gains (losses)		497,710		163,995			15,773

Change in unrealized appreciation (depreciation) during year		569,093		(131,024	)		30,885

Increase (Decrease) in Net Assets from Operations	$	1,121,888	$	40,791		$	46,658

	IV2 [a]		AL1			AL2
	Sub-Account		Sub-Account			Sub-Account
Income:
Dividend income	$	-	$	512		$	4,614

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		27,017		24,830			13,621
Realized gain distributions		-		-			-
Net realized gains (losses)		27,017		24,830			13,621

Change in unrealized appreciation (depreciation) during year		21,829		(4,451	)		13,467

Increase (Decrease) in Net Assets from Operations	$	48,846	$	20,891		$	31,702

	AL3		AL4			GS2
	Sub-Account		Sub-Account			Sub-Account
Income:
Dividend income	$	-	$	-		$	2,581

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		5,293		(7,309	)		6,256
Realized gain distributions		-		46,926			28,169
Net realized gains (losses)		5,293		39,617			34,425

Change in unrealized appreciation (depreciation) during year		19,824		(8,037	)		5,023

Increase (Decrease) in Net Assets from Operations	$	25,117	$	31,580		$	42,029

(a) This fund is not open to new premiums or transfers.

(c) Effective April 30, 2006, AIM V.I. Premium Equity Fund [AIM5] was merged into AIM V.I. Core Equity Fund [AIM3] and AIM V.I. Growth Fund [AIM2] was merged into AIM V.I. Capital Appreciation Fund [AIM1].

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Operations - For the Year Ended December 31, 2006 - continued

	GS3		GS4		GS5
	Sub-Account		Sub-Account		Sub-Account
Income:
Dividend income	$	18,075	$	8,877	$	20,926

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		66,451		51,463		89,015
Realized gain distributions		-		21,335		-
Net realized gains (losses)		66,451		72,798		89,015

Change in unrealized appreciation (depreciation) during year		113,264		25,855		142,007

Increase (Decrease) in Net Assets from Operations	$	197,790	$	107,530	$	251,948

	GS8 [b]		CAS [a]		CGS
	Sub-Account		Sub-Account		Sub-Account
Income:
Dividend income	$	9,855	$	592	$	13,775

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		42,826		10,996		93,067
Realized gain distributions		108,566		-		-
Net realized gains (losses)		151,392		10,996		93,067

Change in unrealized appreciation (depreciation) during year		17,399		3,253		111,496

Increase (Decrease) in Net Assets from Operations	$	178,646	$	14,841	$	218,338

	EGS [a]		GSS		HYS
	Sub-Account		Sub-Account		Sub-Account
Income:
Dividend income	$	-	$	141,847	$	226,131

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		25,167		(39,397)		8,713
Realized gain distributions		-		-		-
Net realized gains (losses)		25,167		(39,397)		8,713

Change in unrealized appreciation (depreciation) during year		11,799		14,282		62,695

Increase (Decrease) in Net Assets from Operations	$	36,966	$	116,732	$	297,539

	MIS		NWD		TRS
	Sub-Account		Sub-Account		Sub-Account
Income:
Dividend income	$	1,219	$	-	$	130,720

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		29,143		101,356		118,368
Realized gain distributions		-		-		184,349
Net realized gains (losses)		29,143		101,356		302,717

Change in unrealized appreciation (depreciation) during year		71,858		49,317		128,930

Increase (Decrease) in Net Assets from Operations	$	102,220	$	150,673	$	562,367

(a) This fund is not open to new premiums or transfers.

(b) Effective May 1, 2006, Goldman Sachs Mid Cap Value Fund is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Operations - For the Year Ended December 31, 2006 - continued

	UTS			EIS			OP1
	Sub-Account			Sub-Account			Sub-Account
Income:
Dividend income		$	30,506		$	19,958		$	2,888

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			163,209			83,202			42,979
Realized gain distributions			-			48,921			37,453
Net realized gains (losses)			163,209			132,123			80,432

Change in unrealized appreciation (depreciation) during year			143,184			143,511			11,453

Increase (Decrease) in Net Assets from Operations		$	336,899		$	295,592		$	94,773

	OP2				OP3			OP4
	Sub-Account				Sub-Account			Sub-Account
Income:
Dividend income		$	-			$	-		$	415

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			698				977			(144	)
Realized gain distributions			16,807				20,246			2,565
Net realized gains (losses)			17,505				21,223			2,421

Change in unrealized appreciation (depreciation) during year			(2,632	)			59,138			(619	)

Increase (Decrease) in Net Assets from Operations		$	14,873			$	80,361		$	2,217

	SCA1			SCA2				SCA3
	Sub-Account			Sub-Account				Sub-Account
Income:
Dividend income		$	87,711		$	152,320		$	65,701

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			-			(11,082	)		336,140
Realized gain distributions			-			33,114			177,868
Net realized gains (losses)			-			22,032			514,008

Change in unrealized appreciation (depreciation) during year			2			(18,394	)		708,923

Increase (Decrease) in Net Assets from Operations		$	87,713		$	155,958		$	1,288,632

	SCA5				SCA7			SCB
	Sub-Account				Sub-Account			Sub-Account
Income:
Dividend income		$	-			$	26,675	$	-

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			89,321				215,480		6,399
Realized gain distributions			534,255				-		78,844
Net realized gains (losses)			623,576				215,480		85,243

Change in unrealized appreciation (depreciation) during year			(282,840	)			247,581		165,189

Increase (Decrease) in Net Assets from Operations		$	340,736			$	489,736	$	250,432

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Operations - For the Year Ended December 31, 2006 - continued

	SCM			AN2 [a]			AN3
	Sub-Account			Sub-Account			Sub-Account
Income:
Dividend income		$	3,716		$	-	$	44,926

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			(1,054	)		4,398		144,010
Realized gain distributions			808			-		201,713
Net realized gains (losses)			(246	)		4,398		345,723

Change in unrealized appreciation (depreciation) during year			23,471			9,080		253,959

Increase (Decrease) in Net Assets from Operations		$	26,941		$	13,478	$	644,608

	FL4		FL5		FL6
	Sub-Account		Sub-Account		Sub-Account
Income:
Dividend income	$	177,169	$	503,943	$	65,733

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares		338,057		-		318,385
Realized gain distributions		-		-		522,047
Net realized gains (losses)		338,057		-		840,432

Change in unrealized appreciation (depreciation) during year		1,256,936		-		(284,768	)

Increase (Decrease) in Net Assets from Operations	$	1,772,162	$	503,943	$	621,397

	FL7			FL8		FTG
	Sub-Account			Sub-Account		Sub-Account
Income:
Dividend income		$	38,151	$	3,093	$	17,958

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			364,429		55,687		47,434
Realized gain distributions			29,699		-		50,029
Net realized gains (losses)			394,128		55,687		97,463

Change in unrealized appreciation (depreciation) during year			480,507		37,383		150,939

Increase (Decrease) in Net Assets from Operations		$	912,786	$	96,163	$	266,360

	FTI			PHY			PMB
	Sub-Account			Sub-Account			Sub-Account
Income:
Dividend income		$	69,424		$	76,869		$	103,122

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			154,141			1,108			15,351
Realized gain distributions			-			-			31,192
Net realized gains (losses)			154,141			1,108			46,543

Change in unrealized appreciation (depreciation) during year			843,727			20,826			33,556

Increase (Decrease) in Net Assets from Operations		$	1,067,292		$	98,803		$	183,221

(a) This fund is not open to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Operations - For the Year Ended December 31, 2006 - continued

	PRR				PTR				PLD
	Sub-Account				Sub-Account				Sub-Account
Income:
Dividend income		$	65,820			$	186,683			$	207,377

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			(2,455	)			(14,049	)			(15,204	)
Realized gain distributions			41,923				28,645				-
Net realized gains (losses)			39,468				14,596				(15,204	)

Change in unrealized appreciation (depreciation) during year			(95,405	)			(27,320	)			2,767

Increase (Decrease) in Net Assets from Operations		$	9,883			$	173,959			$	194,940

	SSC			SCV			DGO
	Sub-Account			Sub-Account			Sub-Account
Income:
Dividend income		$	9,027		$	7,965		$	-

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			76,400			16,304			11,416
Realized gain distributions			104,122			77,251			-
Net realized gains (losses)			180,522			93,555			11,416

Change in unrealized appreciation (depreciation) during year			240,135			165,346			(4,838	)

Increase (Decrease) in Net Assets from Operations		$	429,684		$	266,866		$	6,578

	DMC				LA1			LA2
	Sub-Account				Sub-Account			Sub-Account
Income:
Dividend income		$	12,279			$	18,011	$	7,398

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			58,661				6,648		27,747
Realized gain distributions			523,531				48,263		115,274
Net realized gains (losses)			582,192				54,911		143,021

Change in unrealized appreciation (depreciation) during year			(318,759	)			92,467		5,790

Increase (Decrease) in Net Assets from Operations		$	275,712			$	165,389	$	156,209

	OCF			VGI			TBC
	Sub-Account			Sub-Account			Sub-Account
Income:
Dividend income		$	1,177		$	5,224		$	8,690

Realized and unrealized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund shares			2,490			10,155			49,847
Realized gain distributions			-			28,957			-
Net realized gains (losses)			2,490			39,112			49,847

Change in unrealized appreciation (depreciation) during year			27,364			47,125			206,373

Increase (Decrease) in Net Assets from Operations		$	31,031		$	91,461		$	264,910

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets

	AIM1 Sub-Account						AIM2 Sub-Account [a]

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006[c]			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	1,082		$	722		$	-		$	-
Net realized gains (losses)		101,957			24,171			236,959			14,057
Net unrealized gains (losses)		(39,505	)		73,371			(186,579	)		35,086
Net Increase (Decrease) in net assets from operations		63,534			98,264			50,380			49,143
Contract Owner Transactions:
Purchase payments received		183,658			196,315			-			12,662
Net transfers between sub-accounts and fixed account		611,233			40,377			(716,162	)		(18,822	)
Withdrawals and surrenders		(9,787	)		(25,897	)		(15,750	)		(25,525	)
Mortality and expense risk charges		(9,469	)		(6,060	)		(2,149	)		(4,897	)
Charges for life insurance protection and monthly administration charge		(149,818	)		(108,260	)		(17,407	)		(60,725	)
Net increase (decrease) in net assets from contract owner activity		625,817			96,475			(751,468	)		(97,307	)
Total increase (decrease) in net assets		689,351			194,739			(701,088	)		(48,164	)
Net Assets
Beginning of year		1,184,367			989,628			701,088			749,252
End of year	$	1,873,718		$	1,184,367		$	-		$	701,088

Unit Transactions:
Units Outstanding Beginning of Year		124,767			111,629			96,843			112,323
Units purchased		18,214			26,734			-			2,014
Units transferred between sub-accounts		60,620			5,499			(92,293	)		(2,994	)
Units withdrawn, surrendered, and redeemed for contract charges		(16,768	)		(19,095	)		(4,550	)		(14,500	)
Units Outstanding End of Year		186,833			124,767			-			96,843

	AIM3 Sub-Account [a]						AIM4 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	9,602		$	15,192		$	55,085		$	18,574
Net realized gains (losses)		228,557			23,072			497,710			124,286
Net unrealized gains (losses)		(18,548	)		12,644			569,093			305,177
Net Increase (Decrease) in net assets from operations		219,611			50,908			1,121,888			448,037
Contract Owner Transactions:
Purchase payments received		-			(580	)		604,788			314,878
Net transfers between sub-accounts and fixed account		489,481			(172,246	)		1,388,016			522,251
Withdrawals and surrenders		(363,889	)		(88,643	)		(27,858	)		(48,591	)
Mortality and expense risk charges		(9,538	)		(6,547	)		(22,642	)		(14,170	)
Charges for life insurance protection and monthly administration charge		(92,424	)		(74,738	)		(280,302	)		(191,965	)
Net increase (decrease) in net assets from contract owner activity		23,630			(342,754	)		1,662,002			582,403
Total increase (decrease) in net assets		243,241			(291,846	)		2,783,890			1,030,440
Net Assets
Beginning of year		1,006,051			1,297,897			3,108,700			2,078,260
End of year	$	1,249,292		$	1,006,051		$	5,892,590		$	3,108,700

Unit Transactions:
Units Outstanding Beginning of Year		115,293			153,704			240,420			191,021
Units purchased		-			(65	)		40,336			26,708
Units transferred between sub-accounts		32,730			(19,303	)		92,573			44,297
Units withdrawn, surrendered, and redeemed for contract charges		(31,150	)		(19,043	)		(22,062	)		(21,606	)
Units Outstanding End of Year		116,873			115,293			351,267			240,420

(a) This fund is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	AIM5 Sub-Account [a]						IV1 Sub-Account [a]

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006[c]			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	7,820		$	6,160		$	-		$	-
Net realized gains (losses)		163,995			15,735			15,773			13,308
Net unrealized gains (losses)		(131,024	)		17,088			30,885			16,726
Net Increase (Decrease) in net assets from operations		40,791			38,983			46,658			30,034
Contract Owner Transactions:
Purchase payments received		-			(222	)		-			-
Net transfers between sub-accounts and fixed account		(755,801	)		(66,703	)		(11,190	)		(11,734	)
Withdrawals and surrenders		(4,616	)		(28,767	)		(892	)		(880	)
Mortality and expense risk charges		(1,665	)		(5,073	)		(1,772	)		(1,744	)
Charges for life insurance protection and monthly administration charge		(19,792	)		(66,403	)		(20,844	)		(21,987	)
Net increase (decrease) in net assets from contract owner activity		(781,874	)		(167,168	)		(34,698	)		(36,345	)
Total increase (decrease) in net assets		(741,083	)		(128,185	)		11,960			(6,311	)
Net Assets
Beginning of year		741,083			869,268			308,975			315,286
End of year	$	-		$	741,083		$	320,935		$	308,975

Unit Transactions:
Units Outstanding Beginning of Year		87,260			108,115			34,056			38,477
Units purchased		-			(28	)		-			-
Units transferred between sub-accounts		(84,350	)		(8,322	)		(1,158	)		(1,427	)
Units withdrawn, surrendered, and redeemed for contract charges		(2,910	)		(12,505	)		(2,433	)		(2,994	)
Units Outstanding End of Year		-			87,260			30,465			34,056

	IV2 Sub-Account [a]						AL1 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	-		$	-		$	512		$	1,189
Net realized gains (losses)		27,017			27,766			24,830			(15,274	)
Net unrealized gains (losses)		21,829			(11,177	)		(4,451	)		61,686
Net Increase (Decrease) in net assets from operations		48,846			16,589			20,891			47,601
Contract Owner Transactions:
Purchase payments received		-			41			-			(2,636	)
Net transfers between sub-accounts and fixed account		(32,173	)		(41,461	)		(132,796	)		(89,251	)
Withdrawals and surrenders		(5,101	)		(572	)		(1,011	)		(17,192	)
Mortality and expense risk charges		(2,273	)		(2,381	)		(2,409	)		(2,767	)
Charges for life insurance protection and monthly administration charge		(26,183	)		(33,334	)		(23,268	)		(24,991	)
Net increase (decrease) in net assets from contract owner activity		(65,730	)		(77,707	)		(159,484	)		(136,837	)
Total increase (decrease) in net assets		(16,884	)		(61,118	)		(138,593	)		(89,236	)
Net Assets
Beginning of year		374,143			435,261			429,169			518,405
End of year	$	357,259		$	374,143		$	290,576		$	429,169

Unit Transactions:
Units Outstanding Beginning of Year		41,152			50,367			51,150			67,519
Units purchased		-			5			-			(315	)
Units transferred between sub-accounts		(3,252	)		(4,917	)		(15,671	)		(10,677	)
Units withdrawn, surrendered, and redeemed for contract charges		(3,391	)		(4,303	)		(3,150	)		(5,377	)
Units Outstanding End of Year		34,509			41,152			32,329			51,150

(a) This fund is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	AL2 Sub-Account						AL3 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	4,614		$	4,786		$	-		$	-
Net realized gains (losses)		13,621			2,591			5,293			7,241
Net unrealized gains (losses)		13,467			6,274			19,824			12,458
Net Increase (Decrease) in net assets from operations		31,702			13,651			25,117			19,699
Contract Owner Transactions:
Purchase payments received		234			(963	)		-			(812	)
Net transfers between sub-accounts and fixed account		(4,625	)		(34,389	)		(2,192	)		(6,888	)
Withdrawals and surrenders		(126,974	)		(2,519	)		(147	)		(10,384	)
Mortality and expense risk charges		(2,893	)		(3,043	)		(734	)		(762	)
Charges for life insurance protection and monthly administration charge		(27,820	)		(37,769	)		(10,624	)		(10,511	)
Net increase (decrease) in net assets from contract owner activity		(162,078	)		(78,683	)		(13,697	)		(29,357	)
Total increase (decrease) in net assets		(130,376	)		(65,032	)		11,420			(9,658	)
Net Assets
Beginning of year		397,580			462,612			131,262			140,920
End of year	$	267,204		$	397,580		$	142,682		$	131,262

Unit Transactions:
Units Outstanding Beginning of Year		43,301			51,380			12,298			15,537
Units purchased		25			(99	)		-			(90	)
Units transferred between sub-accounts		(496	)		(3,531	)		(183	)		(760	)
Units withdrawn, surrendered, and redeemed for contract charges		(16,923	)		(4,449	)		(963	)		(2,389	)
Units Outstanding End of Year		25,907			43,301			11,152			12,298

	AL4 Sub-Account						GS2 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	-		$	-		$	2,581		$	825
Net realized gains (losses)		39,617			10,785			34,425			50,320
Net unrealized gains (losses)		(8,037	)		12,315			5,023			(32,174	)
Net Increase (Decrease) in net assets from operations		31,580			23,100			42,029			18,971
Contract Owner Transactions:
Purchase payments received		66,200			28,084			35,575			43,055
Net transfers between sub-accounts and fixed account		(18,755	)		220,775			(15,119	)		12,679
Withdrawals and surrenders		(128	)		-			(855	)		(29,004	)
Mortality and expense risk charges		(2,033	)		(1,100	)		(2,039	)		(1,470	)
Charges for life insurance protection and monthly administration charge		(24,094	)		(15,255	)		(21,170	)		(19,583	)
Net increase (decrease) in net assets from contract owner activity		21,190			232,504			(3,608	)		5,677
Total increase (decrease) in net assets		52,770			255,604			38,421			24,648
Net Assets
Beginning of year		303,096			47,492			348,139			323,491
End of year	$	355,866		$	303,096		$	386,560		$	348,139

Unit Transactions:
Units Outstanding Beginning of Year		21,906			3,770			19,634			19,335
Units purchased		4,517			2,191			2,219			2,268
Units transferred between sub-accounts		(1,280	)		17,221			(943	)		668
Units withdrawn, surrendered, and redeemed for contract charges		(1,791	)		(1,276	)		(1,501	)		(2,637	)
Units Outstanding End of Year		23,352			21,906			19,409			19,634

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	GS3 Sub-Account						GS4 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	18,075		$	11,573		$	8,877		$	7,398
Net realized gains (losses)		66,451			60,289			72,798			22,834
Net unrealized gains (losses)		113,264			29,850			25,855			(14,875	)
Net Increase (Decrease) in net assets from operations		197,790			101,712			107,530			15,357
Contract Owner Transactions:
Purchase payments received		209,275			184,141			67,049			74,077
Net transfers between sub-accounts and fixed account		(14,788	)		105,573			(13,293	)		8,120
Withdrawals and surrenders		(97,221	)		(15,732	)		(11,274	)		(2,185	)
Mortality and expense risk charges		(9,262	)		(6,706	)		(2,847	)		(1,961	)
Charges for life insurance protection and monthly administration charge		(94,875	)		(86,573	)		(38,568	)		(36,200	)
Net increase (decrease) in net assets from contract owner activity		(6,871	)		180,703			1,067			41,851
Total increase (decrease) in net assets		190,919			282,415			108,597			57,208
Net Assets
Beginning of year		1,513,737			1,231,322			448,410			391,202
End of year	$	1,704,656		$	1,513,737		$	557,007		$	448,410

Unit Transactions:
Units Outstanding Beginning of Year		145,363			123,496			39,112			35,174
Units purchased		14,037			22,283			13,008			6,970
Units transferred between sub-accounts		(992	)		12,775			(2,579	)		764
Units withdrawn, surrendered, and redeemed for contract charges		(13,506	)		(13,191	)		(10,222	)		(3,796	)
Units Outstanding End of Year		144,902			145,363			39,319			39,112

	GS5 Sub-Account						GS8 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006 [b]			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	20,926		$	3,496		$	9,855		$	6,987
Net realized gains (losses)		89,015			45,667			151,392			130,479
Net unrealized gains (losses)		142,007			94,921			17,399			(26,409.00	)
Net Increase (Decrease) in net assets from operations		251,948			144,084			178,646			111,057.00
Contract Owner Transactions:
Purchase payments received		103,797			154,279			104,286			98,505
Net transfers between sub-accounts and fixed account		(107,874	)		(15,880	)		(487,649	)		769,025
Withdrawals and surrenders		(4,491	)		(28,870	)		2,149			(4,219	)
Mortality and expense risk charges		(6,846	)		(5,043	)		(7,356	)		(4,813	)
Charges for life insurance protection and monthly administration charge		(80,726	)		(70,595	)		(78,757	)		(63,263	)
Net increase (decrease) in net assets from contract owner activity		(96,140	)		33,891			(467,327	)		795,235
Total increase (decrease) in net assets		155,808			177,975			(288,681	)		906,292
Net Assets
Beginning of year		1,171,628			993,653			1,375,110			468,818
End of year	$	1,327,436		$	1,171,628		$	1,086,429		$	1,375,110

Unit Transactions:
Units Outstanding Beginning of Year		110,987			107,191			101,376			38,922
Units purchased		8,641			17,280			7,240			7,736
Units transferred between sub-accounts		(8,981	)		(1,779	)		(33,853	)		60,396
Units withdrawn, surrendered, and redeemed for contract charges		(7,664	)		(11,705	)		(5,829	)		(5,678	)
Units Outstanding End of Year		102,983			110,987			68,934			101,376

(b) Effective May 1, 2006, Goldman Sachs Mid Cap Value Fund is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	GAS Sub-Account [a]						CGS Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	592		$	1,959		$	13,775		$	13,824
Net realized gains (losses)		10,996			(5,317	)		93,067			156,623
Net unrealized gains (losses)		3,253			(968	)		111,496			(47,497	)
Net Increase (Decrease) in net assets from operations		14,841			(4,326	)		218,338			122,950
Contract Owner Transactions:
Purchase payments received		-			(777	)		184,085			237,545
Net transfers between sub-accounts and fixed account		(27,565	)		(108,354	)		(65,235	)		(970,086	)
Withdrawals and surrenders		(4,999	)		(453	)		(4,103	)		(44,038	)
Mortality and expense risk charges		(1,756	)		(2,169	)		(9,843	)		(8,850	)
Charges for life insurance protection and monthly administration charge		(28,061	)		(31,904	)		(130,585	)		(125,892	)
Net increase (decrease) in net assets from contract owner activity		(62,381	)		(143,657	)		(25,681	)		(911,321	)
Total increase (decrease) in net assets		(47,540	)		(147,983	)		192,657			(788,371	)
Net Assets
Beginning of year		309,208			457,191			1,608,566			2,396,937
End of year	$	261,668		$	309,208		$	1,801,223		$	1,608,566

Unit Transactions:
Units Outstanding Beginning of Year		39,568			58,760			160,325			255,401
Units purchased		-			(104	)		14,307			24,783
Units transferred between sub-accounts		(3,572	)		(14,476	)		(5,070	)		(101,207	)
Units withdrawn, surrendered, and redeemed for contract charges		(4,511	)		(4,612	)		(11,233	)		(18,652	)
Units Outstanding End of Year		31,485			39,568			158,329			160,325

	EGS Sub-Account [a]						GSS Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	-		$	-		$	141,847		$	122,942
Net realized gains (losses)		25,167			58,615			(39,397	)		(12,177	)
Net unrealized gains (losses)		11,799			(16,651	)		14,282			(49,891	)
Net Increase (Decrease) in net assets from operations		36,966			41,964			116,732			60,874
Contract Owner Transactions:
Purchase payments received		-			(2,253	)		413,057			325,361
Net transfers between sub-accounts and fixed account		(20,219	)		(151,789	)		224,203			196,092
Withdrawals and surrenders		(5,264	)		(32,418	)		(33,920	)		(34,223	)
Mortality and expense risk charges		(3,049	)		(3,747	)		(22,140	)		(17,066	)
Charges for life insurance protection and monthly administration charge		(35,840	)		(46,179	)		(230,013	)		(217,462	)
Net increase (decrease) in net assets from contract owner activity		(64,372	)		(236,386	)		351,187			252,702
Total increase (decrease) in net assets		(27,406	)		(194,422	)		467,919			313,576
Net Assets
Beginning of year		503,177			697,599			2,904,730			2,591,154
End of year	$	475,771		$	503,177		$	3,372,649		$	2,904,730

Unit Transactions:
Units Outstanding Beginning of Year		61,332			91,072			228,634			207,719
Units purchased		-			(283	)		32,993			26,929
Units transferred between sub-accounts		(2,365	)		(19,097	)		17,908			16,230
Units withdrawn, surrendered, and redeemed for contract charges		(5,165	)		(10,360	)		(22,850	)		(22,244	)
Units Outstanding End of Year		53,802			61,332			256,685			228,634

(a) This fund is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	HYS Sub-Account						MIS Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	226,131		$	205,464		$	1,219		$	5,971
Net realized gains (losses)		8,713			19,842			29,143			86,870
Net unrealized gains (losses)		62,695			(170,323	)		71,858			(42,513	)
Net Increase (Decrease) in net assets from operations		297,539			54,983			102,220			50,328
Contract Owner Transactions:
Purchase payments received		391,738			315,513			222,168			251,243
Net transfers between sub-accounts and fixed account		263,493			312,639			40,062			(104,470	)
Withdrawals and surrenders		(129,959	)		(58,740	)		(18,004	)		(37,440	)
Mortality and expense risk charges		(18,587	)		(14,402	)		(8,533	)		(7,441	)
Charges for life insurance protection and monthly administration charge		(240,437	)		(190,773	)		(100,517	)		(101,196	)
Net increase (decrease) in net assets from contract owner activity		266,248			364,237			135,176			696
Total increase (decrease) in net assets		563,787			419,220			237,396			51,024
Net Assets
Beginning of year		2,704,033			2,284,813			1,229,966			1,178,942
End of year	$	3,267,820		$	2,704,033		$	1,467,362		$	1,229,966

Unit Transactions:
Units Outstanding Beginning of Year		200,681			172,603			148,002			147,809
Units purchased		27,873			24,322			26,353			69,669
Units transferred between sub-accounts		18,748			24,100			4,752			(28,969	)
Units withdrawn, surrendered, and redeemed for contract charges		(27,677	)		(20,344	)		(15,071	)		(40,507	)
Units Outstanding End of Year		219,625			200,681			164,036			148,002

	NWD Sub-Account						TRS Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	-		$	-		$	130,720		$	111,567
Net realized gains (losses)		101,356			63,825			302,717			132,506
Net unrealized gains (losses)		49,317			(17,125	)		128,930			(109,392	)
Net Increase (Decrease) in net assets from operations		150,673			46,700			562,367			134,681
Contract Owner Transactions:
Purchase payments received		202,082			194,406			407,600			390,825
Net transfers between sub-accounts and fixed account		(51,642	)		(71,291	)		30,876			165,962
Withdrawals and surrenders		21,213			58,743			(280,733	)		(94,762	)
Mortality and expense risk charges		(7,940	)		(6,523	)		(29,227	)		(25,529	)
Charges for life insurance protection and monthly administration charge		(113,343	)		(108,853	)		(310,013	)		(304,196	)
Net increase (decrease) in net assets from contract owner activity		50,370			66,482			(181,497	)		132,300
Total increase (decrease) in net assets		201,043			113,182			380,870			266,981
Net Assets
Beginning of year		1,210,548			1,097,366			4,561,624			4,294,643
End of year	$	1,411,591		$	1,210,548		$	4,942,494		$	4,561,624

Unit Transactions:
Units Outstanding Beginning of Year		123,740			114,708			350,371			338,880
Units purchased		14,110			26,411			30,138			33,945
Units transferred between sub-accounts		(3,606	)		(9,685	)		2,283			14,415
Units withdrawn, surrendered, and redeemed for contract charges		(6,987	)		(7,694	)		(45,841	)		(36,869	)
Units Outstanding End of Year		127,257			123,740			336,951			350,371

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	UTS Sub-Account						EIS Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	30,506		$	8,481		$	19,958		$	13,339
Net realized gains (losses)		163,209			108,562			132,123			16,031
Net unrealized gains (losses)		143,184			8,804			143,511			37,060
Net Increase (Decrease) in net assets from operations		336,899			125,847			295,592			66,430
Contract Owner Transactions:
Purchase payments received		168,241			153,015			196,021			89,968
Net transfers between sub-accounts and fixed account		211,688			5,078			257,268			902,844
Withdrawals and surrenders		(8,864	)		71,051			1,137			(4,058	)
Mortality and expense risk charges		(6,035	)		(4,541	)		(8,917	)		(5,523	)
Charges for life insurance protection and monthly administration charge		(85,925	)		(74,838	)		(72,722	)		(55,003	)
Net increase (decrease) in net assets from contract owner activity		279,105			149,765			372,787			928,228
Total increase (decrease) in net assets		616,004			275,612			668,379			994,658
Net Assets
Beginning of year		1,069,705			794,093			1,322,436			327,778
End of year	$	1,685,709		$	1,069,705		$	1,990,815		$	1,322,436

Unit Transactions:
Units Outstanding Beginning of Year		82,133			70,699			107,101			28,237
Units purchased		10,176			11,682			13,820			7,644
Units transferred between sub-accounts		12,804			388			18,138			76,707
Units withdrawn, surrendered, and redeemed for contract charges		(6,098	)		(636	)		(5,675	)		(5,487	)
Units Outstanding End of Year		99,015			82,133			133,384			107,101

	OPI Sub-Account						OP2 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	2,888		$	2,504		$	-		$	-
Net realized gains (losses)		80,432			1,464			17,505			10,197
Net unrealized gains (losses)		11,453			37,819			(2,632	)		9,179
Net Increase (Decrease) in net assets from operations		94,773			41,787			14,873			19,376
Contract Owner Transactions:
Purchase payments received		-			(97	)		-			3,196
Net transfers between sub-accounts and fixed account		(332,567	)		(531	)		(215	)		(15,331	)
Withdrawals and surrenders		-			(1,045	)		(209	)		(13,154	)
Mortality and expense risk charges		(3,231	)		(3,336	)		(687	)		(703	)
Charges for life insurance protection and monthly administration charge		(21,560	)		(18,212	)		(10,121	)		(10,567	)
Net increase (decrease) in net assets from contract owner activity		(357,358	)		(23,221	)		(11,232	)		(36,559	)
Total increase (decrease) in net assets		(262,585	)		18,566			3,641			(17,183	)
Net Assets
Beginning of year		629,649			611,083			119,509			136,692
End of year	$	367,064		$	629,649		$	123,150		$	119,509

Unit Transactions:
Units Outstanding Beginning of Year		49,614			51,267			4,728			6,314
Units purchased		-			(7	)		-			139
Units transferred between sub-accounts		(22,868	)		(38	)		(8	)		(665	)
Units withdrawn, surrendered, and redeemed for contract charges		(1,705	)		(1,608	)		(406	)		(1,060	)
Units Outstanding End of Year		25,041			49,614			4,314			4,728

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	OP3 Sub-Account						OP4 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	-		$	-		$	415		$	309
Net realized gains (losses)		21,223			49,816			2,421			806
Net unrealized gains (losses)		59,138			(59,134	)		(619	)		172
Net Increase (Decrease) in net assets from operations		80,361			(9,318	)		2,217			1,287
Contract Owner Transactions:
Purchase payments received		-			(2,827	)		-			(1,148	)
Net transfers between sub-accounts and fixed account		-			(69,770	)		-			-
Withdrawals and surrenders		(225	)		(3,316	)		-			2
Mortality and expense risk charges		(1,934	)		(2,051	)		(140	)		(173	)
Charges for life insurance protection and monthly administration charge		(16,668	)		(14,689	)		(2,409	)		(2,569	)
Net increase (decrease) in net assets from contract owner activity		(18,827	)		(92,653	)		(2,549	)		(3,888	)
Total increase (decrease) in net assets		61,534			(101,971	)		(332	)		(2,601	)
Net Assets
Beginning of year		341,336			443,307			24,280			26,881
End of year	$	402,870		$	341,336		$	23,948		$	24,280

Unit Transactions:
Units Outstanding Beginning of Year		17,428			22,473			2,037			2,258
Units purchased		-			(154	)		-			(65	)
Units transferred between sub-accounts		-			(3,799	)		-			-
Units withdrawn, surrendered, and redeemed for contract charges		(857	)		(1,092	)		(208	)		(156	)
Units Outstanding End of Year		16,571			17,428			1,829			2,037

	SCA1 Sub-Account						SCA2 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	87,711		$	49,235		$	152,320		$	124,232
Net realized gains (losses)		-			2			22,032			24,223
Net unrealized gains (losses)		2			(2	)		(18,394	)		(97,024	)
Net Increase (Decrease) in net assets from operations		87,713			49,235			155,958			51,431
Contract Owner Transactions:
Purchase payments received		323,141			432,549			395,447			304,889
Net transfers between sub-accounts and fixed account		287,834			(237,858	)		16,758			907,626
Withdrawals and surrenders		(374,901	)		(81,492	)		(18,289	)		(47,949	)
Mortality and expense risk charges		(10,961	)		(10,151	)		(20,121	)		(16,693	)
Charges for life insurance protection and monthly administration charge		(123,395	)		(120,906	)		(177,519	)		(168,726	)
Net increase (decrease) in net assets from contract owner activity		101,718			(17,858	)		196,276			979,147
Total increase (decrease) in net assets		189,431			31,377			352,234			1,030,578
Net Assets
Beginning of year		1,774,297			1,742,920			2,849,531			1,818,953
End of year	$	1,963,728		$	1,774,297		$	3,201,765		$	2,849,531

Unit Transactions:
Units Outstanding Beginning of Year		157,841			158,525			215,554			135,296
Units purchased		29,411			16,568			26,778			24,991
Units transferred between sub-accounts		26,197			(9,110	)		1,135			74,396
Units withdrawn, surrendered, and redeemed for contract charges		(46,350	)		(8,142	)		(14,622	)		(19,129	)
Units Outstanding End of Year		167,099			157,841			228,845			215,554

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	SCA3 Sub-Account						SCA5 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	65,701		$	47,998		$	-		$	2,222
Net realized gains (losses)		514,008			378,712			623,576			161,482
Net unrealized gains (losses)		708,923			(141,735	)		(282,840	)		221,397
Net Increase (Decrease) in net assets from operations		1,288,632			284,975			340,736			385,101
Contract Owner Transactions:
Purchase payments received		517,295			357,989			292,817			257,301
Net transfers between sub-accounts and fixed account		(291,580	)		261,240			461,355			165,873
Withdrawals and surrenders		(60,381	)		(55,416	)		(49,533	)		(31,092	)
Mortality and expense risk charges		(19,175	)		(14,534	)		(18,136	)		(14,104	)
Charges for life insurance protection and monthly administration charge		(249,279	)		(203,580	)		(182,448	)		(167,388	)
Net increase (decrease) in net assets from contract owner activity		(103,120	)		345,699			504,055			210,590
Total increase (decrease) in net assets		1,185,512			630,674			844,791			595,691
Net Assets
Beginning of year		3,294,424			2,663,750			2,764,866			2,169,175
End of year	$	4,479,936		$	3,294,424		$	3,609,657		$	2,764,866

Unit Transactions:
Units Outstanding Beginning of Year		139,612			122,604			171,043			153,718
Units purchased		12,551			17,613			18,829			21,168
Units transferred between sub-accounts		(7,075	)		12,853			29,666			13,646
Units withdrawn, surrendered, and redeemed for contract charges		(7,978	)		(13,458	)		(16,083	)		(17,489	)
Units Outstanding End of Year		137,110			139,612			203,455			171,043

	SCA7 Sub-Account						SCB Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	26,675		$	18,621		$	-		$	-
Net realized gains (losses)		215,480			85,808			85,243			254,395
Net unrealized gains (losses)		247,581			141,691			165,189			(181,046	)
Net Increase (Decrease) in net assets from operations		489,736			246,120			250,432			73,349
Contract Owner Transactions:
Purchase payments received		631,432			397,353			194,479			219,187
Net transfers between sub-accounts and fixed account		241,669			373,650			27,498			(119,194	)
Withdrawals and surrenders		(76,200	)		(13,246	)		(80,720	)		(13,090	)
Mortality and expense risk charges		(20,322	)		(14,015	)		(11,962	)		(10,230	)
Charges for life insurance protection and monthly administration charge		(235,393	)		(202,117	)		(141,021	)		(137,523	)
Net increase (decrease) in net assets from contract owner activity		541,186			541,625			(11,726	)		(60,850	)
Total increase (decrease) in net assets		1,030,922			787,745			238,706			12,499
Net Assets
Beginning of year		2,923,925			2,136,180			1,832,530			1,820,031
End of year	$	3,954,847		$	2,923,925		$	2,071,236		$	1,832,530

Unit Transactions:
Units Outstanding Beginning of Year		241,536			193,725			132,167			136,275
Units purchased		50,538			35,076			3,765			14,797
Units transferred between sub-accounts		19,343			32,983			532			(8,047	)
Units withdrawn, surrendered, and redeemed for contract charges		(26,566	)		(20,248	)		(4,524	)		(10,858	)
Units Outstanding End of Year		284,851			241,536			131,940			132,167

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	SCM Sub-Account						AN2 Sub-Account [a]

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	3,716		$	129		$	-		$	-
Net realized gains (losses)		(246	)		14,177			4,398			12,471
Net unrealized gains (losses)		23,471			(14,795	)		9,080			(9,520	)
Net Increase (Decrease) in net assets from operations		26,941			(489	)		13,478			2,951
Contract Owner Transactions:
Purchase payments received		20,733			18,243			-			(1	)
Net transfers between sub-accounts and fixed account		154,585			5,303			(5,656	)		(30,751	)
Withdrawals and surrenders		-			(8,381	)		(587	)		(2,600	)
Mortality and expense risk charges		(1,045	)		(728	)		(1,082	)		(1,129	)
Charges for life insurance protection and monthly administration charge		(11,110	)		(9,387	)		(7,998	)		(9,670	)
Net increase (decrease) in net assets from contract owner activity		163,163	)		5,050			(15,323	)		(44,151	)
Total increase (decrease) in net assets		190,104			4,561			(1,845	)		(41,200	)
Net Assets
Beginning of year		96,545			91,984			172,732			213,932
End of year	$	286,649		$	96,545		$	170,887		$	172,732

Unit Transactions:
Units Outstanding Beginning of Year		7,018			6,521			24,780			31,810
Units purchased		1,313			1,795			-			(0	)
Units transferred between sub-accounts		9,792			522			(797	)		(4,896	)
Units withdrawn, surrendered, and redeemed for contract charges		(770	)		(1,820	)		(1,362	)		(2,134	)
Units Outstanding End of Year		17,353			7,018			22,621			24,780

	AN3 Sub-Account						FL4 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	44,926		$	40,479		$	177,169		$	162,201
Net realized gains (losses)		345,723			88,127			338,057			407,301
Net unrealized gains (losses)		253,959			27,752			1,256,936			(101,784	)
Net Increase (Decrease) in net assets from operations		644,608			156,358			1,772,162			467,718
Contract Owner Transactions:
Purchase payments received		693,503			545,938			1,991,011			1,744,790
Net transfers between sub-accounts and fixed account		71,212			211,691			1,327,435			(310,749	)
Withdrawals and surrenders		(159,715	)		(28,914	)		65,394			(202,052	)
Mortality and expense risk charges		(25,296	)		(19,087	)		(74,137	)		(56,301	)
Charges for life insurance protection and monthly administration charge		(324,665	)		(304,754	)		(1,033,557	)		(899,432	)
Net increase (decrease) in net assets from contract owner activity		255,039			404,874			2,276,146			276,256
Total increase (decrease) in net assets		899,647			561,232			4,048,308			743,974
Net Assets
Beginning of year		3,603,531			3,042,299			10,454,905			9,710,931
End of year	$	4,503,178		$	3,603,531		$	14,503,213		$	10,454,905

Unit Transactions:
Units Outstanding Beginning of Year		334,161			294,980			1,030,028			1,007,408
Units purchased		61,818			52,832			179,986			142,864
Units transferred between sub-accounts		6,348			20,486			119,999			(25,444	)
Units withdrawn, surrendered, and redeemed for contract charges		(45,432	)		(34,137	)		(94,223	)		(94,800	)
Units Outstanding End of Year		356,895			334,161			1,235,790			1,030,028

(a) This fund is closed to new premiums or transfers.

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	FL5 Sub-Account						FL6 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	503,943		$	281,942		$	65,733		$	5,571
Net realized gains (losses)		-			-			840,432			137,995
Net unrealized gains (losses)		-			-			(284,768	)		505,989
Net Increase (Decrease) in net assets from operations		503,943			281,942			621,397			649,555
Contract Owner Transactions:
Purchase payments received		3,763,662			2,616,700			763,234			506,343
Net transfers between sub-accounts and fixed account		(4,567,367	)		28,480			1,130,313			1,190,772
Withdrawals and surrenders		(334,800	)		198,196			(190,127	)		(19,772	)
Mortality and expense risk charges		(78,452	)		(61,203	)		(31,691	)		(21,460	)
Charges for life insurance protection and monthly administration charge		(1,020,767	)		(922,445	)		(322,526	)		(260,155	)
Net increase (decrease) in net assets from contract owner activity		(2,237,724	)		1,859,728			1,349,203			1,395,728
Total increase (decrease) in net assets		(1,733,781	)		2,141,670			1,970,600			2,045,283
Net Assets
Beginning of year		11,884,328			9,742,658			4,759,899			2,714,616
End of year	$	10,150,547		$	11,884,328		$	6,730,499		$	4,759,899

Unit Transactions:
Units Outstanding Beginning of Year		1,092,670			918,254			326,818			219,538
Units purchased		339,429			245,409			49,754			38,919
Units transferred between sub-accounts		(411,912	)		2,671			73,684			91,526
Units withdrawn, surrendered, and redeemed for contract charges		(129,328	)		(73,664	)		(35,485	)		(23,165	)
Units Outstanding End of Year		890,859			1,092,670			414,771			326,818

	FL7 Sub-Account						FL8 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	38,151		$	20,393		$	3,093		$	3,750
Net realized gains (losses)		394,128			231,919			55,687			54,566
Net unrealized gains (losses)		480,507			502,265			37,383			(157	)
Net Increase (Decrease) in net assets from operations		912,786			754,577			96,163			58,159
Contract Owner Transactions:
Purchase payments received		787,072			586,960			182,659			168,691
Net transfers between sub-accounts and fixed account		398,645			174,617			823,374			(45,395	)
Withdrawals and surrenders		(80,920	)		(39,309	)		(22,121	)		(29,035	)
Mortality and expense risk charges		(30,345	)		(22,176	)		(10,221	)		(6,572	)
Charges for life insurance protection and monthly administration charge		(405,690	)		(318,857	)		(110,156	)		(102,794	)
Net increase (decrease) in net assets from contract owner activity		668,762			381,235			863,535			(15,105	)
Total increase (decrease) in net assets		1,581,548			1,135,812			959,698			43,054
Net Assets
Beginning of year		4,625,303			3,489,491			1,133,632			1,090,578
End of year	$	6,206,851		$	4,625,303		$	2,093,330		$	1,133,632

Unit Transactions:
Units Outstanding Beginning of Year		370,882			331,343			133,080			135,289
Units purchased		59,683			60,875			20,248			24,670
Units transferred between sub-accounts		30,229			18,110			91,270			(6,639	)
Units withdrawn, surrendered, and redeemed for contract charges		(39,200	)		(39,446	)		(15,796	)		(20,240	)
Units Outstanding End of Year		421,594			370,882			228,802			133,080

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	FTG Sub-Account						FTI Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	17,958		$	9,197		$	69,424		$	42,109
Net realized gains (losses)		97,463			22,888			154,141			92,359
Net unrealized gains (losses)		150,939			45,813			843,727			251,136
Net Increase (Decrease) in net assets from operations		266,360			77,898			1,067,292			385,604
Contract Owner Transactions:
Purchase payments received		155,623			107,802			884,819			512,690
Net transfers between sub-accounts and fixed account		534,089			218,680			694,348			902,092
Withdrawals and surrenders		(35,694	)		(1,201	)		(63,997	)		(20,928	)
Mortality and expense risk charges		(8,221	)		(5,230	)		(31,024	)		(19,880	)
Charges for life insurance protection and monthly administration charge		(82,981	)		(58,610	)		(361,394	)		(266,079	)
Net increase (decrease) in net assets from contract owner activity		562,816			261,441			1,122,752			1,107,895
Total increase (decrease) in net assets		829,176			339,339			2,190,044			1,493,499
Net Assets
Beginning of year		1,007,375			668,036			4,388,017			2,894,518
End of year	$	1,836,551		$	1,007,375		$	6,578,061		$	4,388,017

Unit Transactions:
Units Outstanding Beginning of Year		56,779			40,990			242,295			176,214
Units purchased		7,798			6,510			44,727			30,580
Units transferred between sub-accounts		26,762			13,207			35,099			53,806
Units withdrawn, surrendered, and redeemed for contract charges		(6,358	)		(3,928	)		(23,072	)		(18,305	)
Units Outstanding End of Year		84,981			56,779			299,049			242,295

	PHY Sub-Account						PMB Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	76,869		$	63,862		$	103,122		$	70,295
Net realized gains (losses)		1,108			9,310			46,543			32,535
Net unrealized gains (losses)		20,826			(36,789	)		33,556			44,322
Net Increase (Decrease) in net assets from operations		98,803			36,383			183,221			147,152
Contract Owner Transactions:
Purchase payments received		145,026			119,842			361,446			225,392
Net transfers between sub-accounts and fixed account		233,027			(118,058	)		332,714			292,589
Withdrawals and surrenders		(5,087	)		(4,375	)		(20,833	)		(17,905	)
Mortality and expense risk charges		(6,995	)		(5,869	)		(11,912	)		(8,150	)
Charges for life insurance protection and monthly administration charge		(68,749	)		(63,699	)		(156,388	)		(115,427	)
Net increase (decrease) in net assets from contract owner activity		297,222			(72,159	)		505,027			376,499
Total increase (decrease) in net assets		396,025			(35,776	)		688,248			523,651
Net Assets
Beginning of year		975,892			1,011,668			1,655,494			1,131,843
End of year	$	1,371,917		$	975,892		$	2,343,742		$	1,655,494

Unit Transactions:
Units Outstanding Beginning of Year		64,013			69,113			86,740			65,676
Units purchased		9,020			8,470			18,362			12,610
Units transferred between sub-accounts		14,492			(8,344	)		16,902			16,369
Units withdrawn, surrendered, and redeemed for contract charges		(5,027	)		(5,226	)		(9,608	)		(7,915	)
Units Outstanding End of Year		82,498			64,013			112,396			86,740

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	PRR Sub-Account						PTR Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	65,820		$	42,387		$	186,683		$	98,312
Net realized gains (losses)		39,468			27,084			14,596			55,495
Net unrealized gains (losses)		(95,405	)		(39,858	)		(27,320	)		(86,373	)
Net Increase (Decrease) in net assets from operations		9,883			29,613			173,959			67,434
Contract Owner Transactions:
Purchase payments received		280,429			172,967			791,166			433,729
Net transfers between sub-accounts and fixed account		(75,983	)		22,770			1,446,317			941,916
Withdrawals and surrenders		52,987			(14,100	)		25,559			(30,470	)
Mortality and expense risk charges		(10,468	)		(9,131	)		(29,240	)		(18,083	)
Charges for life insurance protection and monthly administration charge		(127,779	)		(119,323	)		(363,449	)		(269,009	)
Net increase (decrease) in net assets from contract owner activity		119,186			53,183			1,870,353			1,058,083
Total increase (decrease) in net assets		129,069			82,796			2,044,312			1,125,517
Net Assets
Beginning of year		1,520,305			1,437,509			3,427,039			2,301,522
End of year	$	1,649,374		$	1,520,305		$	5,471,351		$	3,427,039

Unit Transactions:
Units Outstanding Beginning of Year		124,133			119,846			296,124			202,924
Units purchased		22,576			13,943			67,322			38,205
Units transferred between sub-accounts		(6,117	)		1,835			123,071			82,968
Units withdrawn, surrendered, and redeemed for contract charges		(6,864	)		(11,491	)		(31,240	)		(27,973	)
Units Outstanding End of Year		133,728			124,133			455,277			296,124

	PLD Sub-Account						SSC Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	207,377		$	111,730		$	9,027		$	7,973
Net realized gains (losses)		(15,204	)		8,353			180,522			102,043
Net unrealized gains (losses)		2,767			(78,736	)		240,135			(15,775	)
Net Increase (Decrease) in net assets from operations		194,940			41,347			429,684			94,241
Contract Owner Transactions:
Purchase payments received		863,670			639,651			382,164			279,045
Net transfers between sub-accounts and fixed account		105,714			873,543			532,308			344,095
Withdrawals and surrenders		(83,515	)		(60,129	)		5,439			(22,042	)
Mortality and expense risk charges		(35,631	)		(24,168	)		(16,875	)		(11,496	)
Charges for life insurance protection and monthly administration charge		(398,312	)		(329,096	)		(210,350	)		(161,594	)
Net increase (decrease) in net assets from contract owner activity		451,926			1,099,801			692,686			428,008
Total increase (decrease) in net assets		646,866			1,141,148			1,122,370			522,249
Net Assets
Beginning of year		4,587,637			3,446,489			2,243,091			1,720,842
End of year	$	5,234,503		$	4,587,637		$	3,365,461		$	2,243,091

Unit Transactions:
Units Outstanding Beginning of Year		452,259			345,073			118,476			94,502
Units purchased		84,006			62,340			18,145			15,618
Units transferred between sub-accounts		10,282			85,135			25,274			19,259
Units withdrawn, surrendered, and redeemed for contract charges		(50,331	)		(40,289	)		(10,530	)		(10,903	)
Units Outstanding End of Year		496,216			452,259			151,365			118,476

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	SCV Sub-Account						DGO Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	7,965		$	1,890		$	-		$	-
Net realized gains (losses)		93,555			27,879			11,416			3,009
Net unrealized gains (losses)		165,346			53,056			(4,838	)		3,437
Net Increase (Decrease) in net assets from operations		266,866			82,825			6,578			6,446
Contract Owner Transactions:
Purchase payments received		228,263			75,257			60,545			24,730
Net transfers between sub-accounts and fixed account		623,363			626,190			(69,639	)		76,095
Withdrawals and surrenders		4,057			(673	)		(633	)		(822	)
Mortality and expense risk charges		(6,813	)		(3,582	)		(1,162	)		(254	)
Charges for life insurance protection and monthly administration charge		(63,876	)		(38,103	)		(11,296	)		(5,989	)
Net increase (decrease) in net assets from contract owner activity		784,994			659,089			(22,185	)		93,760
Total increase (decrease) in net assets		1,051,860			741,914			(15,607	)		100,206
Net Assets
Beginning of year		898,990			157,076			126,460			26,254
End of year	$	1,950,850		$	898,990		$	110,853		$	126,460

Unit Transactions:
Units Outstanding Beginning of Year		66,869			12,881			9,097			2,104
Units purchased		14,295			6,165			4,364			1,844
Units transferred between sub-accounts		39,038			51,293			(5,019	)		5,675
Units withdrawn, surrendered, and redeemed for contract charges		(4,173	)		(3,470	)		(944	)		(526	)
Units Outstanding End of Year		116,029			66,869			7,498			9,097

	DMC Sub-Account						LA1 Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	12,279		$	757		$	18,011		$	6,587
Net realized gains (losses)		582,192			44,405			54,911			44,121
Net unrealized gains (losses)		(318,759	)		202,570			92,467			(30,090	)
Net Increase (Decrease) in net assets from operations		275,712			247,732			165,389			20,618
Contract Owner Transactions:
Purchase payments received		605,814			463,776			167,969			38,978
Net transfers between sub-accounts and fixed account		490,047			390,686			595,338			516,741
Withdrawals and surrenders		(48,169	)		(31,935	)		1,474			(3,081	)
Mortality and expense risk charges		(22,020	)		(14,426	)		(6,866	)		(1,673	)
Charges for life insurance protection and monthly administration charge		(269,069	)		(213,701	)		(69,627	)		(30,464	)
Net increase (decrease) in net assets from contract owner activity		756,603			594,400			688,288			520,501
Total increase (decrease) in net assets		1,032,315			842,132			853,677			541,119
Net Assets
Beginning of year		3,089,604			2,247,472			688,141			147,022
End of year	$	4,121,919		$	3,089,604		$	1,541,818		$	688,141

Unit Transactions:
Units Outstanding Beginning of Year		234,302			186,541			57,041			12,583
Units purchased		44,596			37,265			12,672			3,329
Units transferred between sub-accounts		36,074			31,392			44,915			44,137
Units withdrawn, surrendered, and redeemed for contract charges		(24,974	)		(20,896	)		(5,659	)		(3,008	)
Units Outstanding End of Year		289,998			234,302			108,969			57,041

See notes to financial statements

Sun Life of Canada (U.S.) Variable Account I

Statements of Changes in Net Assets - continued

	LA2 Sub-Account						OCF Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	7,398		$	5,346		$	1,177		$	1,995
Net realized gains (losses)		143,021			90,192			2,490			4,132
Net unrealized gains (losses)		5,790			(6,459	)		27,364			6,978
Net Increase (Decrease) in net assets from operations		156,209			89,079			31,031			13,105
Contract Owner Transactions:
Purchase payments received		299,084			108,558			84,364			51,342
Net transfers between sub-accounts and fixed account		37,514			617,307			243,540			16,951
Withdrawals and surrenders		(41,902	)		(907	)		(599	)		-
Mortality and expense risk charges		(8,000	)		(4,713	)		(2,396	)		(1,422	)
Charges for life insurance protection and monthly administration charge		(100,437	)		(63,978	)		(25,722	)		(18,995	)
Net increase (decrease) in net assets from contract owner activity		186,259			656,267			299,187			47,876
Total increase (decrease) in net assets		342,468			745,346			330,218			60,981
Net Assets
Beginning of year		1,186,695			441,349			281,027			220,046
End of year	$	1,529,163		$	1,186,695		$	611,245		$	281,027

Unit Transactions:
Units Outstanding Beginning of Year		90,528			36,437			23,682			19,488
Units purchased		21,538			8,948			6,777			4,498
Units transferred between sub-accounts		2,701			50,880			19,563			1,485
Units withdrawn, surrendered, and redeemed for contract charges		(10,826	)		(5,737	)		(2,307	)		(1,789	)
Units Outstanding End of Year		103,941			90,528			47,715			23,682

	VGI Sub-Account						TBC Sub-Account

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Increase (Decrease) in net assets from operations:
Net investment income (loss)	$	5,224		$	2,071		$	8,690		$	2,544
Net realized gains (losses)		39,112			11,929			49,847			26,422
Net unrealized gains (losses)		47,125			8,740			206,373			110,335
Net Increase (Decrease) in net assets from operations		91,461			22,740			264,910			139,301
Contract Owner Transactions:
Purchase payments received		104,231			48,566			455,787			314,354
Net transfers between sub-accounts and fixed account		203,538			167,100			178,865			335,905
Withdrawals and surrenders		(152	)		(23	)		(37,627	)		(23,130	)
Mortality and expense risk charges		(3,365	)		(1,331	)		(17,912	)		(12,090	)
Charges for life insurance protection and monthly administration charge		(35,769	)		(21,417	)		(206,662	)		(168,066	)
Net increase (decrease) in net assets from contract owner activity		268,483			192,895			372,451			446,973
Total increase (decrease) in net assets		359,944			215,635			637,361			586,274
Net Assets
Beginning of year		376,511			160,876			2,416,956			1,830,682
End of year	$	736,455		$	376,511		$	3,054,317		$	2,416,956

Unit Transactions:
Units Outstanding Beginning of Year		29,484			13,856			196,686			157,775
Units purchased		7,815			3,935			36,603			27,366
Units transferred between sub-accounts		15,261			13,538			14,364			29,242
Units withdrawn, surrendered, and redeemed for contract charges		(2,945	)		(1,845	)		(21,056	)		(17,697	)
Units Outstanding End of Year		49,615			29,484			226,597			196,686

See notes to financial statements

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I

Notes to Financial Statements

(1)

Organization

Sun Life of Canada (U.S.) Variable Account I (the åVariable Accountæ), a separate account of Sun Life Assurance Company of Canada (U.S.) (the åSponsoræ) was established on August 25, 1999 as a funding vehicle for the variable portion of certain individual variable universal life insurance contracts. The Variable Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940, as amended,.

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:

AIM V.I. Capital Appreciation Fund Sub-Account, AIM V.I. Core Equity Fund Sub-Account, AIM V.I. International Growth Fund Sub-Account, AIM V.I. Dynamics Fund Sub-Account, AIM V.I. Small Cap Growth Fund Sub-Account, Alger American Growth Portfolio Sub-Account, Alger American Income and Growth Portfolio Sub-Account, Alger American Small Capitalization Portfolio Sub-Account, Alger American Mid Cap Growth Portfolio Sub-Account, Goldman Sachs CORE Small Cap Equity Fund Sub-Account, Goldman Sachs Structured US Equity Sub-Account, Goldman Sachs Growth and Income Fund Sub-Account, Goldman Sachs International Equity Fund Sub-Account, Goldman Sachs Mid Cap Value Fund Sub-Account, MFS/Sun Life Series Trust Capital Appreciation Series Sub-Account, MFS/Sun Life Series Trust Massachusetts Investors Trust Series Sub-Account, MFS/Sun Life Series Trust Emerging Growth Series Sub-Account, MFS/Sun Life Series Trust Government Securities Series Sub-Account, MFS/Sun Life Series Trust High Yield Series Sub-Account, MFS/Sun Life Series Trust Massachusetts Investors Growth Stock Series Sub-Account, MFS/Sun Life Series Trust New Discovery Series Sub-Account, MFS/Sun Life Series Trust Total Return Series Sub-Account, MFS/Sun Life Series Trust Utilities Series Sub-Account, MFS/Sun Life Series Trust Value Series Sub-Account, OCC Accumulation Trust Equity Portfolio Sub-Account, OCC Accumulation Trust Mid Cap Portfolio Sub-Account, OCC Accumulation Trust Small Cap Portfolio Sub-Account, OCC Accumulation Trust Managed Portfolio Sub-Account, Sun Capital Money Market Fund Sub-Account, Sun Capital Investment Grade Bond Fund Sub-Account, Sun Capital Real Estate Fund Sub-Account, Sun Capital Blue Chip Mid-Cap Fund Sub-Account, Sun Capital Davis Venture Value Fund Sub-Account, Sun Capital Oppenheimer Main Street Small Cap Fund Sub-Account, Sun Capital All Cap Fund Sub-Account, AllianceBernstein VP Global Technology Portfolio Sub-Account, AllianceBernstein VP Growth and Income Portfolio Sub-Account, Fidelity VIP Index 500 Portfolio Sub-Account, Fidelity VIP Money Market Portfolio Sub-Account, Fidelity VIP Contrafund Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account, Fidelity VIP Growth Portfolio Sub-Account, Franklin Templeton Growth Securities Fund Sub-Account, Franklin Templeton Foreign Securities Sub-Account, PIMCO High Yield Portfolio Sub-Account, PIMCO Emerging Markets Bond Portfolio Sub-Account, PIMCO Real Return Portfolio Sub-Account, PIMCO Total Return Portfolio Sub-Account, PIMCO Low Duration Fund Sub-Account, Scudder VIT Small Cap Index Fund Sub-Account, Scudder SVS Dreman Small Cap Value Portfolio Sub-Account, Delaware VIP Growth Opportunities Series Sub-Account, Dreyfus MidCap Stock Portfolio Sub-Account, Lord Abbett Growth and Income Portfolio Sub-Account, Lord Abbett Mid-Cap Value Portfolio Sub-Account, Oppenheimer Capital Appreciation Fund Sub-Account, Van Kampen LIT Growth & Income Portfolio Sub-Account and T. Rowe Price Blue Chip Growth Portfolio Sub-Account.(collectively the åFundsæ or åSub-Accountsæ).

The Variable Account exists in accordance with the regulations of the Delaware State Insurance Department. The assets and liabilities of the Variable Account are clearly identified and distinguished from the Sponsor’s other assets and liabilities. Assets applicable to the Variable Account are not chargeable with liabilities arising out of any other business the Sponsor may conduct.

(2)

Significant Accounting Policies

General

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Sponsor’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of investment income and realized and unrealized gains or losses during the reporting period. Actual results could differ from those estimates.

Investment Valuations

Investments in the Funds are recorded at their net asset value and are carried at fair value. Transactions are recorded on a trade date basis. Realized gains and losses on sales of shares of the Funds are determined on the identified cost basis. Dividend income and gains from realized gain distributions received by the Sub-Accounts are reinvested in additional Fund shares and are recognized on the ex-distribution date.

Federal Income Tax Status

The operations of the Variable Account are part of the operations of the Sponsor and are not taxed separately. 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 realized gains earned by the Variable Account on contracts are not subject to tax, and therefore, no provision has been made for federal income taxes. The Sponsor will review periodically the status of this policy in the event of changes in the tax law. A provision may be made in future years for any federal income taxes that would be attributable to the contracts.

(3)

Contract Charges and Related Party Transactions

Contract Charges

The Sponsor sells both a Survivorship Variable Universal Life Insurance Product (åSurvivorship Productæ) and Single Life Variable Universal Life Products (åSingle Life Productsæ) within the Variable Account. The contract charges for these products are as follows:

Mortality and Expense Risk - A mortality and expense risk charge based on the value of the Sub-Account within the Variable Account is deducted at the monthly anniversary date from the contract’s account value, through the redemption of units for the mortality and expense risks assumed by the Sponsor. The maximum deduction is at an effective annual rate of .60%, for policy years one through 10 for the Single Life Products, and policy years one through 15 for the Survivorship Product. Thereafter, the effective annual rate is .10% for the Single Life Products and .20% for the Survivorship Product, respectively.

Administration Charges - For the Single Life Products, a monthly charge of $8 is deducted in all policy years, as well as a monthly charge based on the specified face amount is deducted in the first 10 policy years, and for the first 10 policy years following the effective date of each specified face amount increase. For the Survivorship Product, the monthly expense charge is deducted for the first 10 policy years, and for the first 10 policy years following the effective date of each specified face amount increase. The charge is based on the specified face amount or increase thereof, times a rate determined by the age, sex and rating class of each insured. These monthly charges are deducted from each contract’s account value to cover administrative expenses and issuance costs.

Charges for Life Insurance Protection - A monthly cost of insurance charge is deducted from the contract’s account value to cover anticipated costs of providing insurance coverage. The charge is based on the length of time a policy has been in force and other factors, including issue age, sex, and rating class of each insured, and will not exceed the guaranteed maximum monthly cost of insurance rates based on the 1980 Commissioner’s Standard Ordinary smoker and non-smoker mortality tables.

Sales Charge - The Sponsor deducts a sales charge from premiums at the time of purchase. For the Single Life Products the current charge is 5.25% of the amount of premium. The maximum charge is guaranteed not to exceed 7.25%. For the Survivorship Product, the charge is based on certain factors, including the specified face amount, age, sex, and rating class of the insured. The current charge is 6% of premiums, and is guaranteed not to exceed 8%.

Surrender Charge - A surrender charge may be deducted to cover certain expenses relating to the sale of the contract. The surrender charge is based on certain factors, including the specified face amount, the insured’s age, sex and rating class. For the Survivorship Product, the surrender charge period will generally end after 15 policy years from the date of policy issue, or 15 policy years from the effective date of each specified face amount increase. For the Single Life Products, the Futurity Protector II and Futurity Accumulator II products, the surrender charge applies to the first 12 and nine years respectively, from the date of policy issuance, or the respective policy years from the effective date of each specified face amount increase. Surrender charges are deducted and retained by the Sponsor. These amounts are included in the åWithdrawals and Surrendersæ line on the Statement of Changes in Net Assets.

Related Party Transactions

Massachusetts Financial Services Company is the investment adviser to the MFS/Sun Life Series Trust. Sun Capital Advisers Inc. is the investment adviser to Sun Capital Advisers Trust. Both are affiliates of the Sponsor and charge management fees at an effective annual rate ranging from .50% to .75% and .50% to .95% of average net asset value, respectively.

Sun Life of Canada (U.S.) Variable Account I
Notes to Financial Statements - continued

(3) Contract Charges and Related Party Transactions
		Surrender
		Charges

AIM Variable Insurance Funds, Inc.:
V.I. Capital Appreciation Fund Sub-Account (åAIM1æ)		1,760
V.I. Growth Fund Sub-Account Sub-Account (åAIM2æ)		2,833
V.I. Core Equity Fund Sub-Account (åAIM3æ)		60,710
V.I. International Growth Fund Sub-Account (åAIM4æ)		4,589
V.I. Premier Equity Fund Sub-Account (åAIM5æ)		830
V.I. Dynamics Fund Sub-Account (åIV1æ)		160
V.I. Small Cap Growth Fund Sub-Account (åIV2æ)		918
The Alger American Fund:
Growth Portfolio Sub-Account (åAL1æ)		182
Income and Growth Portfolio Sub-Account (åAL2æ)		19,957
Small Capitalization Portfolio Sub-Account (åAL3æ)		26
Mid Cap Growth Portfolio Sub-Account (åAL4æ)		23
Goldman Sachs Variable Insurance Trust:
CORE Small Cap Equity Fund Sub-Account (åGS2æ)		154
Structured US Equity Fund Sub-Account (åGS3æ)		17,125
Growth and Income Fund Sub-Account (åGS4æ)		1,300
International Equity Fund Sub-Account (åGS5æ)		808
Mid Cap Value Fund Sub-Account (åGS8æ)		0
MFS/Sun Life Series Trust:
Capital Appreciation Series Sub-Account (åCASæ)		899
Massachusetts Investors Trust Series Sub-Account (åCGSæ)		385
Emerging Growth Series Sub-Account (åEGSæ)		947
Government Securities Series Sub-Account (åGSSæ)		5,841
High Yield Series Sub-Account (åHYSæ)		22,858
Massachusetts Investors Growth Stock Series Sub-Account (åMISæ)		3,238
New Discovery Series Sub-Account (åNWDæ)		0
Total Return Series Sub-Account (åTRSæ)		50,495
Utilities Series Sub-Account (åUTSæ)		1,594
Value Series Sub-Account (åEISæ)		0
OCC Accumulation Trust:
Equity Portfolio Sub-Account (åOP1æ)		0
Mid Cap Portfolio Sub-Account (åOP2æ)		38
Small Cap Portfolio Sub-Account (åOP3æ)		40
Managed Portfolio Sub-Account (åOP4æ)		0
Sun Capital Advisers Trust:
Sun Capital Money Market Fund Sub-Account (åSCA1æ)		66,095
Sun Capital Investment Grade Bond Fund Sub-Account (åSCA2æ)		3,290
Sun Capital Real Estate Fund Sub-Account (åSCA3æ)		10,513
Sun Capital Select Equity Fund Sub-Account (åSCA4æ)		0
Sun Capital Blue Chip Mid-Cap Fund Sub-Account (åSCA5æ)		7,359
Sun Capital Investors Foundation Fund Sub-Account (åSCA6æ)		0
Sun Capital Davis Venture Value Fund Sub-Account (åSCA7æ)		9,723
Sun Capital Davis Financial Fund Sub-Account (åSCA8æ)		0
Sun Capital Value Equity Fund Sub-Account (åSCA9æ)		0
Sun Capital Value Mid Cap Fund Sub-Account (åSCA å)		0
Sun Capital Value Small Cap Fund Sub-Account (åSCBæ)		14,519
Sun Capital Value Managed Fund Sub-Account (åSCCæ)		0
Sun Capital Neuberger Berman Mid Cap Value Fund Sub-Account (åSCHæ)		0
Sun Capital Neuberger Berman Mid Cap Growth Fund Sub-Account (åSCIæ)		0
Sun Capital Alger Growth Fund Sub-Account (åSCJæ)		0
Sun Capital Alger Income and Growth Fund Sub-Account (åSCKæ)		0
Sun Capital Alger Small Capitalization Fund Sub-Account (åSCLæ)		0
Sun Capital All Cap Fund Sub-Account (åSCMæ)		0
AllianceBernstein Variable Product Series Fund, Inc.:
VP Global Technology Portfolio Sub-Account (åAN2æ)		106
VP Growth and Income Portfolio Sub-Account (åAN3æ)		16,538
Fidelity Variable Insurance Products Fund:
Fidelity VIP Index 500 Portfolio Sub-Account (åFL4æ)		0
Fidelity VIP Money Market Portfolio Sub-Account (åFL5æ)		38,463
Fidelity VIP Contrafund^TM Portfolio Sub-Account (åFL6æ)		34,198
Fidelity VIP Overseas Portfolio Sub-Account (åFL7æ)		13,683
Fidelity VIP Growth Portfolio Sub-Account (åFL8æ)		1,137
Franklin Templeton Variable Insurance Products Trust:
Franklin Templeton Growth Securities Fund Sub-Account (åFTGæ)		6,420
Franklin Templeton Foreign Securities Fund Sub-Account (åFTIæ)		10,989

(3) Contract Charges and Related Party Transactions - continued

		Surrender
		Charges

PIMCO Variable Insurance Trust:
PIMCO High Yield Portfolio Sub-Account (åPHYæ)		915
PIMCO Emerging Markets Bond Portfolio Sub-Account (åPMBæ)		3,211
PIMCO Real Return Portfolio Sub-Account (åPRRæ)		0
PIMCO Total Return Portfolio Sub-Account (åPTRæ)		0
PIMCO Low Duration Fund Sub-Account (åPLDæ)		13,470
Scudder VIT Funds:
Scudder VIT Small Cap Index Fund Sub-Account (åSSCæ)		0
Scudder Variable Series II:
SVS Dreman Small Cap Value Portfolio Sub-Account (åSCVæ)
Delaware Variable Insurance Products Trust:
VIP Growth Opportunities Series Sub-Account (åDGOæ)		114
Dreyfus Investment Portfolios:
MidCap Stock Portfolio Sub-Account (åDMCæ)		7,917
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio Sub-Account (åLA1æ)		0
Mid-Cap Value Portfolio Sub-Account (åLA2æ)		7,537
Oppenheimer Variable Account Funds:
Capital Appreciation Fund Sub-Account (åOCFæ)		108
Van Kampen Life Insurance Trust:
LIT Growth & Income Portfolio Sub-Account (åVGIæ)		27
T. Rowe Price Equity Series, Inc.:
T. Rowe Price Blue Chip Growth Portfolio Sub-Account (åTBCæ)		6,158

Sun Life of Canada (U.S.) Variable Account I

Notes to the Financial Statements - continued

(4) Investment Purchases and Sales

The following table shows the aggregate cost of mutual fund shares purchased and proceeds from the sale of investments for each Sub-Account for the year ended December 31, 2006.

		Purchases		Sales

AIM Variable Insurance Funds, Inc.:
V.I. Capital Appreciation Fund (åAIM1æ)	$	938,568	$	311,669
V.I. Growth Fund (åAIM2æ)		20		751,488
V.I. Core Equity Fund (åAIM3æ)		763,203		729,971
V.I. International Growth Fund (åAIM4æ)		2,632,840		915,753
V.I. Premier Equity Fund (åAIM5æ)		7,819		781,873
V.I. Dynamics Fund (åIV1æ)		-		34,698
V.I. Small Cap Growth Fund (åIV2æ)		-		65,730
The Alger American Fund:
Growth Portfolio (åAL1æ)		512		159,484
Income and Growth Portfolio (åAL2æ)		4,614		162,078
Small Capitalization Portfolio (åAL3æ)		-		13,697
Mid Cap Growth Portfolio (åAL4æ)		175,401		107,285
Goldman Sachs Variable Insurance Trust:
CORE Small Cap Equity Fund (åGS2æ)		91,483		64,341
Structured US Equity Fund (åGS3æ)		296,728		285,524
Growth and Income Fund (åGS4æ)		220,905		189,626
International Equity Fund (åGS5æ)		134,357		209,571
Mid Cap Value Fund (åGS8æ)		353,000		701,906
MFS/Sun Life Series Trust:
Capital Appreciation Series (åCASæ)		592		62,381
Massachusetts Investors Trust Series (åCGSæ)		314,394		326,300
Emerging Growth Series (åEGSæ)		1,927		66,299
Government Securities Series (åGSSæ)		970,811		477,777
High Yield Series (åHYSæ)		979,171		486,792
Massachusetts Investors Growth Stock Series (åMISæ)		281,954		145,559
New Discovery Series (åNWDæ)		381,478		331,108
Total Return Series (åTRSæ)		890,282		756,710
Utilities Series (åUTSæ)		681,656		372,045
Value Series (åEISæ)		1,072,842		631,176
OCC Accumulation Trust:
Equity Portfolio (åOP1æ)		40,341		357,358
Mid Cap Portfolio (åOP2æ)		16,807		11,232
Small Cap Portfolio (åOP3æ)		20,246		18,827
Managed Portfolio (åOP4æ)		2,979		2,548
Sun Capital Advisers Trust:
Sun Capital Money Market Fund (åSCA1æ)		731,436		542,027
Sun Capital Investment Grade Bond Fund (åSCA2æ)		732,916		351,206
Sun Capital Real Estate Fund (åSCA3æ)		832,877		692,428
Sun Capital Blue Chip Mid-Cap Fund (åSCA5æ)		1,287,684		249,374
Sun Capital Davis Venture Value Fund (åSCA7æ)		1,106,156		538,295
Sun Capital Oppenheimer Main Street Small Cap Fund (åSCBæ)		293,206		226,088
Sun Capital All Cap Fund (åSCMæ)		181,161		13,474
AllianceBernstein Variable Product Series Fund, Inc.:
VP Technology Portfolio (åAN2æ)		-		15,323
VP Growth and Income Portfolio (åAN3æ)		928,703		427,025
Fidelity Variable Insurance Products Fund:
Fidelity VIP Index 500 Portfolio (åFL4æ)		3,471,717		1,018,402
Fidelity VIP Money Market Portfolio (åFL5æ)		7,265,086		8,998,867
Fidelity VIP Contrafund^TMPortfolio (åFL6æ)		2,676,486		739,503
Fidelity VIP Overseas Portfolio (åFL7æ)		1,466,037		729,425
Fidelity VIP Growth Portfolio (åFL8æ)		1,043,306		176,678
Franklin Templeton Variable Insurance Products Trust:
Franklin Templeton Growth Securities Fund (åFTGæ)		762,827		132,024
Franklin Templeton Foreign Securities Fund (åFTIæ)		1,575,526		383,350
PIMCO Variable Insurance Trust:
PIMCO High Yield Portfolio (åPHYæ)		461,586		87,495
PIMCO Emerging Markets Bond Portfolio (åPMBæ)		866,727		227,386
PIMCO Real Return Portfolio (åPRRæ)		581,816		354,887
PIMCO Total Return Portfolio (åPTRæ)		2,622,073		536,392
PIMCO Low Duration Fund (åPLDæ)		1,177,823		518,520

Sun Life of Canada (U.S.) Variable Account I

Notes to the Financial Statements - continued

(4) Investment Purchases and Sales - continued

	Purchases	Sales
Scudder VIT Funds:
Scudder VIT Small Cap Index Fund (åSSCæ)	1,176,799	370,964
Scudder Variable Series II:
SVS Dreman Small Cap Value Portfolio (åSCVæ)	1,024,858	154,648
Delaware Variable Insurance Products Trust:
VIP Growth Opportunities Series (åDGOæ)	132,574	154,759
Dreyfus Investment Portfolios:
MidCap Stock Portfolio (åDMCæ)	1,673,654	381,241
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio (åLA1æ)	811,256	56,694
Mid-Cap Value Portfolio (åLA2æ)	536,389	227,458
Oppenheimer Variable Account Funds:
Capital Appreciation Fund (åOCFæ)	325,799	25,435
Van Kampen Life Insurance Trust:
LIT Growth & Income Portfolio (åVGIæ)	380,927	78,263
T. Rowe Price Equity Series, Inc.:
T. Rowe Price Blue Chip Growth Portfolio (åTBCæ)	626,383	245,242

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights

A summary of unit values, units outstanding, investment income, and total return percentages for each of the five years ended December 31, 2006, as shown below. No expense ratio is presented as all charges currently relating to Variable Account I are made directly to contract owner accounts through the redemption of units. An expense ratio represents the annualized contract expenses of the separate account, and includes only those expenses that result in a direct reduction to unit values.

	As of December 31							For the Year Ended
		Unit
		Fair Value						Investment			Total Return ***
	Units	[lowest to highest]				Net Assets		Income Ratio **			[lowest to highest]
AIM Variable Insurance Funds, Inc.
V.I. Capital Appreciation Fund Sub-Account (åAIM1æ)
December 31, 2006 [c]	186,833	$	8.39	to	$ 10.51	$	1,873,718		0.06	%	5.68	%	to	6.30	%
December 31, 2005	124,767		7.94	to	9.94		1,184,367		0.07		8.20		to	8.84
December 31, 2004	111,629		7.33	to	9.19		979,175		-		6.00		to	6.63
December 31, 2003	99,063		6.91	to	8.67		828,821		-		28.77		to	29.52
December 31, 2002	91,280		5.36	to	6.73		593,724		-		(24.80	)	to	(24.36	)
V.I. Growth Fund Sub-Account (åAIM2æ)
December 31, 2006 [c]	-			-			-		-					-
December 31, 2005	96,843		5.43	to	8.89		701,088		-		6.85		to	7.48
December 31, 2004 [a]	112,323		5.08	to	8.27		760,747		-		7.59		to	8.23
December 31, 2003	150,908		4.72	to	7.64		920,979		-		30.48		to	31.24
December 31, 2002	166,107		3.61	to	5.82		774,841		-		(31.37	)	to	(30.97	)
V.I. Core Equity Fund Sub-Account (åAIM3æ)
December 31, 2006 [c]	116,873		9.36	to	11.48		1,249,292		0.65		16.02		to	16.70
December 31, 2005	115,293		8.06	to	9.83		1,006,051		1.34		4.70		to	5.31
December 31, 2004 [a]	153,704		7.69	to	9.34		1,297,259		0.93		8.33		to	8.97
December 31, 2003	170,920		7.09	to	8.57		1,336,477		1.10		23.70		to	24.42
December 31, 2002	159,842		5.73	to	6.89		999,784		0.41		(16.07	)	to	(15.58	)
V.I. International Equity Fund Sub-Account (åAIM4æ)
December 31, 2006	351,267		13.09	to	17.32		5,892,590		1.26		27.49		to	28.23
December 31, 2005	240,420		10.26	to	13.51		3,108,700		0.74		17.24		to	17.93
December 31, 2004	191,021		8.74	to	11.45		2,068,325		0.62		23.28		to	24.00
December 31, 2003	226,906		7.08	to	9.24		1,971,499		0.59		28.31		to	29.06
December 31, 2002	218,318		5.52	to	7.16		1,473,780		0.76		(16.17	)	to	(15.67	)
V.I. Premier Equity Fund Sub-Account (åAIM5æ)
December 31, 2006 [c]	-				-		-		1.04					-
December 31, 2005	87,260				8.49		741,083		0.80					5.65
December 31, 2004	108,115				8.04		869,052		0.45					5.77
December 31, 2003	114,028				7.60		868,442		0.34					25.08
December 31, 2002	106,705				6.08		648,320		0.51					30.26
V.I. Dynamics Fund Sub-Account (åIV1æ)
December 31, 2006	30,465				10.53		320,935		-					16.11
December 31, 2005	34,056				9.07		308,975		-					10.72
December 31, 2004 [a]	38,477				8.19		315,286		-					13.34
December 31, 2003	38,780				7.23		280,977		-					37.82
December 31, 2002	28,387				5.25		148,911		-					(31.90	)
V.I. Small Company Growth Fund Sub-Account (åIV2æ)
December 31, 2006	34,509				10.38		357,259		-					14.13
December 31, 2005	41,152				9.09		374,143		-					5.19
December 31, 2004 [a]	50,367				8.64		435,311		-					13.9
December 31, 2003	51,985				7.59		394,856		-					33.43
December 31, 2002	30,392				5.69		172,843		-					(31.11	)
The Alger American Fund
Growth Portfolio Sub-Account (åAL1æ)
December 31, 2006	32,329		8.38	to	9.54		290,576		0.13		4.54		to	5.15
December 31, 2005	51,150		8.01	to	9.12		429,169		0.26		11.38		to	12.03
December 31, 2004	67,519		7.18	to	8.19		515,807		-		4.88		to	5.50
December 31, 2003	82,632		6.84	to	7.81		606,158		-		34.37		to	35.16
December 31, 2002	105,755		5.09	to	5.81		580,116		0.04		(33.38	)	to	(32.99	)
Income and Growth Portfolio Sub-Account (åAL2æ)
December 31, 2006	25,907		9.20	to	11.82		267,204		1.28		8.67		to	9.31
December 31, 2005	43,301		8.45	to	10.87		397,580		1.13		2.84		to	3.44
December 31, 2004	51,380		8.21	to	10.57		461,602		0.56		7.22		to	7.85
December 31, 2003	72,533		7.66	to	9.86		597,304		0.33		29.08		to	29.84
December 31, 2002	87,095		5.93	to	7.64		557,055		0.78		(31.50	)	to	(31.10	)

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights - continued

	As of December 31							For the Year Ended
		Unit
		Fair Value						Investment		Total Return ***
	Units	[lowest to highest]				Net Assets		Income Ratio **		[lowest to highest]
The Alger American Fund
Small Capitalization Portfolio Sub-Account (åAL3æ)
December 31, 2006	11,152		10.00	to	14.27		142,682		-	19.32		to	20.02
December 31, 2005	12,298		8.37	to	11.89		131,262		-	16.20		to	16.88
December 31, 2004	15,537		7.20	to	10.17		140,158		-	15.89		to	16.57
December 31, 2003	17,371		6.21	to	8.72		135,653		-	41.51		to	42.34
December 31, 2002	22,527		4.38	to	6.13		122,787		-	(26.65	)	to	(26.22	)
Mid Cap Growth Portfolio Sub-Account (åAL4æ)
December 31, 2006	23,352				15.24		355,866		-				10.14
December 31, 2005	21,906				13.84		303,096		-				9.82
December 31, 2004	3,770				12.60		47,492		-				25.98
December 31, 2003	-				-		-		-				-
December 31, 2002	-				-		-		-				-
Goldman Sachs Variable Insurance Trust
CORE Small Cap Equity Fund Sub-Account (åGS2æ)
December 31, 2006	19,409		19.53	to	20.01		386,560		0.69	11.62		to	11.71
December 31, 2005	19,634		17.49	to	17.93		348,139		0.25	5.45		to	5.54
December 31, 2004	19,335		16.57	to	17.00		324,935		0.31	15.65		to	15.75
December 31, 2003	7,278		14.31	to	14.70		104,854		0.26	45.15		to	45.28
December 31, 2002	6,414		9.85	to	10.13		64,565		0.33	(15.46	)	to	(15.39	)
CORE US Equity Fund Sub-Account (åGS3æ)
December 31, 2006	144,902		11.27	to	12.24		1,704,656		1.10	12.23		to	12.89
December 31, 2005	145,363		10.04	to	10.84		1,513,737		0.84	5.89		to	6.51
December 31, 2004	123,496		9.47	to	10.18		1,210,680		1.78	14.27		to	14.94
December 31, 2003	46,161		8.28	to	8.56		402,778		0.93	28.72		to	29.47
December 31, 2002	31,668		6.43	to	6.84		212,638		0.46	(22.35	)	to	(21.89	)
Growth and Income Fund Sub-Account (åGS4æ)
December 31, 2006	39,319		13.78	to	14.48		557,007		1.74	21.92		to	22.02
December 31, 2005	39,112		11.30	to	11.87		448,410		1.79	3.33		to	3.41
December 31, 2004	35,174		10.94	to	11.48		391,361		2.19	18.10		to	18.21
December 31, 2003	17,603		9.26	to	9.71		163,772		1.49	23.64		to	23.74
December 31, 2002	12,714		7.49	to	7.85		96,192		1.71	(11.86	)	to	(11.78	)
International Equity Fund Sub-Account (åGS5æ)
December 31, 2006	102,983		11.96	to	13.79		1,327,436		1.65	21.39		to	21.50
December 31, 2005	110,987		9.84	to	11.36		1,171,628		0.33	13.04		to	13.14
December 31, 2004	107,191		8.70	to	10.05		1,002,357		1.42	12.82		to	12.92
December 31, 2003	64,158		7.70	to	8.91		544,927		4.52	34.70		to	34.82
December 31, 2002	53,887		5.71	to	6.61		337,848		1.25	(18.81	)	to	(18.74	)
Mid Cap Value Fund Sub-Account (åGS8æ)
December 31, 2006 [b]	68,934		15.57	to	15.79		1,086,429		0.81	15.49		to	16.16
December 31, 2005	101,376		13.48	to	13.59		1,375,110		0.78	12.17		to	12.83
December 31, 2004	38,922		12.02	to	12.05		468,562		0.85	20.20		to	20.48
December 31, 2003	-				-		-		-				-
December 31, 2002	-				-		-		-				-
MFS/Sun Life Series Trust
Capital Appreciation Series Sub-Account (åCASæ)
December 31, 2006	31,485		7.10	to	8.43		261,668		0.21	5.75		to	6.37
December 31, 2005	39,568		6.71	to	7.92		309,208		0.55	0.33		to	0.92
December 31, 2004 [a]	58,760		6.68	to	7.85		456,379		0.06	10.37		to	11.02
December 31, 2003	61,954		6.04	to	7.09		432,410		-	27.96		to	28.71
December 31, 2002	58,126		4.72	to	5.54		319,913		0.17	(32.79	)	to	(32.39	)
Massachusetts Investors Trust Series Sub-Account (åCGSæ)
December 31, 2006	158,329		11.03	to	11.59		1,801,223		0.80	12.65		to	13.30
December 31, 2005	160,325		9.79	to	10.23		1,608,566		0.80	7.08		to	7.70
December 31, 2004	255,401		9.14	to	9.50		2,402,768		0.92	11.33		to	11.99
December 31, 2003	202,404		8.21	to	8.48		1,718,235		1.08	22.12		to	22.83
December 31, 2002	171,309		6.72	to	6.90		1,184,056		0.96	(21.68	)	to	(21.22	)

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights - continued

As of December 31

For the Year Ended

Unit

Fair Value

Investment

Total Return ***

Units

[lowest to highest]

Net Assets

Income Ratio **

[lowest to highest]

MFS/Sun Life Series Trust
Emerging Growth Series Sub-Account (åEGSæ)
December 31, 2006	53,802	6.29	to	9.24	475,771	-	7.39		to	8.02
December 31, 2005	61,332	5.85	to	8.60	503,177	-	8.50		to	9.14
December 31, 2004 [a]	91,072	5.38	to	7.93	695,166	-	12.58		to	13.24
December 31, 2003	131,684	4.78	to	7.04	884,400	-	30.73		to	31.49
December 31, 2002	141,341	3.65	to	5.39	723,613	-	(34.53	)	to	(34.15	)
Government Securities Series Sub-Account (åGSSæ)
December 31, 2006	256,685	12.94	to	14.24	3,372,649	4.64	3.08		to	3.68
December 31, 2005	228,634	12.48	to	13.81	2,904,730	4.46	1.71		to	2.30
December 31, 2004	207,719	12.20	to	13.58	2,578,231	5.05	3.15		to	3.76
December 31, 2003	216,241	11.76	to	13.16	2,604,745	4.09	1.55		to	2.15
December 31, 2002	188,842	11.51	to	12.96	2,228,605	4.57	9.16		to	9.80
High Yield Series Sub-Account (åHYSæ)
December 31, 2006	219,625	14.17	to	14.95	3,267,820	7.75	9.75		to	10.39
December 31, 2005	200,681	12.90	to	13.54	2,704,033	8.34	1.60		to	2.19
December 31, 2004	172,603	12.69	to	13.25	2,274,083	8.03	8.91		to	9.54
December 31, 2003	200,016	11.64	to	12.09	2,411,709	8.24	20.73		to	21.44
December 31, 2002	172,449	9.63	to	9.96	1,711,051	8.78	2.10		to	2.70
Massachusetts Investors Growth Stock Series Sub-Account (åMISæ)
December 31, 2006	164,036	7.68	to	9.14	1,467,362	0.09	7.04		to	7.67
December 31, 2005	148,002	7.17	to	8.54	1,229,966	0.49	3.77		to	4.37
December 31, 2004	147,809	6.90	to	8.23	1,179,938	0.07	8.97		to	9.61
December 31, 2003	126,687	6.33	to	7.55	916,040	-	22.67		to	23.39
December 31, 2002	81,106	5.16	to	6.15	480,213	0.13	(28.47	)	to	( 28.05	)
New Discovery Series Sub-Account (åNWDæ)
December 31, 2006	127,257	10.59	to	16.09	1,411,591	-	12.51		to	13.17
December 31, 2005	123,740	9.35	to	14.30	1,210,548	-	4.59		to	5.21
December 31, 2004	114,708	8.89	to	13.68	1,085,097	-	6.86		to	7.49
December 31, 2003	116,920	8.27	to	12.80	1,032,949	-	34.50		to	35.29
December 31, 2002	79,180	6.11	to	9.52	531,512	-	(33.82	)	to	(33.43	)
Total Return Series Sub-Account (åTRSæ)
December 31, 2006	336,951	13.85	to	16.22	4,942,494	2.73	11.57		to	12.22
December 31, 2005	350,371	12.34	to	14.52	4,561,624	2.53	2.42		to	3.02
December 31, 2004	338,880	11.98	to	14.17	4,287,717	2.49	10.82		to	11.47
December 31, 2003	344,082	10.75	to	12.77	3,897,759	3.27	16.47		to	27.72
December 31, 2002	274,812	9.18	to	10.68	2,697,529	3.06	(100.00	)	to	(5.69	)
Utilities Series Sub-Account (åUTSæ)
December 31, 2006	99,015	15.97	to	19.83	1,685,709	2.62	31.51		to	32.28
December 31, 2005	82,133	12.07	to	15.07	1,069,705	0.98	16.61		to	17.29
December 31, 2004	70,699	10.29	to	12.93	808,395	2.01	29.61		to	30.37
December 31, 2003	57,320	7.89	to	9.97	482,718	4.21	35.46		to	36.26
December 31, 2002	47,288	5.79	to	7.36	308,086	3.71	(24.31	)	to	(23.87	)
Value Series Sub-Account (åEISæ)
December 31, 2006	133,384	14.76	to	14.97	1,990,815	1.34	20.25		to	20.96
December 31, 2005	107,101	12.27	to	12.38	1,322,436	1.37	5.98		to	6.60
December 31, 2004	28,237	11.58	to	11.61	327,493	-	15.82		to	16.09
December 31, 2003	-		-		-	-			-
December 31, 2002	-		-		-	-			-
OCC Accumulation Trust
Equity Portfolio Sub-Account (åOP1æ)
December 31, 2006	25,041	13.26	to	14.60	367,064	0.46	14.61		to	14.71
December 31, 2005	49,614	11.57	to	12.73	629,649	0.41	6.42		to	6.51
December 31, 2004	51,267	10.87	to	11.95	610,685	1.09	11.27		to	11.37
December 31, 2003	66,493	9.77	to	10.73	708,868	1.33	27.82		to	27.93
December 31, 2002	70,029	7.64	to	8.39	582,242	0.94	(21.87	)	to	(21.80	)
Mid Cap Portfolio Sub-Account (åOP2æ)
December 31, 2006	4,314	23.94	to	29.84	123,150	-	12.40		to	12.50
December 31, 2005	4,728	21.28	to	26.55	119,509	-	15.51		to	15.61
December 31, 2004	6,314	18.41	to	22.98	139,580	0.10	18.64		to	18.74
December 31, 2003	9,543	15.50	to	19.37	171,651	-	31.65		to	31.77
December 31, 2002	12,424	11.77	to	14.71	170,197	-	(7.68	)	to	(7.60	)

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights - continued

	As of December 31							For the Year Ended
		Unit
		Fair Value						Investment		Total Return ***
	Units	[lowest to highest]				Net Assets		Income Ratio **		[lowest to highest]
OCC Accumulation Trust
Small Cap Portfolio Sub-Account (åOP3æ)
December 31, 2006	16,571		23.61	to	24.32		402,870		-	23.36		to	23.47
December 31, 2005	17,428		19.14	to	19.70		341,336		-	(0.52	)	to	(0.44	)
December 31, 2004	22,473		19.24	to	19.78		440,215		0.05	17.19		to	17.29
December 31, 2003	28,428		16.42	to	16.87		476,584		0.05	41.82		to	41.94
December 31, 2002	31,605		11.58	to	11.88		372,684		0.07	(22.09	)	to	(22.03	)
Managed Portfolio Sub-Account (åOP4æ)
December 31, 2006	1,829		12.97	to	13.48		23,948		1.74	9.02		to	9.11
December 31, 2005	2,037		11.90	to	12.36		24,280		1.21	4.67		to	4.76
December 31, 2004	2,258		11.37	to	11.80		25,755		1.60	10.12		to	10.21
December 31, 2003	3,811		10.33	to	10.70		40,081		1.92	21.04		to	21.15
December 31, 2002	4,691		8.53	to	8.83		40,526		1.74	(17.37	)	to	(17.30	)
Sun Capital Advisers Trust
Sun Capital Money Market Fund Sub-Account (åSCA1æ)
December 31, 2006	167,099		11.50	to	11.75		1,963,728		4.52	3.99		to	4.08
December 31, 2005	157,841		11.05	to	11.30		1,774,297		2.73	2.16		to	2.25
December 31, 2004	158,525		10.81	to	11.06		1,743,749		0.81	0.15		to	0.23
December 31, 2003	107,943		10.78	to	11.05		1,570,196		0.56	(0.04	)	to	0.05
December 31, 2002	151,139		10.78	to	11.05		1,656,791		1.12	0.54		to	0.62
Sun Capital Investment Grade Bond Fund Sub-Account (åSCA2æ)
December 31, 2006	228,845		13.69	to	14.87		3,201,765		5.17	4.79		to	5.41
December 31, 2005	215,554		12.99	to	14.19		2,849,531		4.80	1.37		to	1.96
December 31, 2004	135,296		12.74	to	14.00		1,768,092		4.82	5.80		to	6.42
December 31, 2003	250,179		11.97	to	13.23		3,057,433		5.20	9.01		to	9.65
December 31, 2002	252,822		10.92	to	12.14		2,842,873		5.57	4.63		to	5.24
Sun Capital Real Estate Fund Sub-Account (åSCA3æ)
December 31, 2006	137,110		32.01	to	39.45		4,479,936		1.66	38.16		to	38.96
December 31, 2005	139,612		23.04	to	28.55		3,294,424		1.67	9.03		to	9.67
December 31, 2004	122,604		21.00	to	26.19		2,650,303		1.65	32.54		to	33.32
December 31, 2003	93,289		15.75	to	19.76		1,521,942		-	35.16		to	35.95
December 31, 2002	73,335		11.59	to	14.62		891,543		6.36	3.44		to	4.04
Sun Capital Blue Chip Mid-Cap Fund Sub-Account (åSCA5æ)
December 31, 2006	203,455		16.42	to	25.66		3,609,657		-	10.65		to	11.30
December 31, 2005	171,043		14.75	to	23.19		2,764,866		0.09	15.93		to	16.61
December 31, 2004	153,718		12.65	to	20.00		2,164,285		-	15.47		to	16. 14
December 31, 2003	237,573		10.89	to	17.32		2,846,103		-	35.30		to	36.09
December 31, 2002	193,905		8.00	to	12.80		1,754,504		-	(15.41	)	to	(14.91	)
Sun Capital Davis Venture Value Fund Sub-Account (åSCA7æ)
December 31, 2006	284,851				13.89		3,954,847		0.77				14.77
December 31, 2005	241,536				12.11		2,923,925		0.75				9.73
December 31, 2004	193,725				11.03		2,137,277		0.68				12.45
December 31, 2003	121,794				9.81		1,194,587		0.66				30.50
December 31, 2002	70,206				7.52		527,790		-				(16.24	)
Sun Capital Oppenheimer Main Street Small Cap Fund Sub-Account (åSCBæ) [d]
December 31, 2006	131,940		14.23	to	16.03		2,071,236		-	12.94		to	13.60
December 31, 2005	132,167		12.60	to	14.11		1,832,530		-	3.72		to	4.33
December 31, 2004	136,275		12.15	to	13.53		1,811,446		-	17.74		to	18.43
December 31, 2003	201,256		10.32	to	11.42		2,265,709		0.06	40.80		to	41.62
December 31, 2002	149,387		7.33	to	8.07		1,189,036		-	(26.70	)	to	(20.61	)
Sun Capital All Cap Fund Sub-Account (åSCMæ)
December 31, 2006	17,353				16.52		286,649		2.56				20.07
December 31, 2005	7,018				13.76		96,545		0.14				(0.72	)
December 31, 2004	6,521				13.86		90,356		0.13				20.39
December 31, 2003	24,634				11.51		282,512		1.04				52.3
December 31, 2002	17,505				7.56		132,292		0.40				(24.43	)
AllianceBernstein Variable Product Series Fund, Inc.
VP Global Technology Portfolio Sub-Account (åAN2æ)
December 31, 2006	22,621				7.55		170,887		-				8.38
December 31, 2005	24,780				6.97		172,732		-				3.65
December 31, 2004 [a]	31,810				6.73		213,926		-				5.09
December 31, 2003	39,085				6.40		250,545		-				43.79
December 31, 2002	22,628				4.45		100,711		-				(41.81	)

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights - continued

	As of December 31					For the Year Ended
		Unit
		Fair Value				Investment		Total Return ***
	Units	[lowest to highest]		Net Assets		Income Ratio **		[lowest to highest]
AllianceBernstein Variable Product Series Fund, Inc.
VP Growth and Income Portfolio Sub-Account (åAN3æ)
December 31, 2006	356,895		12.62		4,503,178		1.13		16.98
December 31, 2005	334,161		10.78		3,603,531		1.24		4.60
December 31, 2004	294,980		10.31		3,041,247		0.60		11.22
December 31, 2003	137,868		9.27		1,279,150		0.78		32.18
December 31, 2002	87,587		7.01		614,232		0.52		(22.27	)
Fidelity Variable Insurance Products Fund
Fidelity VIP Index 500 Portfolio Sub-Account (åFL4æ)
December 31, 2006	1,235,790		11.73		14,503,213		1.47		15.61
December 31, 2005	1,030,028		10.15		10,454,905		1.68		4.71
December 31, 2004	1,007,408		9.69		9,765,021		1.03		10.51
December 31, 2003	619,237		8.77		5,436,616		1.03		28.27
December 31, 2002	357,682		6.84		2,445,800		0.89		(22.32	)
Fidelity VIP Money Market Portfolio Sub-Account (åFL5æ)
December 31, 2006	890,859		11.40		10,150,547		4.66		4.77
December 31, 2005	1,092,670		10.88		11,884,328		2.90		2.93
December 31, 2004	918,254		10.57		9,703,636		1.15		1.10
December 31, 2003	869,135		10.45		9,001,425		0.88		0.90
December 31, 2002	772,471		10.36		8,001,083		1.59		1.61
Fidelity VIP Contrafund^TM Portfolio Sub-Account (åFL6æ)
December 31, 2006	414,771		16.25		6,730,499		1.18		11.59
December 31, 2005	326,818		14.56		4,759,899		0.15		16.85
December 31, 2004	219,538		12.46		2,736,419		0.21		15.34
December 31, 2003	164,605		10.81		1,775,416		0.25		28.35
December 31, 2002	88,676		8.42		746,648		0.41		(9.42	)
Fidelity VIP Overseas Portfolio Sub-Account (åFL7æ)
December 31, 2006	421,594		14.71		6,206,851		0.70		17.95
December 31, 2005	370,882		12.47		4,625,303		0.52		18.97
December 31, 2004	331,343		10.48		3,473,292		0.82		13.49
December 31, 2003	172,921		9.24		1,599,589		0.65		43.20
December 31, 2002	165,090		6.45		1,064,835		0.20		(20.34	)
Fidelity VIP Growth Portfolio Sub-Account (åFL8æ)
December 31, 2006	228,802		9.09		2,093,330		0.19		6.73
December 31, 2005	133,080		8.52		1,133,632		0.36		5.67
December 31, 2004	135,289		8.06		1,090,579		0.12		3.26
December 31, 2003	85,991		7.81		674,737		0.15		32.78
December 31, 2002	68,738		5.88		404,118		0.08		(30.20	)
Franklin Templeton Variable Insurance Products Trust
Franklin Templeton Growth Securities Fund Sub-Account (åFTGæ)
December 31, 2006	84,981		21.61		1,836,551		1.33		21.81
December 31, 2005	56,779		17.74		1,007,375		1.10		8.86
December 31, 2004	40,990		16.30		668,030		1.21		16.03
December 31, 2003	12,883		14.05		181,106		1.67		32.13
December 31, 2002	339		10.63		3,607		-		6.30
Franklin Templeton Foreign Securities Fund Sub-Account (åFTIæ)
December 31, 2006	299,049		21.99		6,578,061		1.26		21.44
December 31, 2005	242,295		18.11		4,388,017		1.18		10.17
December 31, 2004	176,214		16.44		2,896,736		1.06		18.53
December 31, 2003	87,810		13.87		1,215,035		1.87		32.21
December 31, 2002	494		10.49		5,182		-		4.90
PIMCO Variable Insurance Trust
PIMCO High Yield Portfolio Sub-Account (åPHYæ)
December 31, 2006	82,498		16.63		1,371,917		6.85		9.10
December 31, 2005	64,013		15.25		975,892		6.53		4.13
December 31, 2004	69,113		14.64		1,011,927		6.49		9.56
December 31, 2003	40,673		13.36		3		6.83		22.91
December 31, 2002	1,189		10.87		12,923		1.44		8.73
PIMCO Emerging Markets Bond Portfolio Sub-Account (åPMBæ)
December 31, 2006	112,396		20.86		2,343,742		5.31		9.28
December 31, 2005	86,740		19.09		1,655,494		5.08		10.78
December 31, 2004	65,676		17.23		1,131,673		4.24		12.12
December 31, 2003	4,295		15.37		66,100		4.61		31.69
December 31, 2002	162		11.67		1,890		1.23		16.70

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights - continued

	As of December 31								For the Year Ended
			Unit
			Fair Value						Investment		Total Return ***
	Units		[lowest to highest]				Net Assets		Income Ratio **		[lowest to highest]
PIMCO Variable Insurance Trust
PIMCO Real Return Portfolio Sub-Account (åPRRæ)
December 31, 2006		133,728				12.34		1,649,374		4.23			0.72
December 31, 2005		124,133				12.25		1,520,305		2.80			2.10
December 31, 2004		119,846				12.00		1,437,641		1.02			8.92
December 31, 2003		70,429				11.01		775,844		1.90			8.85
December 31, 2002		3,614				10.12		36,570		0.84			1.19
PIMCO Total Return Portfolio Sub-Account (åPTRæ)
December 31, 2006		455,277				12.02		5,471,351		4.41			3.85
December 31, 2005		296,124				11.57		3,427,039		3.48			2.45
December 31, 2004		202,924				11.30		2,292,255		1.91			4.89
December 31, 2003		122,353				10.77		1,307,443		2.71			5.04
December 31, 2002		24,233				10.25		248,429		0.83			2.52
PIMCO Low Duration Fund Sub-Account (åPLDæ)
December 31, 2006		496,216		10.41	to	10.56		5,234,503		4.21	3.37	to	3.98
December 31, 2005		452,259		10.07	to	10.16		4,587,637		2.84	0.43	to	1.01
December 31, 2004		345,073		10.03	to	10.05		3,468,358		0.62			0.55
December 31, 2003		-				-		-		-			-
December 31, 2002		-				-		-		-			-
Scudder VIT Funds
Scudder VIT Small Cap Index Fund Sub-Account (åSSCæ)
December 31, 2006		151,365				22.19		3,365,461		0.31			17.19
December 31, 2005		118,476				18.93		2,243,091		0.40			3.99
December 31, 2004		94,502				18.21		1,720,509		0.13			17.48
December 31, 2003		30,464				15.50		472,599		0.01			119.48
December 31, 2002		227				7.06		2,405		0.84			(29.39	)
Scudder VIT EAFE Equity Index Sub-Account (åSEEæ)
December 31, 2006		-				-		-		-			-
December 31, 2005		-				16.60		-		2.02			1.08
December 31, 2004		19,301				16.42		317,006		2.20			18.78
December 31, 2003		12,372				13.83		171,079		0.38			38.27
December 31, 2002		-				-		-		-			-
Scudder Variable Series II
SVS Dreman Small Cap Value Portfolio Sub-Account (åSCVæ)
December 31, 2006		116,029				16.81		1,950,850		0.65			25.06
December 31, 2005		66,869				13.44		898,990		0.33			10.25
December 31, 2004		12,881				12.19		157,077		-			21.95
December 31, 2003		-				-		-		-			-
December 31, 2002		-				-		-		-			-
Delaware Variable Insurance Products Trust
VIP Growth Opportunities Series Sub-Account (åDGOæ)
December 31, 2006		7,498				14.78		110,853		-			6.36
December 31, 2005		9,097				13.90		126,460		-			11.40
December 31, 2004		2,104				12.48		26,255		-			24.78
December 31, 2003		-				-		-		-			-
December 31, 2002		-				-		-		-			-
Dreyfus Investment Portfolios
MidCap Stock Portfolio Sub-Account (åDMCæ)
December 31, 2006		289,998		14.02	to	14.22		4,121,919		0.35	7.12	to	7.75
December 31, 2005		234,302		13.09	to	13.20		3,089,604		0.03	8.54	to	9.17
December 31, 2004		186,541		12.06	to	12.09		2,254,469		0.40			20.88
December 31, 2003		-				-		-		-			-
December 31, 2002		-				-		-		-			-
Lord Abbett Series Fund, Inc.
Growth and Income Portfolio Sub-Account (åLA1æ)
December 31, 2006		108,969				14.15		1,541,818		1.73			17.27
December 31, 2005		57,041				12.06		688,141		2.08			3.25
December 31, 2004		12,583				11.68		147,022		0.87			16.85
December 31, 2003		-				-		-		-			-
December 31, 2002		-				-		-		-			-
Mid-Cap Value Portfolio Sub-Account (åLA2æ)
December 31, 2006		103,941				14.71		1,529,163		0.56			12.23
December 31, 2005		90,528				13.11		1,186,695		0.64			8.22
December 31, 2004		36,437				12.11		441,350		0.41			21.13
December 31, 2003		-				-		-		-			-
December 31, 2002		-				-		-		-			-

Sun Life of Canada (U.S.) Variable Account I

Notes to Financial Statements - (Continued)

(5) Financial Highlights - continued

	As of December 31					For the Year Ended
		Unit
		Fair Value				Investment		Total Return ***
	Units	[lowest to highest]		Net Assets		Income Ratio **		[lowest to highest]
Oppenheimer Variable Account Funds
Capital Appreciation Fund Sub-Account (åOCFæ)
December 31, 2006	47,715		12.81		611,245		0.31		7.95
December 31, 2005	23,682		11.87		281,027		0.83		5.10
December 31, 2004	19,488		11.29		220,045		-		12.91
December 31, 2003	-		-		-		-		-
December 31, 2002	-		-		-		-		-
Van Kampen Life Insurance Trust
LIT Growth & Income Portfolio Sub-Account (åVGIæ)
December 31, 2006	49,615		14.84		736,455		0.94		16.23
December 31, 2005	29,484		12.77		376,511		0.88		9.99
December 31, 2004	13,856		11.61		160,875		0.00		16.11
December 31, 2003	-		-		-		-		-
December 31, 2002	-		-		-		-		-
T. Rowe Price Equity Series, Inc.
T. Rowe Price Blue Chip Growth Portfolio Sub-Account (åTBCæ)
December 31, 2006	226,597		13.48		3,054,317		0.32		9.67
December 31, 2005	196,686		12.29		2,416,956		0.12		5.94
December 31, 2004	157,775		11.60		1,830,113		0.64		16.00
December 31, 2003	-		-		-		-		-
December 31, 2002	-		-		-		-		-

** These amounts represent the dividends, excluding distributions of capital gains, received by the Sub-Account from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses that result in the direct reduction in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the underlying fund in which the Sub-Account invest. Balances have been annualized for sub-accounts in existence for less than one year.

*** These amounts represent the total return for the period indicated, including changes in the value of the underlying fund. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Variable Account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period.

(a) This investment option is closed to new premiums or transfers.

(b) Effective May 1, 2006, this investment option is closed to new premiums or transfers.

(d) On January 9, 2006, OppenheimerFunds, Inc. will replace OpCap Advisors as subadvisor to the SC Oppenheimer Main Street Small Cap Fund.

(6)

Recently Issued Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, (FIN 48) åAccounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109æ. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109. åAccounting for Income Taxesæ. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective during the first required financial reporting period for fiscal years beginning after December 15, 2006. Management of the Sub-Accounts is currently evaluating the impact of applying the various provisions of FIN 48.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, (FAS 157) åFair Value Measurementsæ. FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management of the Sub-Accounts is currently evaluating the impact the adoption of FAS 157 will have on the Variable Account’s financial statement disclosures.

Report of Independent Registered Public Accounting Firm

To the Participants of Sun Life of Canada (U.S.) Variable Account I and the Board of Directors of Sun Life Assurance Company of Canada (U.S.):

We have audited the accompanying statements of condition of AIM V.I. Capital Appreciation Fund Sub-Account, AIM V.I. Growth Fund Sub-Account, AIM V.I. Core Equity Fund Sub-Account, AIM V.I. International Growth Fund Sub-Account, AIM V.I. Premier Equity Fund Sub-Account, AIM V.I. Dynamics Fund Sub-Account, AIM V.I. Small Cap Growth Fund Sub-Account, Alger American Growth Portfolio Sub-Account, Alger American Income and Growth Portfolio Sub-Account, Alger American Small Capitalization Portfolio Sub-Account, Alger American Mid Cap Growth Portfolio Sub-Account, Goldman Sachs CORE Small Cap Equity Fund Sub-Account, Goldman Sachs Structured US Equity Fund Sub-Account, Goldman Sachs Growth and Income Fund Sub-Account, Goldman Sachs International Equity Fund Sub-Account, Goldman Sachs Mid Cap Value Fund Sub-Account, MFS/Sun Life Series Trust Capital Appreciation Series Sub-Account, MFS/Sun Life Series Trust Massachusetts Investors Trust Series Sub-Account, MFS/Sun Life Series Trust Emerging Growth Series Sub-Account, MFS/Sun Life Series Trust Government Securities Series Sub-Account, MFS/Sun Life Series Trust High Yield Series Sub-Account, MFS/Sun Life Series Trust Massachusetts Investors Growth Stock Series Sub-Account, MFS/Sun Life Series Trust New Discovery Series Sub-Account, MFS/Sun Life Series Trust Total Return Series Sub-Account, MFS/Sun Life Series Trust Utilities Series Sub-Account, MFS/Sun Life Series Trust Value Series Sub-Account, OCC Accumulation Trust Equity Portfolio Sub-Account, OCC Accumulation Trust Mid Cap Portfolio Sub-Account, OCC Accumulation Trust Small Cap Portfolio Sub-Account, OCC Accumulation Trust Managed Portfolio Sub-Account, Sun Capital Money Market Fund Sub-Account, Sun Capital Investment Grade Bond Fund Sub-Account, Sun Capital Real Estate Fund Sub-Account, Sun Capital Blue Chip Mid-Cap Fund Sub-Account, Sun Capital Davis Venture Value Fund Sub-Account, Sun Capital Oppenheimer Main Street Small Cap Fund Sub-Account, Sun Capital All Cap Fund Sub-Account, AllianceBernstein VP Global Technology Portfolio Sub-Account, AllianceBernstein VP Growth and Income Portfolio Sub-Account, Fidelity VIP Index 500 Portfolio Sub-Account, Fidelity VIP Money Market Portfolio Sub-Account, Fidelity VIP Contrafund Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account, Fidelity VIP Growth Portfolio Sub-Account, Franklin Templeton Growth Securities Fund Sub-Account, Franklin Templeton Foreign Securities Fund Sub-Account, PIMCO High Yield Portfolio Sub-Account, PIMCO Emerging Markets Bond Portfolio Sub-Account, PIMCO Real Return Portfolio Sub-Account, PIMCO Total Return Portfolio Sub-Account, PIMCO Low Duration Fund Sub-Account, Scudder VIT Small Cap Index Fund Sub-Account, Scudder SVS Dreman Small Cap Value Portfolio Sub-Account, Delaware VIP Growth Opportunities Series Sub-Account, Dreyfus MidCap Stock Portfolio Sub-Account, Lord Abbett Growth and Income Portfolio Sub-Account, Lord Abbett Mid-Cap Value Portfolio Sub-Account, Oppenheimer Capital Appreciation Fund Sub-Account, Van Kampen LIT Growth & Income Portfolio Sub-Account and T. Rowe Price Blue Chip Growth Portfolio Sub-Account of Sun Life of Canada (U.S.) Variable Account I (collectively the åSub-Accountsæ), as of December 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Sub-Accounts management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Sub-Accounts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Sub-Accounts’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2006, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Sub-Accounts as of December 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

April 20, 2007

Boston, Massachusetts

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

For the years ended December 31,

		2006		2005		2004

Revenues:
Premiums and annuity considerations	$	59,192	$	51,982	$	58,820
Net investment income		1,206,081		1,112,529		1,134,257
Net derivative income (loss)		9,089		16,474		(98,419)
Net realized investment (losses) gains		(44,511)		16,925		96,074
Fee and other income		398,622		362,275		357,011

Total revenues		1,628,473		1,560,185		1,547,743

Benefits and expenses:
Interest credited		633,405		637,502		673,442
Interest expense		130,802		123,279		128,522
Policyowner benefits		156,970		187,013		141,377
Amortization of deferred acquisition costs ("DAC") and value of business acquired ("VOBA")		399,182		243,821		82,876
Other operating expenses		231,434		196,543		214,495

Total benefits and expenses		1,551,793		1,388,158		1,240,712

Income before income tax (benefit) expense, minority interest and cumulative effect of change in accounting principles		76,680		172,027		307,031

Income tax (benefit) expense:
Federal		(1,717)		40,091		71,352
State		105		(2)		(98)
Income tax (benefit) expense		(1,612)		40,089		71,254

Income before minority interest and cumulative
effect of change in accounting principles		78,292		131,938		235,777

Minority interest share of (loss) income		-		(1,214)		5,561

Income before cumulative effect of change in accounting principles		78,292		133,152		230,216

Cumulative effect of change in accounting principles, net of tax benefit of $4,814 in 2004		-		-		(8,940)

Net income	$	78,292	$	133,152	$	221,276

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED BALANCE SHEETS

(in thousands except per share data)

ASSETS		December 31, 2006		December 31, 2005
Investments
Available-for-sale fixed maturities at fair value (amortized cost of $13,623,450 and $15,620,827 in 2006 and 2005, respectively)	$	13,637,973	$	15,677,148
Trading fixed maturities at fair value (amortized cost of $3,838,732 and $1,982,762 in 2006 and 2005, respectively)		3,856,053		1,984,848
Subordinated note from affiliate held-to-maturity (fair value of $630,751 and $645,755 in 2006 and 2005, respectively)		600,000		600,000
Mortgage loans		2,273,176		1,739,370
Derivative instruments - receivable		653,854		487,947
Limited partnerships		193,728		222,148
Real estate		186,891		170,510
Policy loans		709,626		701,769
Other invested assets		950,226		554,917
Cash and cash equivalents		578,080		347,654
Total investments and cash		23,639,607		22,486,311

Accrued investment income		291,218		261,507
Deferred policy acquisition costs		1,234,206		1,341,377
Value of business acquired		47,744		53,670
Deferred federal income taxes		3,597		4,360
Goodwill		701,451		701,451
Receivable for investments sold		33,241		79,860
Reinsurance receivable		1,817,999		1,860,680
Other assets		153,230		122,239
Separate account assets		21,060,255		19,095,391

Total assets	$	48,982,548	$	46,006,846

LIABILITIES

Contractholder deposit funds and other policy liabilities	$	19,428,625	$	18,668,578
Future contract and policy benefits		750,112		768,297
Payable for investments purchased		218,465		248,733
Accrued expenses and taxes		144,695		150,318
Debt payable to affiliates		1,325,000		1,125,000
Partnership capital securities		607,826		607,826
Reinsurance payable to affiliate		1,605,626		1,652,517
Derivative instruments - payable		160,504		197,765
Other liabilities		1,178,086		766,657
Separate account liabilities		21,060,255		19,095,391

Total liabilities		46,479,194		43,281,082

Commitments and contingencies - Note 19

STOCKHOLDER’S EQUITY

Common stock, $1,000 par value - 10,000 shares authorized; 6,437 shares issued and outstanding in 2006 and 2005	$	6,437	$	6,437
Additional paid-in capital		2,143,408		2,138,880
Accumulated other comprehensive income		14,030		19,260
Retained earnings		339,479		561,187

Total stockholder’s equity		2,503,354		2,725,764

Total liabilities and stockholder’s equity	$	48,982,548	$	46,006,846

The accompanying notes are an integral part of the consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

For the years ended December 31,

		2006		2005		2004

Net income	$	78,292	$	133,152	$	221,276

Other comprehensive loss:
Net change in unrealized holding (losses) gains on available-for sale securities, net of tax and policyholder amounts (1)		(46,229)		(79,814)		23,103
Minimum pension liability adjustment, net of tax (2)		326		(1,842)		-
Reclassification adjustments of realized investment losses (gains) into net income, net of tax (3)		40,673		(79,722)		(70,146)

Other comprehensive loss		(5,230)		(161,378)		(47,043)

Comprehensive income (loss)	$	73,062	$	(28,226)	$	174,233

(1)	Net of tax (benefit) expense of $(25.5) million, $(43.0) million and $12.4 million for the years ended December 31, 2006, 2005 and 2004, respectively.

(2)	Net of tax (expense) benefit of $(0.2) million and $1.0 million for the years ended December 31, 2006 and 2005, respectively.

(3)	Net of tax benefit (expense) of $ 21.9 million, $(42.9) million and $(37.8) million for the years ended December 31, 2006, 2005 and 2004, respectively.

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in thousands)

For the years ended December 31,

			Accumulated
		Additional	Other		Total
	Common	Paid-In	Comprehensive	Retained	Stockholder’s
	Stock	Capital	Income	Earnings	Equity

Balance at December 31, 2003	$ 6,437	$ 2,071,888	$ 227,681	$ 563,335	$ 2,869,341

Net income	-	-	-	221,276	221,276
Additional paid-in-capital		60,000			60,000
Dividends				(156,576)	(156,576)
Other comprehensive loss	-	-	(47,043)	-	(47,043)

Balance at December 31, 2004	$ 6,437	$ 2,131,888	$ 180,638	$ 628,035	$ 2,946,998

Net income	-	-	-	133,152	133,152
Additional paid-in-capital	-	6,992	-	-	6,992
Dividends	-	-	-	(200,000)	(200,000)
Other comprehensive loss	-	-	(161,378)	-	(161,378)

Balance at December 31, 2005	$ 6,437	$ 2,138,880	$ 19,260	$ 561,187	$ 2,725,764

Net income	-	-	-	78,292	78,292
Additional paid-in-capital	-	4,528	-	-	4,528
Dividends	-	-	-	(300,000)	(300,000)
Other comprehensive loss	-	-	(5,230)	-	(5,230)

Balance at December 31, 2006	$ 6,437	$ 2,143,408	$ 14,030	$ 339,479	$ 2,503,354

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the years ended December 31,

		2006		2005		2004

Cash Flows From Operating Activities:
Net income from operations	$	78,292	$	133,152	$	221,276
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Minority interest share (loss) income		-		(1,214)		5,561
Net amortization of premiums on investments		58,379		60,195		82,123
Amortization of DAC and VOBA		399,182		243,821		82,876
Depreciation and amortization		4,608		3,985		3,025
Non cash derivative activity		(17,315)		(93,478)		(18,690)
Net realized losses (gains) on investments		44,511		(16,925)		(96,074)
Net (gains) losses on trading investments		(15,235)		80,324		7,237
Net change in unrealized and undistributed (gains) in private equity limited partnerships		(29,120)		(48,244)		(58,981)
Interest credited to contractholder deposits		633,405		637,502		671,101
Deferred federal income taxes		4,180		22,047		72,648
Cumulative effect of change in accounting principles, net of tax		-		-		8,940
Changes in assets and liabilities:
DAC additions		(262,895)		(261,917)		(346,996)
Accrued investment income		(29,711)		17,916		5,545
Future contract and policy benefits		(6,619)		25,123		(42,530)
Other, net		96,793		155,865		211,882
Net (purchases) sales of trading fixed maturities		(1,866,153)		(651,921)		27,801
Net cash (used in) provided by operating activities		(907,698)		306,231		836,744

Cash Flows From Investing Activities:
Sales, maturities and repayments of:
Available-for-sale fixed maturities		5,872,190		5,685,008		10,472,377
Mortgage loans		248,264		117,438		205,740
Real estate		-		947		-
Net cash from disposition of subsidiary		-		17,040		39,687
Other invested assets		184,646		483,700		144,145
Purchases of:
Available-for-sale fixed maturities		(4,002,244)		(5,269,211)		(10,367,260)
Mortgage loans		(780,592)		(390,376)		(698,776)
Real estate		(20,619)		(6,648)		(86,743)
Other invested assets		(489,493)		(171,539)		(910,784)
Net changes in other investing activities		399,514		(239,910)		728,637
Net change in policy loans		(7,857)		(5,464)		(3,418)
Net change in short-term investments		-		(4,576)		705

Net cash provided by (used in) investing activities	$	1,403,809	$	216,409	$	(475,690)

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the years ended December 31,

		2006		2005		2004

Cash Flows From Financing Activities:
Additions to contractholder deposit funds	$	3,520,138	$	2,720,141	$	2,552,431
Withdrawals from contractholder deposit funds		(3,690,351)		(3,404,468)		(2,867,815)
Net cash of Sun Capital Advisers LLC		-		-		(2,910)
Debt proceeds		200,000		100,000		-
Dividends paid to stockholder		(300,000)		(150,600)		(150,000)
Additional capital contributed		-		-		60,000
Other, net		4,528		6,992		42,004
Net cash used in financing activities		(265,685)		(727,935)		(366,290)

Net change in cash and cash equivalents		230,426		(205,295)		(5,236)

Cash and cash equivalents, beginning of year		347,654		552,949		558,185

Cash and cash equivalents, end of year	$	578,080	$	347,654	$	552,949

Supplemental Cash Flow Information
Interest paid	$	130,686	$	122,474	$	120,195

Supplemental Schedule of non-cash investing and financing activities

In 2005, the Company declared and paid $200.0 million in dividends to its direct parent, Sun Life of Canada (U.S.) Holdings Inc. (the "Parent"), consisting of $150.6 million in cash and $49.4 million in notes. In 2004, the Company declared and paid cash dividends in the amount of $150.0 million and transferred via dividend its ownership of Sun Capital Advisers LLC. valued at $6.6 million to its indirect parent, Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc..

On April 19, 2005, the Company sold its interest in a consolidated variable interest entity ("VIE"). As a result of the sale, bonds decreased by $42.5 million, short-term investments decreased by $28.5 million, investment income due and accrued decreased by $0.3 million, other invested assets decreased by $3.2 million, other liabilities decreased by $26.1 million, deferred tax liability decreased by $3.9 million, and notes payable decreased by $33.5 million.

On December 31, 2004, the Company distributed through a dividend to the Parent its interest in Sun Capital Advisers LLC. As a result of the dividend, other assets decreased by $5.2 million, other liabilities decreased by $0.9 million, and accrued expenses and taxes decreased by $0.6 million in a non-cash transaction.

On June 30, 2004, the Company sold its interest in another consolidated VIE. As a result of the sale, bonds decreased by $51.0 million, other liabilities decreased by $11.1 million, deferred tax liability decreased by $3.8 million, notes payable decreased by $7.0 million, and other invested assets decreased by $0.6 million.

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

Sun Life Assurance Company of Canada (U.S.) (the "Company") and its subsidiaries are primarily engaged in the sale of individual and group variable life insurance, individual universal life insurance, individual and group fixed and variable annuities, funding agreements, group life, group disability, and group stop loss insurance. These products are distributed through individual insurance agents, financial planners, insurance brokers and broker-dealers to both the tax qualified and non-tax-qualified markets. The Company is authorized to transact business in 49 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. In addition, the Company’s wholly-owned subsidiary, Sun Life Insurance and Annuity Company of New York ("SLNY"), is authorized to transact business in the State of New York.

The Company is a stock life insurance company incorporated under the laws of Delaware. The Company is a direct wholly-owned subsidiary of the Parent. The Company is an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc. ("SLC - U.S. Ops Holdings") and is an indirect wholly-owned subsidiary of Sun Life Financial Inc. ("SLF"), a reporting company under the Securities Exchange Act of 1934. SLF and its subsidiaries are collectively referred to herein as "Sun Life Financial."

As of December 31, 2004, SLC - U.S. Ops Holdings was a direct wholly-owned subsidiary of Sun Life Assurance Company of Canada ("SLOC"). SLOC is a life insurance company incorporated in 1865 and a direct wholly-owned subsidiary of SLF. On January 4, 2005, a reorganization was completed under which most of SLOC’s asset management businesses in Canada and the United States were transferred to Sun Life Financial Corp., a newly incorporated wholly-owned direct subsidiary of SLF. The Company is now an indirect subsidiary of Sun Life Financial Corp., and continues to be an indirect subsidiary of SLF.

On April 19, 2005, the Company sold its interest in a consolidated variable interest entity ("VIE") and recognized a gain of $6.1 million. The Company received net cash proceeds of $17.0 million and reduced consolidated assets and liabilities by $74.5 million and $63.6 million, respectively. The Company’s net income for the year ended December 31, 2005 included a net loss of $0.8 million related to this VIE.

On December 31, 2004, Sun Capital Advisers LLC ("SCA"), a registered investment adviser, was distributed in the form of a dividend to the Parent and became a consolidated subsidiary of the SLC - U.S. Ops Holdings. As a result of this transaction, SCA is no longer the Company’s wholly-owned subsidiary. As of December 31, 2004, SCA’s total assets were $8.1 million. SCA’s net income was $1.9 million for the year ended December 31, 2004.

On June 30, 2004, the Company sold its interest in another consolidated VIE and recognized a gain of $9.7 million. The Company received net cash proceeds of $39.7 million and reduced consolidated assets and liabilities by $51.6 million and $21.9 million, respectively. The Company’s net income related to this VIE for the year ended December 31, 2004, excluding the gain on the sale, was $7.1 million.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BASIS OF PRESENTATION

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for stock life insurance companies.

The consolidated financial statements include the accounts of the Company and its subsidiaries. As of December 31, 2006, the Company directly or indirectly owned all of the outstanding shares or members interest of SLNY, which issues individual fixed and variable annuity contracts, group life, long-term disability and stop loss insurance, and individual life insurance in New York; Independence Life and Annuity Company, a life insurance company that sold variable and whole life insurance products; Clarendon Insurance Agency, Inc., a register broker-dealer; Sun Life of Canada (U.S.) SPE 97-I, Inc., organized for the purpose of engaging in activities incidental to securitizing mortgage loans; Sun Life of Canada (U.S.) Holdings General Partner LLC (the "General Partner"), the sole general partner of Sun Life of Canada (U.S.) Limited Partnership I; SLF Private Placement Investment Company I, LLC; Sun Parkaire Landing LLC; 7101 France Avenue Manager, LLC; Sun MetroNorth, LLC; and SLNY Private Placement Investment Company I, LLC. During 2005, Sun Benefit Services Company, Inc., an inactive subsidiary, was dissolved.

The General Partner is the sole general partner in Sun Life of Canada (U.S.) Limited Partnership I (the "Partnership") and, as a result, the Partnership is consolidated with the results of the Company. The Partnership was established to purchase subordinated debentures issued by the Parent and to issue partnership capital securities to an affiliated business trust, Sun Life of Canada (U.S.) Capital Trust I (the "Capital Trust").

On September 6, 2006 the Company entered into an agreement with Credit and Repackaged Securities Limited Series 2006-10 Trust (the "Trust"), whereby the Company is the sole beneficiary of the Trust. As the sole beneficiary of the Trust, the Company is required to consolidate the Trust under the requirements of Financial Accounting Standards Board ("FASB") Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51." Accordingly, the assets and liabilities of the Trust are included in the Company’s consolidated financial statements. As of December 31, 2006, the Company recorded in its consolidated balance sheets $55.3 million of trading fixed maturities, $1.2 million of accrued investment income and $56.8 million of liabilities.

In addition, the Company had consolidated a certain interest in a VIE. The consolidation of the VIE required the Company to report its minority interest relating to the equity ownership not controlled by the Company. The Company’s interest in the VIE was sold on April 19, 2005.

The Company has a greater than or equal to 20% involvement in five VIEs at December 31, 2006. The Company is a creditor in three trusts and two limited liability companies that were used to finance commercial mortgages, franchise receivables and equipment used in utility generation. The Company’s maximum exposure to loss related to all of these VIEs is the investments’ carrying value, which was $30.1 million and $40.2 million at December 31, 2006 and 2005, respectively. The notes relating to the VIE’s mature between July 2007 and October 2024. See Note 4 for additional information with respect to leveraged leases which is not included above.

All intercompany transactions have been eliminated in consolidation.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant estimates are those used in determining the fair value of financial instruments, goodwill, DAC, VOBA, the liabilities for future contract and policyholder benefits and other-than-temporary impairments of investments. Actual results could differ from those estimates.

FINANCIAL INSTRUMENTS

In the normal course of business, the Company enters into transactions involving various types of financial instruments, including cash equivalents, fixed maturity investments, mortgage loans, equity securities, derivative financial instruments, debt, loan commitments and financial guarantees. These instruments involve credit risk and also may be subject to risk of loss due to interest rate fluctuation. The Company evaluates and monitors each financial instrument individually and, when appropriate, obtains collateral or other security to minimize losses.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents primarily include cash, commercial paper, money market investments and short-term bank participations. All such investments have maturities of three months or less when purchased and are considered cash equivalents for purposes of reporting cash flows.

INVESTMENTS

The Company accounts for its investments in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." At the time of purchase, fixed maturity securities are classified based on the Company’s intent as either held-to-maturity, trading or available-for-sale. In order for the security to be classified as held-to-maturity, the Company must have positive intent and ability to hold the securities to maturity. Securities held-to-maturity are stated at cost, adjusted for amortization of premiums and accretion of discounts. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading. Trading securities are carried at aggregate fair value with changes in unrealized gains or losses reported as a component of net investment income. Securities that do not meet the held-to-maturity or trading criterion are classified as available-for-sale. Included with available-for-sale fixed maturities are mortgage-backed securities in the To Be Announced form ("TBA"). The Company records TBA purchases on the trade date and the corresponding payable is recorded as an outstanding liability in the payable for investments purchased until the settlement date of the transaction. Available-for-sale securities are carried at fair value with the unrealized gains or losses reported in other comprehensive income.

Fair values for publicly traded securities are obtained from external market quotations. For privately-placed fixed maturities, fair values are estimated by taking into account prices for publicly-traded securities of similar credit risk, maturities repayment and liquidity characteristics. All security transactions are recorded on a trade date basis.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENTS (CONTINUED)

The Company's accounting policy for impairment requires recognition of an other-than-temporary impairment write-down on a security if it is determined that the Company will be unable to recover all amounts due under the contractual obligation of the security. Once an impairment charge has been recorded, the Company continues to review the other-than-temporarily impaired security for additional impairment, if necessary. Other-than-temporary impairments are reported as a component of net realized investment gains (losses).

Mortgage loans are stated at unpaid principal balances, net of provisions for estimated losses. Mortgage loans acquired at a premium or discount are carried at amortized values net of provisions for estimated losses. Mortgage loans, which include primarily commercial first mortgages, are diversified by property type and geographic area throughout the United States. Mortgage loans are collateralized by the related properties and generally are no more than 75% of the property’s value at the time that the original loan is made.

A loan is recognized as impaired when it is probable that the principal or interest is not collectible in accordance with the contractual terms of the loan. Measurement of impairment is based on the lower of the present value of expected future cash flows discounted at the loan's effective interest rate, or on the loan's observable market price. A specific valuation allowance is established if the fair value of the impaired loan is less than the recorded amount. Loans are also charged against the allowance when determined to be uncollectible. The allowance is based on a continuing review of the loan portfolio, past loss experience and current economic conditions, which may affect the borrower's ability to pay. While management believes that it uses the best information available to establish the allowance, future adjustments to the allowance may become necessary if economic conditions differ from the assumptions used in making the evaluation.

Real estate investments are held for the production of income or are held-for-sale. Real estate investments held for the production of income are carried at the lower of cost adjusted for accumulated depreciation or 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. Real estate investments held-for-sale are primarily acquired through foreclosure of mortgage loans. The cost of real estate that has been acquired through foreclosure is the estimated fair value less estimated costs to dispose at the time of foreclosure. Real estate investments are diversified by property type and geographic area throughout the United States.

Policy loans are carried at the amount of outstanding principal balance. Policy loans are collateralized by the related insurance policy and do not exceed the net cash surrender value of such policy.

Investments in private equity limited partnerships are accounted for by the equity method of accounting.

The Company uses derivative financial instruments including swaps, options and futures as a means of hedging exposure to interest rate, currency and equity price risk. Derivatives are carried at fair value and changes in fair value are recorded as a component of derivative income.

Realized gains and losses on the sales of investments are recognized in operations at the date of sale and are determined using the average cost method. When an impairment of a specific available-for-sale investment is determined to be other-than-temporary, a realized investment loss is recorded. Changes in the provision for estimated losses on mortgage loans and real estate are included in net realized investment gains and losses.

Interest income is recorded on the accrual basis. Investments are placed in a non-accrual status when management believes that the borrower's financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of principal and interest is doubtful. When an investment is placed in non-accrual status, all interest previously accrued is reversed against current period interest income. Interest accruals are resumed on such investments only when the investments have performed on a sustained basis for a reasonable period of time and when, in the judgment of management, the investments are estimated to be fully collectible as to both principal and interest.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED POLICY ACQUISITION COSTS

Acquisition costs consist of commissions, underwriting and other costs, which vary with and are primarily related to the production of new business. Acquisition costs related to investment-type contracts, primarily deferred annuity and guaranteed investment contracts ("GICs"), and universal and variable life products are deferred and amortized with interest in proportion to the present value of estimated gross profits to be realized over the estimated lives of the contracts. Estimated gross profits are composed of net investment income, net realized investment gains and losses, life and variable annuity fees, surrender charges, interest credited, policyholder benefits and direct variable administrative expenses. This amortization is reviewed regularly and adjusted, as appropriate, retrospectively when the Company records actual profits and revises its estimate of future gross profits to be realized from this group of products, including realized gains and losses from investments.

Although realization of DAC is not assured, the Company believes it is more likely than not that all of these costs will be realized. The amount of DAC considered realizable, however, could be reduced in the near term if the estimates of gross profits or total revenues discussed above are reduced.

DAC is also adjusted for amounts relating to unrealized investment gains and losses. This adjustment, net of tax, is included with unrealized investment gains or losses that are recorded in accumulated other comprehensive income (loss). DAC was increased (decreased) by $6.9 million and $(12.8) million at December 31, 2006 and 2005, respectively, to reflect unrealized losses and (gains).

VALUE OF BUSINESS ACQUIRED

VOBA represents the actuarially-determined present value of projected future gross profits from policies in force at the date of their acquisition. This amount is amortized in proportion to the projected emergence of profits over the estimated life of the purchased block of business.

VOBA is also adjusted for amounts relating to unrealized investment gains and losses. This adjustment, net of tax, is included with unrealized investment gains or losses that are recorded in accumulated other comprehensive income (loss). VOBA was increased (decreased) by $0.5 million and $(1.2) million at December 31, 2006 and 2005, respectively, to account for unrealized investment losses and (gains).

GOODWILL

Goodwill represents the difference between the purchase price paid and the fair value of the net assets acquired in connection with the acquisition of Keyport Life Insurance Company ("Keyport") on November 1, 2001. In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," goodwill is tested for impairment on an annual basis. The Company completed the required impairment tests of goodwill and indefinite-lived intangible assets during the second quarter of 2006 and concluded that these assets were not impaired.

OTHER ASSETS

Property, equipment, leasehold improvements and capitalized software costs that are included in other assets are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line or accelerated method over the estimated useful lives of the related assets, which generally range from 3 to 10 years.

Amortization of leasehold improvements is calculated using the straight-line method over the lesser of the term of the leases or the estimated useful life of the improvements. Intangible assets are also included in other assets.

Intangible assets acquired primarily consist of state insurance licenses that are not subject to amortization and of intangible assets related to product rights that have a weighted-average useful life of 7 years.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

POLICY LIABILITIES AND ACCRUALS

Future contract and policy benefit liabilities include amounts reserved for future policy benefits payable upon contingent events as well as liabilities for unpaid claims due as of the statement date. Such liabilities are established in amounts adequate to meet the estimated future obligations of policies in force.

Policy reserves for annuity contracts include liabilities held for group pension and payout annuity payments and liabilities held for product guarantees on variable annuity products, such as guaranteed minimum death benefits. Reserves for pension and payout annuity contracts are calculated using the best-estimate interest and decrement assumptions that were set at the time that loss recognition testing resulted in additional reserves. Loss recognition testing is done periodically to make sure that these assumptions remain adequate. Reserves for guaranteed minimum death benefits and guaranteed minimum income benefits are calculated according to the methodology of AICPA Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"), whereby the expected benefits provided by the guarantees are spread over the duration of the contract in proportion to the benefit assessments.

Policy reserves for universal life contracts are held for benefit coverages that are not fully provided for in the policy account value. These include rider coverages, conversions from group policies, and benefits provided under market conduct settlements.

Policy reserves for group life and health contracts are calculated using standard actuarial methods recognized by the American Academy of Actuaries. For the tabular reserves, discount rates are based on the Company’s earned investment yield and the morbidity and mortality tables used are standard industry tables modified to reflect the Company’s actual experience when appropriate. In particular, for the Company’s group known claim reserves, the mortality and morbidity tables for the early durations of claims are based exclusively on the Company’s experience, incorporating factors such as age at disability, sex and elimination period. These reserves are computed at amounts that, with interest compounded annually at assumed rates, are expected to meet the Company’s future obligations.

Liabilities for unpaid claims consist of the estimated amount payable for claims reported but not yet settled and an estimate of claims incurred but not reported. The amount reported is based upon historical experience, adjusted for trends and current circumstances. Management believes that the recorded liability is sufficient to provide for the associated claims adjustment expenses. Revisions of these estimates are included in operations in the year such refinements are made.

Contractholder deposit funds consist of policy values that accrue to the holders of universal life-type contracts and investment-related products such as deferred annuities, single premium whole life policies ("SPWL") and GICs. The liabilities consist of deposits received plus interest credited, less accumulated policyholder charges, assessments, partial withdrawals and surrenders. The liabilities are not reduced by surrender charges.

REVENUE AND EXPENSES

Premiums for traditional individual life products are considered earned revenue when due. Premiums related to group life, group stop loss and group disability insurance are recognized as earned revenue pro-rata over the contract period. The unexpired portion of these premiums is recorded as unearned premiums. Revenue from universal life-type products and investment-related products includes charges for the cost of insurance (mortality), initiation and administration of the policy and surrender charges. Revenue is recognized when the charges are assessed except that any portion of an assessment that relates to services to be provided in future years is deferred and recognized over the period during which the services are provided.

Benefits and expenses related to traditional life, annuity and disability contracts, including group policies, are recognized when incurred in a manner designed to match them with related premium revenue and to spread income recognition over the expected life of the policy. For universal life-type and investment-type contracts, expenses include interest credited to policyholders’ accounts and death benefits in excess of account values, which are recognized as incurred.

Fees from investment advisory services are recognized as revenues when the services are provided.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

For the years ended December 31, 2006, 2005 and 2004, the Company participated in a consolidated federal income tax return with SLC - US Ops Holdings and other affiliates.

Deferred income taxes are generally recognized when assets and liabilities have different values for financial statement and tax reporting purposes, and for other temporary taxable and deductible differences as defined by SFAS No. 109, "Accounting for Income Taxes." These differences primarily relate from policy reserves, policy acquisition expenses and unrealized gains or losses on investments.

SEPARATE ACCOUNTS

The Company has established separate accounts applicable to various classes of contracts providing for variable benefits. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. Contracts for which funds are invested in separate accounts include variable life insurance and individual and group qualified and non-qualified variable annuity contracts. Investment income and changes in mutual fund asset values are allocated to policyholders and therefore do not affect the operating results of the Company. Assets held in the separate accounts are carried at fair value and the investment risk of such securities is retained by the contractholder. The Company earns separate account fees for providing administrative services and bearing the mortality risks related to these contracts. The activity of the separate accounts is not reflected in the consolidated financial statements except for: (1) the fees the Company receives, which are assessed periodically and recognized as revenue when assessed; and (2) the activity related to the guaranteed minimum death benefit ("GMDB"), guaranteed minimum income benefit (‘GMIB’), guaranteed minimum accumulation benefit ("GMAB") and guaranteed minimum withdrawal benefit (‘GMWB’) which is reflected in the Company’s consolidated financial statements and accompanying notes.

ACCOUNTING PRONOUNCEMENTS

New and Adopted Accounting Pronouncements

On September 29, 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans," which amends SFAS No. 87 and SFAS No. 106 to require recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under SFAS No. 158, gains and losses, prior service costs and credits, and any remaining transition amounts under SFAS No. 87 and SFAS No. 106 that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic cost. The measurement date is required to be the company's fiscal year end. SFAS No. 158 is effective for publicly-held companies for fiscal years ending after December 15, 2006, except for the measurement date provisions, which are effective for fiscal years ending after December 15, 2008. See Note 9 with respect to the effects of adoption of SFAS No. 158 on the Company.

In September 2006, the Securities and Exchange Commission ("SEC") Staff issued Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB No. 108"), which addresses how the effects of prior year uncorrected financial statement misstatements should be considered in current year financial statements. SAB No. 108 requires registrants to quantify misstatements using both balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relative quantitative and qualitative factors. The requirements of SAB No. 108 are effective for annual financial statements covering the first fiscal year ending after November 15, 2006. The Company’s adoption of SAB No. 108 during the year ended December 31, 2006 had no impact on the Company’s consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

New and Adopted Accounting Pronouncements (continued)

In November of 2005, the FASB issued FASB Staff Position ("FSP") 115-1 and 124-1 "The Meaning of Other-Than-Temporary Impairments and its Application to Certain Investments." This FSP is effective for reporting periods beginning after December 15, 2005. The FSP addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of the impairment loss. The statement also includes accounting guidance for periods subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. Adoption of this FSP did not impact the methodology used by the Company to determine and measure impaired investments. See disclosure in Note 4.

In May of 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3" ("SFAS No. 154"). This statement is effective for fiscal years beginning after December 15, 2005. SFAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. The statement eliminates the requirement in APB 20 to include the cumulative effect of a change in accounting in the income statement in the period of change and requires retrospective applications to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the specific period effects or the cumulative effect of the change. SFAS No. 154 applies to changes required by new accounting pronouncements only when the pronouncement does not include specific transition guidance. The adoption of SFAS No. 154 did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2004, the Company adopted SOP 03-1. The major provisions of SOP 03-1 that affect the Company require:

o	Establishment of reserves primarily related to death benefit and income benefit guarantees provided under variable annuity contracts;
o	Deferral of sales inducements that meet certain criteria, and amortization using the same method used for DAC; and
o	Reporting and measuring the Company’s interest in its separate accounts as investments.

See Footnote 12 for additional information regarding the impact of adoption of SOP 03-1.

Accounting Standards Not Yet Adopted

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"), which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reporting earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007 and all interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157, "Fair Value Measurements." The Company is currently evaluating the impact, if any, that SFAS No. 159 may have on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and all interim periods within those fiscal years. Earlier application is permitted provided that the reporting entity has not yet issued interim or annual financial statements for that fiscal year. The Company is currently evaluating the impact, if any, that SFAS No. 157 may have on the Company’s consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48").

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Accounting Standards Not Yet Adopted (continued)

FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently assessing the impact, if any, of FIN 48 on its consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets" ("SFAS No. 156"), an amendment to SFAS No. 140. SFAS No. 156 requires all separately recognized servicing assets and liabilities to be initially measured at fair value and permits entities to choose to either subsequently measure servicing rights at fair value and report changes in fair value in earnings, or amortize servicing rights in proportion to, and over the estimated net servicing income or loss and assess the rights for impairment or the need for an increased obligation. The option to subsequently measure servicing rights at fair value will allow entities which utilize derivative instruments to hedge their servicing rights to account for such hedging relationships at fair value and avoid the complications of hedge accounting under SFAS No. 133. SFAS No. 156 is effective for fiscal years beginning after September 15, 2006. Earlier application is permitted provided that the reporting entity has not yet issued interim or annual financial statements for that fiscal year. The adoption of this statement will not have a material impact on the Company’s financial position or results of operations.

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Instruments" ("SFAS No. 155"), an amendment to SFAS No. 133 and SFAS No. 140. Among other things, SFAS No. 155: (i) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; (ii) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; (iii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iv) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (v) amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement (new basis) event occurring after the beginning of an entity’s first fiscal year beginning after September 15, 2006. At initial application of SFAS No. 155, the fair value election provided for in paragraph 4(c) may be applied for hybrid financial instruments that were bifurcated under paragraph 12 of SFAS No. 133 prior to the initial application of SFAS No. 155.

In January 2007, the FASB provided a scope exception under SFAS No. 155 for securitized interests that only contain an embedded derivative that is tied to the prepayment risk of the underlying prepayable financial assets, and for which the investor does not control the right to accelerate the settlement. If a securitized interest contains any other embedded derivative (for example, an inverse floater), then it would be subject to the bifurcation tests in SFAS No. 133, as would securities purchased at a significant premium. Following the issuance of the scope exception by the FASB, changes in the market value of the Company’s investment securities would continue to be made through other comprehensive income, a component of stockholders’ equity. The Company does not expect that the January 1, 2007 adoption of SFAS No. 155 will have a material impact on the Company’s financial position, results of operations or cash flows. However, to the extent that certain of the Company’s future investments in securitized financial assets do not meet the scope exception adopted by the FASB, the Company’s future results of operations may exhibit volatility if such investments are required to be bifurcated or marked to market value in their entirety through the income statement, depending on the election made by the Company.

In September of 2005, the American Institute of Certified Public Accountants (the "AICPA") issued Statement of Position 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts" ("SOP 05-1"). SOP 05-1 provides guidance on accounting by insurance companies for DAC on internal replacements other than those specifically described in SFAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments." SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. The adoption of SOP 05-1 is not expected to have a material impact on the Company’s financial position or results of operations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

2. MERGERS, ACQUISITIONS AND DISPOSITIONS

On September 6, 2006, the Company entered into an agreement with the Trust, whereby the Company is the sole beneficiary of the Trust. As of December 31, 2006, total assets of the Trust were $56.6 million. As the sole beneficiary of the Trust, the Company is required to consolidate this Trust under the requirements of FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51." Accordingly, the assets and liabilities of the Trust are included in the Company’s consolidated financial statements. As of December 31, 2006, the Company recorded in its consolidated balance sheets $55.3 million of trading fixed maturities, $1.2 million of accrued investment income and $56.8 million of liabilities.

On April 19, 2005, the Company sold its interest in a consolidated VIE and recognized a gain of $6.1 million. The Company received net cash proceeds of $17.0 million and reduced consolidated assets and liabilities by $74.5 million and $63.6 million, respectively. The Company’s net income for the year ended December 31, 2005 includes a net loss of $0.8 million related to this VIE.

On December 31, 2004, SCA, a registered investment adviser and a wholly-owned subsidiary of the Company, was distributed in the form of a dividend to the Parent and became a consolidated subsidiary of SLC - U.S. Ops Holdings. As a result of this transaction, SCA is no longer the Company’s wholly-owned subsidiary. As of December 31, 2004, SCA’s net assets were $8.1 million. SCA’s net income for the year ended December 31, 2004 was $1.9 million.

On June 30, 2004, the Company sold its interest in another consolidated VIE and recognized a gain of $9.7 million. The Company received net cash proceeds of $39.7 and reduced consolidated assets and liabilities by $51.6 million and $21.9 million, respectively. The Company’s net income for the year ended December 31, 2004 includes net income of $7.1 million related to this VIE.

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES

Below is a summary of affiliated transactions for those affiliates that are not consolidated within the Company.

The Company and its subsidiaries have administrative services agreements with SLOC which provides that SLOC will furnish, as requested, certain services and facilities on a cost-reimbursement basis. Expenses under these agreements amounted to approximately $9.4 million, $11.3 million and $24.4 million for the years ended December 31, 2006, 2005 and 2004, respectively.

In accordance with an administrative service agreement between the Company and SLOC, the Company provides personnel and certain services to SLOC, as requested. Reimbursements under this agreement, which are recorded as a reduction of other operating expenses, were approximately $212.4 million, $170.4 million and $136.8 million for the years ended December 31, 2006, 2005 and 2004, respectively.

The Company has an administrative service agreement with Sun Life Information Services Canada, Inc. ("SLISC") under which SLISC provides administrative and support services to the Company in connection with the Company’s insurance and annuity business. Expenses under this agreement amounted to approximately $10.7 million and $5.8 million for the years ended December 31, 2006 and 2005, respectively. There were no expenses incurred for the year ended December 31, 2004.

The Company has a service agreement with Sun Life Information Services Ireland Limited ("SLISIL") under which SLISIL provides various insurance related and information systems services to the Company. Expenses under this agreement amounted to approximately $19.6 million, $13.9 million and $10.4 million for the years ended December 31, 2006, 2005 and 2004, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

The Company has an administrative services agreement with SLC - U.S. Ops Holdings under which the Company provides administrative and investor services with respect to certain open-end management investment companies for which an affiliate, Massachusetts Financial Services Company ("MFS"), serves as the investment adviser, and which are offered to certain of the Company’s separate accounts established in connection with the variable annuity contracts issued by the Company. Amounts received under this agreement amounted to approximately $22.6 million, $23.4 million and $22.8 million for the years ended December 31, 2006, 2005 and 2004, respectively.

The Company leases office space to SLOC under lease agreements with terms expiring in December 31, 2009 and options to extend the terms for each of twelve successive five-year terms at fair market value of the fixed rent for the term which is then ending. Rent received by the Company under the leases amounted to approximately $10.6 million, $10.6 million, and $11.8 million in 2006, 2005 and 2004, respectively. Rental income is reported as a component of net investment income.

As more fully described in Note 8, the Company has been involved in several reinsurance transactions with SLOC.

In 2006, the Company declared and paid $300.0 million in cash dividends to the Parent. In 2005, the Company declared and paid $200.0 million in dividends to the Parent, consisting of $150.6 million in cash and $49.4 million in notes. In 2004, the Company declared and paid cash dividends in the amount of $150.0 million and transferred via dividend its ownership of SCA valued at $6.6 million to its indirect parent, SLC - U.S. Ops Holdings.

On December 31, 2004, the Company received a $60.0 million capital contribution from its indirect parent, SLC - U.S. Ops Holdings.

In 2004, the employees of the Company became participants in a restricted share unit ("RSU") plan with its indirect parent, SLF. Under the RSU plan, participants are granted units that are equivalent to one common share of SLF stock and have a fair market value of a common share of SLF stock on the date of grant. RSUs earn dividend equivalents in the form of additional RSUs at the same rate as the dividends on common shares of SLF stock. The redemption value, upon vesting, is the fair market value of an equal number of common shares of SLF stock. The Company incurred expenses of $7.3 million, $7.0 million and $4.1 million relating to RSUs for the years ended December 31, 2006, 2005 and 2004, respectively.

In 2006, the Company recorded a tax benefit of $4.5 million through paid-in-capital for SLF stock options issued to employees of the Company for the year ended December 31, 2006. In 2005, the Company recorded a tax benefit of $7.0 million through paid-in-capital for stock options issued to employees of the Company during 2001 through 2005. The $7.0 million tax benefit is comprised of a $2.5 million tax benefit on expenses accrued at its indirect parent, SLF, and a $4.5 million adjustment to record the excess tax benefit over the recorded book expense for stock options exercised.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

At December 31, 2006, the Company had $460.0 million in promissory notes maturing June 30, 2012 issued to an affiliate, Sun Life (Hungary) Group Financing Limited Liability Company ("Sun Life (Hungary) LLC"). The Company pays interest semi-annually to Sun Life (Hungary) LLC. The Company expensed $26.5 million for interest on these promissory notes for each of the years ended December 31, 2006, 2005 and 2004, respectively. The proceeds of the notes were used to purchase fixed-rate government and corporate bonds.

At December 31, 2006 and 2005, the Company had $565.0 million of surplus notes issued to Sun Life Financial (U.S.) Finance, Inc., an affiliate of the Company. The Company expensed $42.6 million for interest on these surplus notes for each of the years ended December 31, 2006, 2005 and 2004, respectively.

At December 31, 2006 and 2005, the Company, through the Partnership, had $600 million of 8.526% partnership capital securities issued to the Capital Trust. The Company expensed $51.2 million for interest on these partnership capital securities for each of the years ended December 31, 2006, 2005 and 2004, respectively.

At December 31, 2006 and 2005, the Company, through the Partnership, owned $600 million of 8.526% subordinated notes issued by the Parent. Interest earned on these notes was $51.2 million for each of the years ended December 31, 2006, 2005 and 2004, respectively.

The Company purchased a total of $140.0 million in promissory notes from MFS in 2004 and 2003. Interest earned for the years ended December 31, 2005 and 2004 was $4.2 million and $4.0 million, respectively. As of December 31, 2005, the Company sold and transferred these notes to affiliates. On December 31, 2005, the Company sold notes with a par value of $90.0 million to an affiliate, Sun Life (Hungary) LLC, and recognized a loss of $3.3 million. On September 23, 2005, the Company transferred notes with a par value of $50.0 million to the Parent as a dividend. The Company recognized a loss of $0.6 million on the transfer of these notes to the Parent.

During the years ended December 31, 2006, 2005 and 2004, the Company paid $24.3 million, $23.2 million and $35.0 million, respectively, in commission fees to an affiliate, Sun Life Financial Distributors, Inc., ("SLFD"). The Company also has an agreement with SLFD and the Parent whereby the Parent provides expense reimbursements to the Company for administrative services provided by the Company to SLFD. The Company received reimbursement of $3.2 million for the year ended December 31, 2006 related to this agreement. In addition, the Company received fee income for administrative services provided to SLFD of $7.1 million and $5.9 million for the years ended December 31, 2005 and 2004, respectively.

During the years ended December 31, 2006, 2005 and 2004, the Company paid $20.1 million, $25.1 million and $45.1 million, respectively, in commission fees to Independent Financial Marketing Group, Inc., an affiliate.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

The Company has an administrative services agreement with SCA under which the Company provides administrative services with respect to certain open-end management investment companies for which SCA serves as the investment adviser, and which are offered to certain of the Company’s separate accounts established in connection with the variable contracts issued by the Company. Amounts received under this agreement amounted to approximately $1.5 million and $2.4 million for the year ended December 31, 2006 and 2005. SCA was a consolidated entity of the Company through December 31, 2004.

The Company paid $14.9 million and $16.4 million for the years ended December 31, 2006 and 2005 in investment management services fees to SCA, an affiliate and registered investment adviser.

On September 12, 2006, the Company entered into a Terms Agreement (the "2006-B Terms Agreement") with its affiliates Sun Life Financial Global Funding III, L.P. (the "Issuer III"), Sun Life Financial Global Funding III, U.L.C. (the "ULC III") and Sun Life Financial Global Funding III, L.L.C. (the "LLC III"), and with Citigroup Global Markets, Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets Corporation and Wachovia Capital Markets (each, an "Initial Purchaser" and collectively, the "2006-B Initial Purchasers"), in connection with the offer and sale by the Issuer III of $750 million of Series 2006-1 Floating Rate Notes due 2013 ("2006-B Notes"). On September 21, 2006, the Company entered into another Terms Agreement (together with the original 2006-B Terms Agreement, the "2006-B Terms Agreements") with the same parties as the original 2006-B Terms Agreement in connection with the offer and sale by the Issuer III of a second tranche of $150 million of 2006-B Notes. The payment obligations of the Issuer III for the full $900 million of 2006-B Notes are unconditionally guaranteed by the LLC III pursuant to a guarantee (the "2006-B Secured Guarantee") dated as of September 19, 2006, and the obligations of the LLC III under the 2006-B Secured Guarantee are secured by two floating rate funding agreements issued by the Company to the LLC III, one for $750 million issued on September 19, 2006 and another for $150 million issued on September 29, 2006. Total interest credited for the funding agreements was $14.9 million for the year ended December 31, 2006.

The 2006-B Terms Agreements incorporate by reference the provisions of a Purchase Agreement dated as of September 5, 2006 by and among the Issuer III, the ULC III, the LLC III, the Company and all of the 2006-B Initial Purchasers. Pursuant to these incorporated provisions, the Company has agreed, among other things, to indemnify each 2006 Initial Purchaser against certain securities law liabilities related to the offering of the 2006-B Notes.

In addition, the Company issued a $100 million floating rate demand note payable to the LLC III on September 19, 2006. The Company expensed $1.7 million for interest on this demand note for the year ended December 31, 2006.

The Company has entered into an interest rate swap agreement with the LLC III with an aggregate notional amount of $900 million that effectively converts the floating rate payment obligations under the funding agreements to fixed rate obligations.

On May 17, 2006, the Company entered into a Terms Agreement (the "2006-A Terms Agreement") with its affiliates Sun Life Financial Global Funding II, L.P. (the "Issuer II"), Sun Life Financial Global Funding II, U.L.C. (the "ULC II") and Sun Life Financial Global Funding II, L.L.C. (the "LLC II"), and with Citigroup Global Markets, Inc. ("Citigroup"), Morgan Stanley & Co. Incorporated ("Morgan Stanley"), Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets Corporation (collectively, with Citigroup and Morgan Stanley, the "2006-A Initial Purchasers"), in connection with the offer and sale by the Issuer II of $900 million of Series 2006-1 Floating Rate Notes due 2011 (the "2006-A Notes"). The payment obligations of the Issuer II are unconditionally guaranteed by the LLC II pursuant to a guarantee (the "2006-A Secured Guarantee"), and the obligations of the LLC II under the 2006-A Secured Guarantee are secured by a $900 million floating rate funding agreement issued by the Company to the LLC II. The 2006-A Terms Agreement incorporates by reference the provisions of a Purchase Agreement dated as of May 15, 2006 by and among the Issuer II, the ULC II, the LLC II, the Company and the 2006-A Initial Purchasers. Pursuant to these incorporated provisions, the Company has agreed, among other things, to indemnify each 2006 Initial Purchaser against certain securities law liabilities related to the offering of the 2006-A Notes. Total interest credited for the funding agreement was $30.7 million for the year ended December 31, 2006.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

On May 24, 2006, the Company also issued a $100 million floating rate demand note payable to the LLC II. The Company expensed $3.4 million for interest on this demand note for the year ended December 31, 2006.

The Company has entered into an interest rate swap agreement with the LLC II with an aggregate notional amount of $900 million that effectively converts the floating rate payment obligations under the funding agreement to fixed rate obligations. The net interest payable under this swap agreement was $0.2 million at December 31, 2006.

On June 3, 2005, the Company entered into a Terms Agreement (the "2005 Terms Agreement") with its affiliates, Sun Life Financial Global Funding, L.P. (the "Issuer"), Sun Life Financial Global Funding, U.L.C. (the "ULC") and Sun Life Financial Global Funding, L.L.C. (the "LLC"), and with Citigroup, Morgan Stanley, Banc of America Securities LLC, Credit Suisse First Boston LLC, J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets Corporation (collectively, the "2005 Initial Purchasers"), in connection with the offer and sale by the Issuer of $600 million of Series 2005-1 Floating Rate Notes due 2010 (the "First Tranche Notes").

On June 29, 2005, the Company entered into a Second Terms Agreement (the "Second 2005 Terms Agreement") with the Issuer, the ULC and the LLC, and with Citigroup and Morgan Stanley, in connection with the offer and sale by the Issuer of $300 million of Series 2005-1 Floating Rate Notes due 2010 (the "Second Tranche Notes").

The payment obligations of the Issuer under the First Tranche Notes and the Second Tranche Notes are unconditionally guaranteed by the LLC pursuant to a guarantee (the "2005 Secured Guarantee") dated as of June 10, 2005, and the obligations of the LLC under the 2005 Secured Guarantee are secured by two floating rate funding agreements issued by the Company to the LLC, one for $600 million issued on June 10, 2005 and one for $300 million issued on July 5, 2005. The Company issued a total of $900 million funding agreements to the LLC in connection with the First Tranche Notes and Second Tranche Notes. The Terms Agreement and the Second Terms Agreement incorporate by reference the provisions of a Purchase Agreement dated as of November 11, 2004 by and among the Issuer, the ULC, the LLC, the Company, and the 2005 Initial Purchasers. Pursuant to these incorporated provisions, the Company has agreed, among other things, to indemnify each 2005 Initial Purchaser against certain securities law liabilities related to the offering of the First Tranche Notes and the Second Tranche Notes.

Total interest credited for the funding agreements associated with the First Tranche Notes and Second Tranche Notes was $49.5 million and $20.7 million for the years ended December 31, 2006 and 2005, respectively.

On June 10, 2005, the Company issued a $100 million floating rate demand note payable to the LLC. The Company expensed $5.5 million and $2.3 million for interest on the demand note for the years ended December 31, 2006 and 2005, respectively.

The Company has entered into two interest rate swap agreements with the LLC with an aggregate notional amount of $900 million that effectively convert the floating rate payment obligations under the funding agreements to fixed rate obligations. The net interest (payable) receivable under these swap agreements was $(0.5) million and $0.1 million at December 31, 2006 and 2005, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

Management believes inter-company revenues and expenses are calculated on a reasonable basis; however, these amounts may not necessarily be indicative of the costs that would be incurred if the Company operated on a stand-alone basis.

The following table lists the details of notes due to affiliates at December 31, 2006 (in 000’s):

Payees	Type	Rate	Maturity	Principal	Interest Expense

Sun Life Financial (U.S.) Finance, Inc.	Surplus	8.625%	11/06/2027	$ 250,000	$ 21,563
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.150%	12/15/2027	150,000	9,225
Sun Life Financial (U.S.) Finance, Inc.	Surplus	7.250%	12/15/2015	150,000	10,875
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.125%	12/15/2015	7,500	459
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.150%	12/15/2027	7,500	461
Sun Life (Hungary) LLC	Promissory	5.760%	06/30/2012	380,000	21,888
Sun Life (Hungary) LLC	Promissory	5.710%	06/30/2012	80,000	4,568
Sun Life Financial Global Funding I, L.L.C.	Demand	Libor plus 0.35%	07/6/2010	100,000	5,518
Sun Life Financial Global Funding II, L.L.C.	Demand	Libor plus 0.26%	07/6/2011	100,000	3,428
Sun Life Financial Global Funding III, L.L.C.	Demand	Libor plus 0.35%	10/6/2013	100,000	1,660
				$ 1,325,000	$ 79,645

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS

Fixed Maturities

The amortized cost and fair value of fixed maturities at December 31, 2006, was as follows:

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale fixed maturities:
Asset Backed and Mortgage Backed Securities	$ 4,415,712	$ 38,390	$ (58,980)	$ 4,395,122
Foreign Government & Agency Securities	79,319	3,512	(283)	82,548
States & Political Subdivisions	495	32	-	527
U.S. Treasury & Agency Securities	307,580	2,637	(4,027)	306,190

Corporate securities:
Basic Industry	204,355	4,217	(3,182)	205,390
Capital Goods	520,338	11,507	(3,973)	527,872
Communications	1,163,026	20,149	(24,077)	1,159,098
Consumer Cyclical	1,051,633	10,127	(28,599)	1,033,161
Consumer Noncyclical	364,459	7,847	(2,302)	370,004
Energy	350,930	6,226	(3,547)	353,609
Finance	3,201,774	43,217	(33,235)	3,211,756
Industrial Other	228,442	7,446	(629)	235,259
Technology	22,779	357	(852)	22,284
Transportation	307,542	10,418	(5,458)	312,502
Utilities	1,405,066	35,310	(17,725)	1,422,651
Total Corporate	8,820,344	156,821	(123,579)	8,853,586

Total available-for-sale fixed maturities	$ 13,623,450	$ 201,392	$ (186,869)	$ 13,637,973

Held-to-maturity fixed maturities:
Sun Life of Canada (U.S.) Holdings, Inc.,
8.526% subordinated debt, due 2027	$ 600,000	$ 30,751	$ -	$ 630,751

Total held-to-maturity fixed maturities	$ 600,000	$ 30,751	$ -	$ 630,751

	Amortized	Gross	Gross
	Cost	Gains	Losses	Fair Value
Trading fixed maturities:
Asset Backed and Mortgage Backed Securities	$ 353,571	$ 3,851	$ (3,479)	$ 353,943
Foreign Government & Agency Securities	40,274	710	(152)	40,832
U.S. Treasury & Agency Securities	796	10	-	806

Corporate securities:
Basic Industry	8,237	596	-	8,833
Capital Goods	71,060	540	-	71,600
Communications	735,753	5,378	(5,077)	736,054
Consumer Cyclical	279,856	2,628	(3,550)	278,934
Consumer Noncyclical	159,221	633	(901)	158,953
Energy	20,620	2,388	-	23,008
Finance	1,742,731	14,625	(7,385)	1,749,971
Industrial Other	55,950	405	(839)	55,516
Transportation	48,887	1,873	(672)	50,088
Utilities	321,776	7,476	(1,737)	327,515
Total Corporate	3,444,091	36,542	(20,161)	3,460,472

Total trading fixed maturities	$ 3,838,732	$ 41,113	$ (23,792)	$ 3,856,053

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2005, was as follows:

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale fixed maturities:
Asset Backed and Mortgage Backed Securities	$ 5,234,792	$ 40,958	$ (74,124)	$ 5,201,626
Foreign Government & Agency Securities	86,360	2,965	(64)	89,261
States & Political Subdivisions	742	24	-	766
U.S. Treasury & Agency Securities	449,877	4,773	(4,286)	450,364

Corporate securities:
Basic Industry	228,782	6,192	(3,384)	231,590
Capital Goods	602,974	20,310	(4,507)	618,777
Communications	1,285,638	32,582	(24,476)	1,293,744
Consumer Cyclical	1,321,417	16,741	(62,470)	1,275,687
Consumer Noncyclical	548,636	16,985	(6,206)	559,415
Energy	445,207	15,281	(2,225)	458,264
Finance	3,167,168	50,719	(28,844)	3,189,043
Industrial Other	246,421	9,913	(1,029)	255,305
Technology	49,288	853	(1,127)	49,014
Transportation	409,812	17,786	(7,739)	419,859
Utilities	1,543,713	54,264	(13,544)	1,584,433
Total Corporate	9,849,056	241,626	(155,551)	9,935,131

Total available-for-sale fixed maturities	$ 15,620,827	$ 290,346	$ (234,025)	$ 15,677,148

Held-to-maturity fixed maturities:
Sun Life of Canada (U.S.) Holdings, Inc.,
8.526% subordinated debt, due 2027	$ 600,000	$ 45,755	$ -	$ 645,755

Total held-to-maturity fixed maturities	$ 600,000	$ 45,755	$ -	$ 645,755

	Amortized	Gross	Gross
	Cost	Gains	Losses	Fair Value
Trading fixed maturities:
Asset Backed and Mortgage Backed Securities	$ 209,548	$ 1,915	$ (3,776)	$ 207,687
Foreign Government & Agency Securities	19,516	-	(136)	19,380

Corporate securities:
Basic Industry	8,649	783	-	9,432
Capital Goods	15,651	751	-	16,402
Communications	343,647	3,607	(8,542)	338,712
Consumer Cyclical	246,522	2,615	(6,160)	242,977
Consumer Noncyclical	84,411	712	(2,370)	82,753
Energy	27,675	3,187	-	30,862
Finance	713,043	13,996	(8,285)	718,754
Industrial Other	47,464	798	(928)	47,334
Technology	3,801	82	-	3,883
Transportation	60,950	2,588	(4,696)	58,842
Utilities	201,885	8,244	(2,299)	207,830
Total Corporate	1,753,698	37,363	(33,280)	1,757,781

Total trading fixed maturities	$ 1,982,762	$ 39,278	$ (37,192)	$ 1,984,848

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

The amortized cost and estimated fair value by maturity periods for fixed maturity investments are shown below. Actual maturities may differ from contractual maturities on asset-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

			December 31, 2006
			Amortized Cost	Fair Value
Maturities of available-for-sale fixed securities:
	Due in one year or less		$ 410,397	$ 410,402
	Due after one year through five years		2,206,629	2,226,776
	Due after five years through ten years		3,807,300	3,791,183
	Due after ten years		2,783,412	2,814,491
Subtotal - Maturities available-for-sale			9,207,738	9,242,852
Asset-backed securities			4,415,712	4,395,121
Total Available-for-sale			$ 13,623,450	$ 13,637,973

Maturities of trading fixed securities:
	Due in one year or less		$ 138,476	$ 138,797
	Due after one year through five years		1,342,987	1,345,899
	Due after five years through ten years		1,757,081	1,764,447
	Due after ten years		246,617	252,968
	Subtotal - Maturities of trading		3,485,161	3,502,111
Asset-backed securities			353,571	353,942
	Total Trading		$ 3,838,732	$ 3,856,053

Maturities of held-to-maturity fixed securities:
		Due after ten years	$ 600,000	$ 630,751

Gross gains of $39.2 million, $61.0 million and $152.5 million and gross losses of $92.3 million, $38.9 million and $45.4 million were realized on the sale of fixed maturities for the years ended December 31, 2006, 2005 and 2004, respectively.

Fixed maturities with an amortized cost of approximately $12.0 million and $10.9 million at December 31, 2006 and 2005, respectively, were on deposit with federal and state governmental authorities as required by law.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

As of December 31, 2006 and 2005, 96.5% and 94.7%, respectively, of the Company's fixed maturities were investment grade. Investment grade securities are those that are rated "BBB" or better by nationally recognized statistical rating organizations. During 2006, 2005 and 2004, the Company incurred realized losses totaling $6.3 million, $29.7 million and $32.5 million, respectively, for other-than-temporary impairment of value of some of its fixed maturities after determining that not all of the unrealized losses were temporary in nature.

The Company has discontinued accruing income on all of its holdings for issuers that are in default. The termination of accrual accounting on these holdings reduced previously accrued income by $0.6 million, $1.7 million and $7.0 million for the years ended December 31, 2006, 2005 and 2004, respectively. The fair market value of these investments was $24.4 million and $29.8 million for the years ended December 31, 2005 and 2004, respectively. As of December 31, 2006, the Company did not have any holding for issuers that were in default.

The following table provides the fair value and gross unrealized losses of the Company’s available-for-sale fixed maturities investments, which were deemed to be temporarily impaired, aggregated by investment category, industry sector and length of time that individual securities have been in an unrealized loss position, at December 31, 2006:

	Less Than Twelve Months		Twelve Months Or More		Total
Corporate Securities
	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses
Basic Industry	$ 7,750	$ (109)	$ 43,426	$ (3,073)	$ 51,176	$ (3,182)
Capital Goods	50,624	(399)	108,017	(3,574)	158,641	(3,973)
Communications	228,260	(4,389)	292,442	(19,688)	520,702	(24,077)
Consumer Cyclical	175,557	(3,380)	514,067	(25,219)	689,624	(28,599)
Consumer Noncyclical	138,379	(942)	33,801	(1,360)	172,180	(2,302)
Energy	75,777	(1,357)	43,064	(2,190)	118,841	(3,547)
Finance	482,642	(5,525)	874,370	(27,710)	1,357,012	(33,235)
Industrial Other	14,092	(15)	11,214	(614)	25,306	(629)
Technology	-	-	13,938	(852)	13,938	(852)
Transportation	30,905	(207)	111,423	(5,251)	142,328	(5,458)
Utilities	252,419	(3,303)	429,194	(14,422)	681,613	(17,725)

Total Corporate	1,456,405	(19,626)	2,474,956	(103,953)	3,931,361	(123,579)

Non-Corporate
Asset Backed and Mortgage Backed Securities	912,875	(5,565)	1,978,436	(53,415)	2,891,311	(58,980)
Foreign Government & Agency Securities	-	-	13,865	(283)	13,865	(283)
U.S. Treasury & Agency Securities	147,386	(2,026)	86,591	(2,001)	233,977	(4,027)

Total Non-Corporate	1,060,261	(7,591)	2,078,892	(55,699)	3,139,153	(63,290)

Grand Total	$2,516,666	$(27,217)	$ 4,553,848	$(159,652)	$7,070,514	$ (186,869)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

	Less Than Twelve Months		Twelve Months Or More		Total
Corporate Securities
	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses
Basic Industry	$ 62,351	$ (1,334)	$ 47,710	$ (2,050)	$ 110,061	$ (3,384)
Capital Goods	37,622	(476)	172,069	(4,031)	209,691	(4,507)
Communications	207,469	(12,291)	284,749	(12,185)	492,218	(24,476)
Consumer Cyclical	475,628	(31,554)	352,308	(30,916)	827,936	(62,470)
Consumer Noncyclical	82,655	(3,602)	116,271	(2,604)	198,926	(6,206)
Energy	44,087	(739)	56,103	(1,486)	100,190	(2,225)
Finance	754,646	(13,576)	685,785	(15,268)	1,440,431	(28,844)
Industrial Other	12,450	(535)	17,657	(494)	30,107	(1,029)
Technology	18,971	(829)	6,703	(298)	25,674	(1,127)
Transportation	64,664	(2,987)	95,889	(4,752)	160,553	(7,739)
Utilities	138,031	(3,438)	444,299	(10,106)	582,330	(13,544)

Total Corporate	1,898,574	(71,361)	2,279,543	(84,190)	4,178,117	(155,551)

Non-Corporate
Asset Backed and Mortgage Backed Securities	1,965,773	(43,011)	1,240,823	(31,113)	3,206,596	(74,124)
Foreign Government & Agency Securities	1,002	(3)	19,118	(61)	20,120	(64)
U.S. Treasury & Agency Securities	56,051	(633)	216,469	(3,653)	272,520	(4,286)

Total Non-Corporate	2,022,826	(43,647)	1,476,410	(34,827)	3,499,236	(78,474)

Grand Total	$ 3,921,400	$ (115,008)	$ 3,755,953	$ (119,017)	$ 7,677,353	$ (234,025)

The Company has a comprehensive process in place to identify potential problem securities that could have an impairment that is other-than-temporary. At the end of each quarter, all securities with an unrealized loss are reviewed. An analysis is undertaken to determine whether this decline in market value is other-than-temporary. The Company’s process focuses on issuer operating performance and overall industry and market conditions. Any deterioration in operating performance is assessed relative to the impact on financial ratios including leverage and coverage measures specific to an industry and relative to any investment covenants.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

The Company’s analysis also assesses each issuer's ability to service its debts in a timely fashion, the length of time the security has been in an unrealized loss position, rating agency actions, and any other key developments as well as the Company’s ability and intention, if any, to dispose of its position prior to the fair value increasing so as to allow recovery of the Company’s cost. The Company has a Credit Committee that includes members from its investment, finance and actuarial functions. The committee meets and reviews the results of the Company’s impairment analysis on a quarterly basis.

The following table provides the number of securities with gross unrealized losses, which were deemed to be temporarily impaired, at December 31, 2006 (not in thousands):

	Number of Securities Less Than Twelve Months	Number of Securities Twelve Months Or More	Total Number of Securities
Corporate Securities

Basic Industry	2	12	14
Capital Goods	9	15	24
Communications	22	64	86
Consumer Cyclical	28	57	85
Consumer Noncyclical	14	10	24
Energy	13	15	28
Finance	80	137	217
Industrial Other	3	2	5
Technology	-	3	3
Transportation	8	47	55
Utilities	39	55	94

Total Corporate	218	417	635

Non-Corporate
Asset Backed and Mortgage Backed Securities	368	741	1,109
Foreign Government & Agency Securities	-	3	3
U.S. Treasury & Agency Securities	10	25	35

Total Non-Corporate	378	769	1,147

Grand Total	596	1,186	1,782

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

The following table provides the number of securities with gross unrealized losses, which were deemed to be temporarily impaired, at December 31, 2005 (not in thousands):

	Number of Securities Less Than Twelve Months	Number of Securities Twelve Months Or More	Total Number of Securities
Corporate Securities

Basic Industry	17	7	24
Capital Goods	6	18	24
Communications	46	44	90
Consumer Cyclical	71	40	111
Consumer Noncyclical	23	18	41
Energy	9	14	23
Finance	113	81	194
Industrial Other	1	6	7
Technology	2	1	3
Transportation	17	43	60
Utilities	32	42	74

Total Corporate	337	314	651

Non-Corporate
Asset Backed and Mortgage Backed Securities	696	353	1,049
Foreign Government & Agency Securities	1	2	3
U.S. Treasury & Agency Securities	16	32	48

Total Non-Corporate	713	387	1,100

Grand Total	1,050	701	1,751

The Company has made funding commitments of private placement bonds into the future. The outstanding funding commitments for these private placement bonds amounted to $4.1 million at December 31, 2006. There were no outstanding funding commitments for private placement bonds at December 31, 2005.

The Company had unfunded commitments with respect to funding of limited partnerships of approximately $53.3 million and $71.3 million at December 31, 2006 and 2005, respectively.

Mortgage Loans and Real Estate

The Company invests in commercial first mortgage loans and real estate throughout the United States. Investments are diversified by property type and geographic area. Mortgage loans are collateralized by the related properties and generally are no more than 75% of the property’s value at the time that the original loan is made.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

Mortgage Loans and Real Estate (continued)

The carrying value of mortgage loans and real estate investments, net of applicable reserves and accumulated depreciation, was as follows:

		December 31,
		2006	2005

Total mortgage loans		$ 2,273,176	$ 1,739,370

Real estate:
	Held for production of income	186,891	170,510
Total real estate		$ 186,891	$ 170,510

Accumulated depreciation on real estate was $27.2 million and $23.0 million at December 31, 2006 and 2005, respectively.

The Company monitors the condition of the mortgage loans in its portfolio. In those cases where mortgages have been restructured, values are impaired or values are impaired but mortgages are performing, appropriate allowances for losses have been made. The Company has impaired mortgage loans and impaired-but-performing mortgage loans totaling $3.9 million and $6.3 million at December 31, 2006 and 2005, respectively.

Activity for the investment valuation allowances was as follows:

	Balance at			Balance at
	January 1,	Additions	Subtractions	December 31,
2006
Mortgage loans	$ 6,272	$ 400	$ ( 2,744)	$ 3,928

2005
Mortgage loans	$ 7,646	$ 800	$ (2,174)	$ 6,272

Mortgage loans and real estate investments comprise the following property types and geographic regions at December 31:

	2006	2005
Property Type:
Office building	$ 864,486	$ 703,927
Residential	115,822	87,874
Retail	998,291	751,041
Industrial/warehouse	310,346	264,567
Other	175,050	108,743
Valuation allowances	(3,928)	(6,272)
Total	$ 2,460,067	$ 1,909,880

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

	2006	2005
Geographic region:

Alaska	$ 3,041	$ -
Alabama	7,824	8,070
Arizona	56,964	48,113
Arkansas	474	-
California	179,502	144,829
Colorado	32,294	33,238
Connecticut	15,016	30,026
Delaware	20,445	15,194
Florida	264,316	140,592
Georgia	86,510	80,802
Idaho	2,635	-
Illinois	47,777	23,118
Indiana	23,471	19,950
Iowa	364	-
Kansas	6,089	-
Kentucky	32,000	25,623
Louisiana	38,314	32,186
Maine	12,508	-
Maryland	58,318	64,724
Massachusetts	141,485	142,421
Michigan	15,522	6,799
Minnesota	40,259	53,157
Missouri	88,348	34,567
Mississippi	770	-
Montana	483	-
Nebraska	12,615	7,948
Nevada	7,304	7,509
New Hampshire	961	-
New Jersey	44,003	36,042
New Mexico	10,097	7,386
New York	313,204	240,390
North Carolina	44,866	43,111
North Dakota	2,150	-
Ohio	145,692	128,525
Oklahoma	4,900	-
Oregon	23,910	11,968
Pennsylvania	136,091	118,709
South Carolina	31,688	-
South Dakota	977	-
Tennessee	41,161	32,430
Texas	295,284	211,889
Utah	30,710	29,718
Virginia	16,825	17,386
Washington	77,525	73,326
West Virginia	4,874	-
Wisconsin	18,663	19,494
All other	25,766	26,912
Valuation allowances	(3,928)	(6,272)
Total	$ 2,460,067	$ 1,909,880

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

At December 31, 2006, scheduled mortgage loan maturities were as follows:

2007	$ 31,619
2008	41,168
2009	42,433
2010	53,443
2011	150,548
Thereafter	1,953,965
Total	$ 2,273,176

Actual maturities could differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties and loans may be refinanced.

The Company has made funding commitments of mortgage loans on real estate and other loans into the future. The outstanding funding commitments for these mortgages amount to $99.0 million and $115.8 million at December 31, 2006 and 2005, respectively.

During 2004, the Company sold commercial mortgage loans in securitization transactions. The mortgages were primarily sold to qualified special purpose entities that were established for the purpose of purchasing the assets and issuing trust certificates. In these transactions, the Company retained investment tranches, which are considered available-for-sale securities, in addition to servicing rights. The securitizations are structured so that investors have no recourse to the Company’s other assets for failure of debtors to pay when due. The value of the Company’s retained interests are subject to credit and interest rate risk on the transferred financial assets. The Company recognized pre-tax gains of $3.0 million for its 2004 securitization transaction. The Company did not sell any commercial mortgage loans in securitization transactions in 2005 or 2006.

The tranches retained through the 2004 securitization were considered interest only strips ("I/O"). Key economic assumptions used in measuring the retained interests at the date of securitization resulting from securitizations completed during the year ended December 31, 2004 were as follows:

	Exeter I/O	Fairfield I/O
Prepayment speed	-	-
Weighted average life in years	5.72-5.92	2.89-8.74
Expected credit losses	-	-
Residual cash flows discount rate	4.80%-4.84%	4.43%-5.28%
Treasury rate interpolated for average life	3.35%-3.39%	3.18%-4.03%
Spread over treasuries	1.45%	1.25%
Duration in years	6.64-10.14	1.45-4.92

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

Key economic assumptions and the sensitivity of the current fair value of cash flows in those assumptions at December 31, 2006 were as follows:

	Exeter I/O	Fairfield I/O
Amortized cost of retained
Interests	$ 646	$ 275
Fair value of retained interests	674	109
Weighted average life in years	4.06 - 7.56	0.93

Expected Credit Losses
Fair value of retained interest as a result of a .20% of adverse change	674	109
Fair value of retained interest as a result of a .30% of adverse change	674	109

Residual Cash flows Discount Rate
Fair value of retained interest as a result of a 10% of adverse change	672	109
Fair value of retained interest as a result of a 20% of adverse change	670	109

The outstanding principal amount of the securitized commercial mortgage loans was $849.6 million at December 31, 2006, none of which were 60 days or more past due. There were no net credit losses incurred relating to the securitized commercial mortgage loans at the dates of securitization through December 31, 2006.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

Key economic assumptions and the sensitivity of the current fair value of cash flows in those assumptions at December 31, 2006 were as follows in regards to tranches retained for securitizations completed between the years 2000 and 2003:

	Commercial Mortgages
Amortized cost of retained
Interests	$ 23,063
Fair value of retained interests	23,819
Weighted average life in years	2.98 - 13.73

Expected Credit Losses
Fair value of retained interest as a result of a .20% of adverse change	23,532
Fair value of retained interest as a result of a .30% of adverse change	23,406

Residual Cash flows Discount Rate
Fair value of retained interest as a result of a 10% of adverse change	23,074
Fair value of retained interest as a result of a 20% of adverse change	22,362

The outstanding principal amount of the securitized commercial mortgage loans was $872.8 million at December 31, 2006, none of which were 60 days or more past due. There were no net credit losses incurred relating to the securitized commercial mortgage loans at the date of securitization through December 31, 2006.

Securities Lending

The Company is engaged in certain securities lending transactions, which require the borrower to provide collateral on a daily basis, in amounts in excess of 102% of the fair value of the applicable securities loaned. The Company maintains effective control over all loaned securities and, therefore, continues to report such loaned securities as fixed maturities in its consolidated balance sheet.

Cash collateral received on securities lending transactions is reflected in other invested assets with an offsetting liability recognized in other liabilities for the obligation to return the collateral. The fair value of collateral held and included in other invested assets was $895.3 million and $495.7 million at December 31, 2006 and 2005, respectively. Fees earned on securities lending transactions were $2.3 million, $1.9 million and $1.2 million for the years ended December 31, 2006, 2005 and 2004, respectively.

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 originally leased through a VIE for a term of 9.78 years. During 2001, the lease term was extended until 2010. The Company's equity investment in this VIE represented 8.33% of the partnership that provided 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 is 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. The leveraged lease is included as a part of other invested assets.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

Leveraged Leases (continued)

The Company's net investment in the leveraged lease is composed of the following elements:

	Year ended December 31,
	2006	2005
Lease contract receivable	$ 18,631	$ 25,914
Less: non-recourse debt	-	(1,410)
Net Receivable	18,631	24,504
Estimated value of leased assets	20,795	21,420
Less: unearned and deferred income	(6,506)	(9,178)
Investment in leveraged leases	32,920	36,746
Less: fees	(113)	(138)
Net investment in leveraged leases	$ 32,807	$ 36,608

Derivatives

The Company uses derivative financial instruments for risk management purposes to hedge against specific interest rate risk, to alter investment rate exposures arising from mismatches between assets and liabilities, and to minimize the Company's exposure to fluctuations in interest rates, foreign currency exchange rates and general market conditions. The Company does not hold or issue any derivative instruments for trading purposes.

As a component of its investment strategy and to reduce its exposure to interest rate risk, the Company utilizes interest rate swap agreements. Interest rate swap agreements are agreements to exchange with a counter-party interest rate payments of differing character (e.g., fixed-rate payments exchanged for variable-rate payments) based on an underlying principal balance (notional principal) as an economic hedge against interest rate changes. No cash is exchanged at the outset of the contract and no principal payments are made by either party. A single net payment is usually made by one counter-party at each interest payment date. The net payment is recorded as a component of derivative income (loss). Because the underlying principal is not exchanged, the Company's maximum exposure to counter-party credit risk is the difference in payments exchanged. The fair value of swap agreements is included with derivative instruments - receivable (positive position) or derivative instruments - payable (negative position) in the accompanying balance sheet.

The Company utilizes payer swaptions to hedge exposure to interest rate risk. Swaptions give the buyer the option to enter into an interest rate swap per the terms of the original swaption agreement. A premium is paid on settlement date and no further cash transactions occur until the positions expire. The swaptions have a physical settlement at expiration for which an interest rate swap becomes effective. Swaptions are carried at fair value which is included in derivative instruments - receivable (positive position) in the accompanying balance sheet and the change in value is offset to derivative income.

The Company utilizes over-the-counter ("OTC") put options and exchange traded futures on the Standard & Poor’s 500 Composite Stock Price Index ("S&P 500 Index") ("S&P", "S&P 500", and "Standard & Poor's" are trademarks of The McGraw Hill Companies, Inc. and have been licensed for use by the Company) and other indexes to hedge against stock market exposure inherent in the GMDB and living benefit features of the Company's variable annuities. The Company also purchases OTC call options on the S&P 500 Index to economically hedge its obligation under certain fixed annuity contracts. Options are carried at fair value and are included with derivative instruments - receivable in the Company’s balance sheet.

Standard & Poor’s indexed futures contracts are entered into for purposes of hedging fixed index products. The interest credited on these 1, 5, 7 and 10 year term products is based on the changes in the S&P 500 Index. On trade date, an initial cash margin is exchanged. Daily cash is exchanged to settle the daily variation margin and the offset is recorded in derivative income.

The Company issues annuity contracts that contain a derivative instrument that is "embedded" in the contract. Upon issuing the contract, the embedded derivative is separated from the host contract (annuity contract) and is carried at fair value.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

From 2000 through 2002, the Company marketed GICs to unrelated third parties. Each transaction is highly-individualized but typically involves the issuance of foreign currency denominated contracts backed by cross currency swaps or equity-linked cross currency swaps. The combination of the currency swaps with interest rate swaps allows the Company to lock in U.S. dollar fixed rate payments for the life of the contract.

Included in derivative gains (losses) are gains (losses) on the translation of foreign currency denominated GIC liabilities of $(90.2) million, $197.1 million and $(83.3) million for the years ended December 31, 2006, 2005 and 2004, respectively.

Beginning in 2005, the Company marketed GICs to unrelated third parties and entered into funding agreements and interest rate swaps as part of this guaranteed investment program. The interest rate swaps allow the Company to lock in U.S. dollar fixed rate payments for the life of the contracts.

The Company does not employ hedge accounting. The Company believes that its derivatives provide economic hedges and the cost of formally documenting hedge effectiveness in accordance with the provisions of SFAS No.133, "Accounting for Derivative Instruments," is not justified. As a result, all changes in the fair value of derivatives are recorded in the current period operations as a component of derivative income.

Net derivative income (loss) for the years ended December 31 consisted of the following:

		2006		2005		2004
Net expense on swap agreements	$	(7,749)	$	(64,915)	$	(62,514)
Change in fair value of swap agreements (interest rate, currency, and equity)		8,392		101,320		(43,977)
Change in fair value of options, futures and embedded derivatives		8,446		(19,931)		8,072
Net derivative income (losses)	$	9,089	$	16,474	$	(98,419)

The Company is required to pledge and receive collateral for open derivative contracts. The amount of collateral required is determined by agreed upon thresholds with the counter-parties. The Company currently pledges cash and U.S. Treasury bonds to satisfy this collateral requirement. At December 31, 2006 and 2005, $43.0 million and $35.6 million, respectively, of fixed maturities were pledged as collateral and are included with fixed maturities.

The Company’s underlying notional or principal amounts associated with open derivatives positions were as follows for the years ended December 31:

	2006
	Notional		Fair Value
	Principal		Asset (Liability)
	Amounts

Interest rate swaps		$10,759,984		$ (84,860)
Currency swaps		488,377		169,618
Equity swaps		172,329		52,664
Currency forwards		3,570		2,493
Futures		1,008,792		(2,313)
Swaptions		1,500,000		1,428
S&P 500 index call options		4,166,184		337,441
S&P 500 index put options		1,103,502		16,879

Total		$19,202,738		$ 493,350

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

4. INVESTMENTS (CONTINUED)

	2005
	Notional		Fair Value
	Principal		Asset (Liability)
	Amounts

Interest rate swaps		$ 6,764,984		$ (115,333)
Currency swaps		534,916		116,070
Equity swaps		181,334		29,463
Currency forwards		2,571		(2,079)
Credit Default Swaps		10,000		(3)
Futures		745,009		(1,724)
Swaptions		2,500,000		8,979
S&P 500 index call options		3,410,279		225,243
S&P 500 index put options		1,160,202		29,566

Total		$ 15,309,295		$ 290,182

5. NET REALIZED INVESTMENT GAINS AND LOSSES

Net realized investment (losses) gains consisted of the following for the years ended December 31:

		2006	2005	2004

Fixed maturities		$ (53,120)	$ 21,873	$ 108,603
Equity securities		519	(6)	3,375
Mortgage and other loans		1,543	614	858
Real estate		-	318	-
Other invested assets		(19)	12,741	(1,601)
Other than temporary declines		(6,329)	(29,707)	(32,494)
Sales on previously impaired assets		12,895	11,092	17,333

	Total	$ (44,511)	$ 16,925	$ 96,074

6. NET INVESTMENT INCOME

Net investment income consisted of the following for the years ended December 31:

		2006	2005	2004

Fixed maturities		$ 991,738	$ 921,803	$ 1,030,973
Mortgage and other loans		135,515	103,253	83,986
Real estate		10,460	11,047	11,615
Policy loans		44,516	37,595	42,821
Other		38,858	55,245	(19,715)
	Gross investment income	1,221,087	1,128,943	1,149,680
Less: Investment expenses		15,006	16,414	15,423
	Net investment income	$ 1,206,081	$ 1,112,529	$ 1,134,257

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosure about Fair Value of Financial Instruments," excludes certain insurance liabilities and other non-financial instruments from its disclosure requirements. The fair value amounts presented herein do not include the expected interest margin (interest earnings over interest credited) to be earned in the future on investment-type products or other intangible items. Accordingly, the aggregate fair value amounts presented herein do not necessarily represent the underlying value to the Company. Likewise, care should be exercised in deriving conclusions about the Company's business or financial condition based on the fair value information presented herein.

The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31:

		2006		2005
		Carrying	Estimated	Carrying	Estimated
		Amount	Fair Value	Amount	Fair Value
Financial assets:
	Cash and cash equivalents	$ 578,080	$ 578,080	$ 347,654	$ 347,654
	Fixed maturities	18,094,026	18,124,777	18,261,996	18,307,751
	Equity securities	15,895	15,895	15,427	15,427
	Mortgages	2,273,176	2,267,327	1,739,370	1,790,629
	Derivatives instruments -receivables	653,854	653,854	487,947	487,947
	Policy loans	709,626	709,626	701,769	701,769
	Separate accounts	21,060,255	21,060,255	19,095,391	19,095,391

Financial liabilities:
	Contractholder deposit funds and other policy liabilities	19,428,625	18,051,332	18,668,578	17,449,961
	Derivative instruments - payables	160,504	160,504	197,765	197,765
	Long-term debt to affiliates	1,325,000	1,370,223	1,125,000	1,178,918
	Partnership capital securities	607,826	630,751	607,826	645,755
	Separate accounts	21,060,255	21,060,255	19,095,391	19,095,391

The following methods and assumptions were used by the Company in determining the estimated fair value of its financial instruments:

Interest receivable on the above financial instruments is stated at carrying value which approximates fair value.

Cash and cash equivalents: The fair values of cash and cash equivalents are estimated to be cost plus accrued interest.

Fixed maturities, short term investments and equity securities: The fair values of short-term bonds are estimated to be amortized cost. The fair values of publicly-traded fixed maturities are based upon market prices or dealer quotes. For privately-placed fixed maturities, fair values are estimated by taking into account prices for publicly-traded securities of similar credit risk, maturity, repayment and liquidity characteristics. The fair value of equity securities are based on quoted market prices. Equity securities are included as a component of other invested assets.

Mortgage: The fair values of mortgage and other loans 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.

Derivative instruments, receivables and payables: The fair values of swaps are based on current settlement values. The current settlement values are based on dealer quotes and market prices. Fair values for options and futures are based on dealer quotes and market prices.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Policy loans: Policy loans are stated at unpaid principal balances, which approximate fair value.

Separate accounts, assets and liabilities: The estimated fair value of assets held in separate accounts is based on quoted market prices. The fair value of liabilities related to separate accounts is the amount payable on demand, which excludes surrender charges.

Contractholder deposit funds and other policy liabilities: The fair values of the Company's general account insurance reserves and contractholder deposits 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 based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for all contracts being valued. Those contracts that are deemed to have short-term guarantees have a carrying amount equal to the estimated market value. The fair values of other deposits with future maturity dates are estimated using discounted cash flows. The fair values of S&P 500 Index and other equity linked embedded derivatives are produced using standard derivative valuation techniques. GMABs or GMWBs are considered to be derivatives under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and are included in contractholder deposit funds. The fair value of the embedded derivatives is calculated stochastically using risk neutral scenarios over a fifty-year projection. Policyholder assumptions are based on experience studies and industry standards.

Long term debt: The fair value of notes payable and other borrowings are estimated using discounted cash flow analyses based upon the Company's current incremental borrowing rates for similar types of borrowings.

8. REINSURANCE

Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreement. To minimize its exposure to significant losses from reinsurer insolvencies, the Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. Management believes that any liability from this contingency is unlikely. A brief discussion of the Company’s reinsurance agreements by segment follows (see Note 15 for segmented information).

Wealth Management Segment

The Wealth Management Segment manages a closed block of SPWL insurance policies, a retirement-oriented tax-advantaged life insurance product. The Company discontinued sales of SPWL’s in response to certain tax law changes in the 1980s. The Company had SPWL policyholder balances of approximately $1.6 billion and $1.7 billion as of December 31, 2006 and 2005, respectively. On December 31, 2003, this entire block of business was reinsured on a funds withheld basis with SLOC, an affiliate.

By reinsuring the SPWL policies, the Company reduced net investment income by $97.0 million, $82.7 million and $91.2 million for the years ended December 31, 2006, 2005 and 2004, respectively. The reduction of net investment income resulting from interest paid on funds withheld includes the impact from net investment income, net derivative (loss) income and net realized investment gains. The Company also reduced interest credited by $76.0 million, $57.5 million and $79.6 million for the years ended December 31, 2006, 2005 and 2004, respectively. In addition, the Company also increased net investment income, relating to an experience rating refund under the reinsurance agreement with SLOC, by $13.0 million, $13.1 and $13.6 million for the years ended December 31, 2006, 2005 and 2004, respectively. The liability for the SPWL policies is included in contractholder deposit funds and other policy liabilities.

Individual Protection Segment

The Company has agreements with SLOC and several unrelated companies, which provide for reinsurance of portions of the net-amount-at-risk under certain individual variable universal life, individual private placement variable universal life, bank owned life insurance ("BOLI"), and corporate owned life insurance ("COLI") policies. These amounts are reinsured on either a monthly renewable or a yearly renewable term basis. Fee income was reduced by $37.8 million, $33.3 million and $28.7 million for the years ended December 31, 2006, 2005 and 2004, respectively, to account for these agreements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

8. REINSURANCE (CONTINUED)

Individual Protection Segment (continued)

Effective October 1, 2004, the Company no longer acts as the reinsurer of risk under the lapse protection benefit for certain universal life contracts issued by SLOC.

Group Protection Segment

The Company, through its affiliate SLNY, had an agreement with SLOC whereby SLOC reinsured the mortality risks of SLNY’s group life insurance contracts. Under this agreement, certain death benefits were reinsured on a yearly-renewable term basis. The agreement provided that SLOC would reinsure mortality risks in excess of $50,000 per claim for group life contracts ceded by SLNY. The treaty was commuted effective December 31, 2004.

The Company, through its affiliate SLNY, had an agreement with SLOC whereby SLOC reinsured morbidity risks of a block of SLNY’s group long-term disability contracts. The treaty was commuted effective December 31, 2004.

The Company, through its affiliate SLNY, has an agreement with an unrelated company whereby the unrelated company reinsures the mortality risks of the Company’s group life contracts. Under this agreement, certain group life mortality benefits are reinsured on a yearly-renewable term basis. The agreement provides that the unrelated company will reinsure amounts above $0.7 million per claim for group life contracts ceded by the Company.

The Company, through its affiliate SLNY, has an agreement with an unrelated company whereby the unrelated company reinsures the morbidity risks of SLNY’s group stop loss contracts. Under this agreement, certain stop loss benefits are reinsured on a yearly- renewable term basis. The agreement provides that the unrelated company will reinsure specific claims for amounts above $1.0 million per claim for stop loss contracts ceded by SLNY. The retention limit was raised to $1.5 million for policies sold or renewed on or after January 1, 2006.

The Company, through its affiliate SLNY, has an agreement with an unrelated company whereby the unrelated company reinsures the morbidity risks of SLNY’s group long-term disability contracts. Under this agreement, certain long-term disability benefits are reinsured on a yearly-renewable term basis. The agreement provides that the unrelated company will reinsure amounts in excess of $4,000 per claim per month for long-term disability contracts ceded by SLNY. The retention limit was raised to $9,000 per claim per month for claims incurred or after January 1, 2006.

The Company, through its affiliate SLNY, has an agreement with an unrelated company whereby the unrelated company reinsures 100% of the risks on a quota share basis for certain specific group life and disability policies.

The effects of reinsurance were as follows:

		For the Years Ended December 31,
			2006	2005	2004
Premiums and annuity considerations:
	Direct		$ 61,713	$ 54,915	$ 62,939
	Ceded		2,521	2,933	4,119
Net premiums and annuity considerations:			$ 59,192	$ 51,982	$ 58,820

Policyowner benefits:
	Direct		$ 197,872	$ 225,936	$ 170,381
	Ceded		40,902	38,923	29,004
Net policyowner benefits:			$ 156,970	$ 187,013	$ 141,377

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS

The Company sponsors three non-contributory defined benefit pension plans for its employees and certain affiliated employees. These plans are the staff qualified pension plan ("retirement plan"), the agent qualified pension plan ("agent pension plan") and the staff nonqualified pension plan ("UBF plan"). Expenses are allocated to participating companies based in a manner consistent with the allocation of employee compensation expenses. The Company's funding policies for the two qualified pension plans are to contribute amounts which at least satisfy the minimum amount required by the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code of 1986. Most qualified pension plan assets consist of separate accounts of SLOC or other insurance company contracts.

Prior to 2006, the Company participated in the UBF plan which was sponsored by SLOC and expensed the portion of the plan cost that was allocated to the Company. Effective January 1, 2006, the plan was divided, with the Company taking over the pension benefit obligation ("PBO") and the associated unrecognized gain/loss and prior service cost/credit. The Company has included the allocated PBO in a separate line in the PBO reconciliation, and accounted for the plan as the Company’s own from that point forward.

The Company uses a measurement date of September 30 for its pension and other post retirement benefit plans.

The Company amended the retirement plan effective January 1, 2006, including the following relating to the retirement plan:

(a) To provide that no one shall become a participant in the plan after December 31, 2005;

(b) To freeze accruals under the plan as of December 31, 2005 for all participants except (i) those participants (x) who are at least age 50 and whose age plus service on January 1, 2006 equals or exceeds 60 and (y) who in 2005 choose to continue their participation in the plan, (ii) those participants who are receiving on December 31, 2005 severance or termination payments and (iii) those participants who are receiving on December 31, 2005 amounts paid under the Long Term Disability plan sponsored by the Company;.

Due to the retirement plan changes, a $1.9 million curtailment charge was recognized in 2005.

Other post retirement benefit plans have been amended effective January 1, 2006, as follows:

To provide retiree medical coverage where the retiree pays the entire cost of coverage equal to the cost paid by active employees unless the participant is a retiree as of December 31, 2005, a "grandfathered employee" or a "Rule 75 employee."

A grandfathered employee shall mean an active employee (i) who retires on or after January 1,2006 and (ii) who as of January 1, 2006 is at least age 55 with 15 or more years of service and whose age plus service is at least 75.

A Rule 75 employee shall mean an active employee (i) who is not a grandfathered employee, ii) who retires on or after January 1, 2006, and (iii) who when they retire are at least age 55 with 15 or more years of service and whose age plus service is at least 75.

For grandfathered employees and Rule 75 employees, retiree medical coverage is provided at reduced cost.

On September 29, 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" ("SFAS No. 158"), which amends SFAS No. 87 and SFAS No. 106 to require recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under SFAS No. 158, gains and losses, prior service costs and credits, and any remaining transition amounts under SFAS No. 87 and SFAS No. 106 that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic cost. The measurement date -- the date at which the benefit obligation and plan assets are measured -- is required to be the Company's fiscal year end. SFAS No. 158 is effective for publicly-held companies for fiscal years ending after December 15, 2006, except for the measurement date provisions, which are effective for fiscal years ending after December 15, 2008. The Company has adopted the balance sheet recognition provisions of SFAS No. 158 at December 31, 2006 and will adopt the year end measurement date in 2008. The Company recognized a liability of $2.3 million as a result of adoption of SFAS No. 158. The statement does not affect the results of operations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

The following table sets forth the change in the retirement plan, agent pension plan and UBF plan projected benefit obligations and assets, as well as such plans’ funded status at December 31:

	2006	2005
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$ 229,545	$ 215,439
Other (uninsured benefit plan split)	28,118	-
Service cost	6,024	10,948
Interest cost	15,064	13,839
Actuarial loss (gain)	(9,862)	17,780
Benefits paid	(7,509)	(6,105)
Plan amendments	-	2,344
Curtailment loss (gain)	-	(24,700)
Projected benefit obligation at end of year	$ 261,380	$ 229,545

Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$ 252,096	$ 233,551
Contributions	(496)	(1,250)
Actual return on plan assets	25,621	25,900
Benefits paid	(7,509)	(6,105)
Fair value of plan assets at end of year	$ 269,712	$ 252,096
Information on the funded status of the plan:
Funded status	$ 8,332	$ 22,551
Unrecognized net actuarial loss	-	7,802
Unrecognized transition obligation	-	(10,392)
Unrecognized prior service cost	-	3,945
4th quarter contribution	(1,108)	(1,550)
Prepaid benefit cost	$ 7,224	$ 22,356

The accumulated benefit obligation for the retirement plan, agent pension plan and UBF plan at December 31, 2006 and 2005 was $249.4 million and $222.4 million, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

Amounts recognized in the Company’s Consolidated Balance Sheets consist of the following as of December 31:

	2006	2005
Other assets	$ 38,345	$ 26,600
Other liabilities	(31,121)	(4,245)
	$ 7,224	$ 22,355

Amounts recognized in the Company’s Consolidated Accumulated Other Comprehensive Income ("AOCI") consist of the following:

	2006

Net actuarial gain	$ (1,923)
Prior service cost	3,564
Transition asset	(8,299)
	$ (6,658)

Amounts included in the Company’s AOCI for the following periods:

	December 31, 2005	December 31, 2006 (before the adoption of statement 158)	December 31, 2006

Additional Minimum Liability included in AOCI	$ 2,834	$ -	$ -
Amount included in AOCI after the adoption of SFAS No. 158	$ -	$ -	$ (6,658)

The retirement plan and agent pension plan were overfunded at December 31, 2006. The funded status of the UBF plan as of December 31, 2006 was as follows:

	2006

Plan assets	$ -
Less: Projected benefit obligations	27,209
Funded status	$ (27,209)

Accumulated benefit obligation	$ 24,084

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

The agent pension plan was overfunded at December 31, 2005. The funded status of the retirement plan as of December 31, 2005 was as follows:

	2005

Plan assets	$ 211,612
Less: Projected benefit obligations	219,802
Funded status	$ ( 8,190)

Accumulated benefit obligation	$ 212,630

The following table sets forth the components of the net periodic benefit cost and the Company’s share of net periodic benefit costs for the retirement plan, agent pension plan and UBF plan for the years ended December 31:

	2006	2005	2004

Components of net periodic benefit cost:
Service cost	$ 6,024	$ 10,948	$ 9,873
Interest cost	15,065	13,839	12,118
Expected return on plan assets	(21,672)	(20,092)	(17,704)
Amortization of transition obligation asset	(2,093)	(3,051)	(3,051)
Amortization of prior service cost	266	855	855
Curtailment loss	-	1,856	-
Recognized net actuarial loss	437	1,918	3,140
Net periodic benefit (benefit) cost	$ (1,973)	$ 6,273	$ 5,231
The Company’s share of net periodic benefit (benefit) cost	$ (1,973)	$ 4,116	$ 4,272

Prior to becoming the plan sponsor of the UBF plan, the cost recognized for the Company’s participation in the UBF plan was $2.9 million and $1.9 million for the years ended December 31, 2005 and 2004, respectively.

The estimated amounts that will be amortized from AOCI into net periodic benefit costs in 2007 are as follows:

Actuarial gain	$ (70)
Prior service cost	266
Transition asset	(2,093)
Total	$ (1,897)

Assumptions

Weighted average assumptions used to determine benefit obligations were as follows:

	Pension Benefits
	2006	2005	2004
Discount rate	6.0%	5.8%	6.2%
Rate of compensation increase	4.0%	4.0%	4.0%

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

Weighted average assumptions used to determine net periodic benefit cost were as follows:

	Pension Benefits
	2006	2005	2004

Discount rate	5.8%	6.2%	6.1%
Expected long term return on plan assets	8.75%	8.75%	8.75%
Rate of compensation increase	4.0%	4.0%	4.0%

The Company relies on historical market returns from Ibbotson Associates (1926-2006) to determine its overall long term rate of return on asset assumption. Applying Ibbotson’s annualized market returns of 12.3% stock, 5.8% bonds and 3.8% cash to the Company’s target allocation results in an expected return consistent with the one used by the Company for purposes of determining the benefit obligation.

Plan Assets

The asset allocation for the Company’s retirement plan and agent pension plan assets for 2006 and 2005 measurement, and the target allocation for 2007, by asset category, are as follows:

	Target Allocation	Percentage of Plan Assets
Asset Category	2007	2006	2005

Equity Securities	60%	63%	61%
Debt Securities	25%	27%	30%
Commercial Mortgages	15%	10%	9%
Other	-%	-%	-%
Total	100%	100%	100%

The target allocations were established to reflect the Company’s investment risk posture and to achieve the desired level of return commensurate with the needs of the fund. The target ranges are based upon a three to five year time horizon and may be changed as circumstances warrant.

The portfolio of investments should, over a period of time, earn a gross annualized rate of return that:

1)	exceeds the assumed actuarial rate;
2)	exceeds the return of customized index created by combining benchmark returns in appropriate weightings based on an average asset mix of funds; and
3)	generates a real rate of return of at least 3% after inflation, and sufficient income or liquidity to pay retirement benefits on a timely basis.

Cash Flow

Due to the over funded status of the retirement plan and the agent pension plan, the Company will not be making contributions to the plan in 2007. The Company will be making a contribution of $1.1 million to the UBF plan in 2007.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

The Company has estimated the following future benefit payments for the years 2007 through 2016:

	Pension Benefits
2007	7,852
2008	8,438
2009	8,936
2010	9,447
2011	10,035
2012 to 2016	69,668

Savings and Investment Plan

The Company sponsors and participates in a savings account that qualifies under Section 401(k) of the Internal Revenue Code (the "401(k) Plan") for which substantially all employees of at least age 21 are eligible to participate at date of hire. Under the 401(k) Plan, the Company matches, up to specified amounts, employee contributions to the plan.

On September 21, 2005, the Board of Directors of the Company approved amendments to the 401(k) Plan, including the following.

Effective January 1, 2006, the 401(k) Plan also includes a retirement investment account that qualifies under Section 401(a) of the Internal Revenue Code (the "RIA"). The Company contributes a percentage of participant’s eligible compensation as determined per the following chart based on the sum of the participant’s age and service on January 1 of the applicable plan year-

Age Plus Service	Company Contribution
Less than 40	3%
At least 40 but less than 55	5%
At least 55	7%

For RIA participants who are at least age 40 on January 1, 2006 and whose age plus service on January 1, 2006 equals or exceeds 45, the Company also contributes to the RIA from January 1, 2006 through December 31, 2015, a percentage of the participant’s eligible compensation as determined per the following chart based on the participant’s age and service on January 1, 2006 -

	Service
Age	Less than 5 years	5 or more years
At least 40 but less than 43	3.0%	5.0%
At least 43 but less than 45	3.5%	5.5%
At least 45	4.5%	6.5%

For RIA participants who did not become participants in the retirement plan before January 1, 2006, the Company made a one-time RIA contribution in January 2006 based on the applicable percentage from the first chart above as of January 1, 2006 and their eligible compensation paid during the period beginning on their hire date and ending on December 31, 2005.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

The amount of the 2006 employer contributions under the 401(k) Plan by the Company and its affiliates was $16.3 million. Amounts are allocated to affiliates based on their respective employees’ contributions. The Company’s portion of the expense was $10.8 million, $4.6 million and $2.8 million for the years ended December 31, 2006, 2005 and 2004, respectively. The Company’s 2005 contribution includes a $1.6 million accrued retroactive adjustment related to the board approved amendments to the 401(k) Plan. This retroactive adjustment was funded in 2006.

Other Post-Retirement Benefit Plans

The Company sponsors a post-retirement benefit pension plan for its employees and certain affiliates employees providing certain health, dental and life insurance benefits ("post-retirement benefits") for retired employees and dependents (the "Retirement Plan"). Expenses are allocated to participating companies based on the number of participants. Substantially all employees of the participating companies 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 following table sets forth the change in the Retirement Plan’s obligations and assets, as well as the plan’s funded status at December 31:

Change in benefit obligation:	2006	2005

Benefit obligation at beginning of year	$ 51,300	$ 48,453
Service cost	1,311	1,333
Interest cost	2,967	2,994
Actuarial (gain) loss	(7,220)	4,596
Benefits paid	(2,756)	(2,884)
Federal Subsidy	250	-
Plan Amendments	-	(3,192)
Benefit obligation at end of year	$ 45,852	$ 51,300

Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$ -	$ -
Employer contributions	2,756	2,884
Benefits paid	(2,756)	(2,884)
Fair value of plan assets at end of year	$ -	$ -

Information on the funded status of the plan:
Funded Status	$ (45,852)	$ (51,301)
Unrecognized net actuarial loss	-	22,741
4th quarter contribution	600	686
Unrecognized prior service cost	-	(5,609)
Accrued benefit cost	$ (45,252)	$ (33,483)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

Amounts recognized in the Company’s Consolidated Balance Sheets Consist of the following:

	2006	2005

Other liabilities	$ (45,252)	$ (33,483)

Amounts recognized in the Company’s AOCI consist of the following:

	2006

Net actuarial loss	$ 14,070
Prior service credit	(5,080)
Transition liability	$ 8,990

Amounts included in the Company’s AOCI for the following periods:

	December 31, 2005	December 31, 2006 (before the adoption of statement 158)	December 31, 2006

Additional Minimum Liability included in AOCI	$ -	$ -	$ -
Amount included in AOCI after the adoption of SFAS No. 158	$ -	$ -	$ 8,990

The following table sets forth the components of the net periodic post-retirement benefit costs and the Company’s allocated share for the year ended December 31:

	2006	2005
Components of net periodic benefit cost
Service cost	$ 1,311	$ 1,333
Interest cost	2,967	2,994
Amortization of prior service cost	(529)	(241)
Recognized net actuarial loss	1,450	1,273
Net periodic benefit cost	$ 5,199	$ 5,359

The Company’s share of net periodic benefit cost	$ 4,501	$ 4,947

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

The estimated amounts that will be amortized from AOCI into net periodic benefit costs in 2007 are as follows:

Actuarial (gain)/loss	$ 912
Prior service (credit)/cost	(529)

Total	$ 383

Assumptions

Weighted average assumptions used to determine benefit obligations were as follows:

	Other Benefits
	2006	2005	2004
Discount Rate	6.0%	5.8%	6.2%
Rate of Compensation increase	4.0%	4.0%	4.0%

Weighted average assumptions used to determine net cost for the years ended December 31 were as follows:

	Other Benefits
	2006	2005	2004
Discount rate	5.8%	6.2%	6.1%
Rate of compensation increase	4.0%	4.0%	4.0%

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

9. RETIREMENT PLANS (CONTINUED)

In order to measure the post-retirement benefit obligation for 2006, the Company assumed a 10% annual rate of increase in the per capita cost of covered health care benefits. In addition, medical cost inflation is assumed to be 9% in 2007 and assumed to decrease gradually to 5.00% for 2011 and remain at that level thereafter. Assumed healthcare 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 effect:

	1- Percentage-Point	1- Percentage-Point
	Increase	Decrease
Effect on Post retirement benefit obligation	$ 4,100	$ (3,674)

Effect on total of service and interest cost	$ 357	$ (335)

The Company has estimated the following future benefit payments for the years 2007 through 2016:

	Other Benefits	Expected Federal Subsidy
2007	$ 3,074	$ 238
2008	3,186	247
2009	3,300	254
2010	3,386	256
2011	3,416	257
2012 to 2016	$ 17,914	$ 1,214

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

10. FEDERAL INCOME TAXES

In June 2006, the FASB issued FIN 48. FIN 48 establishes a comprehensive reporting model which addresses how a business entity should recognize, measure, present and disclose uncertain tax positions that the entity has taken or plans to take on a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently assessing the impact, if any, of FIN 48 on its consolidated financial statements.

The Company will file a consolidated return with SLC -U.S. Ops Holdings for the year ended December 31, 2006, as the Company did for the years ended December 31, 2005 and 2004. The Company’s subsidiary, SLNY, will file a stand-alone federal income tax return for the year ended December 31, 2006 as it did for the years 2005 and 2004. A summary of the components of federal income tax expense (benefit) in the Company’s consolidated statements of income for the years ended December 31 is as follows:

	2006	2005	2004
Federal income tax (benefit) expense:
Current	$ (5,897)	$ 11,239	$ (5,331)
Deferred	4,180	28,852	76,683

Total federal income tax (benefit) expense	$ (1,717)	$ 40,091	$ 71,352

Federal income taxes attributable to the Company’s consolidated operations are different from the amounts determined by multiplying income before federal income taxes by the statutory federal income tax rate at 35%. The Company's effective rate differed from the statutory federal income tax rate as follows:

	2006	2005	2004

Federal income tax expense at statutory rate	$ 26,838	$ 60,210	$ 107,446
Low income housing credit	(6,225)	(5,947)	(6,021)
Separate account dividend received deduction	(13,090)	(10,150)	(10,500)
Prior year items, including settlements	(8,396)	(2,802)	(17,351)
Other items	(844)	(1,220)	(2,222)

Federal income tax (benefit) expense	$ (1,717)	$ 40,091	$ 71,352

The deferred income tax asset (liability) represents the tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. The components of the Company's deferred tax assets and (liabilities) as of December 31 were as follows:

	2006	2005
Deferred tax assets:
Actuarial liabilities	$ 128,848	$ 250,818
Net operating loss	7,954	-
Investments, net	146,116	40,866
Other	-	281
Total deferred tax assets	282,918	291,965

Deferred tax liabilities:
Deferred policy acquisition costs	(250,469)	(287,605)
Other	(28,852)	-
Total deferred tax liabilities	(279,321)	(287,605)

Net deferred tax asset	$ 3,597	$ 4,360

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

10. FEDERAL INCOME TAXES (CONTINUED)

The Company makes payments under certain tax sharing agreements as if it were filing as a separate company. The Company made income tax payments of $22.7 million in 2006 and received income tax refunds of $32.0 million in 2005. The Company did not have any net income tax payments for 2004. At December 31, 2006, the Company has $8.0 million of tax benefit on operating loss carryforwards that begin to expire in 2017.

The Company’s federal income tax returns are routinely audited by the Internal Revenue Service ("IRS"), and provisions are made in the consolidated financial statements in anticipation of the results of these audits. In August of 2006 the Company was issued a Revenue Agent’s Report for the tax years 2001 and 2002. The IRS is currently conducting a federal income tax audit of the Company for the tax years 2003 and 2004. In the Company’s opinion, adequate tax liabilities have been established for all years and any adjustments that might be required for the years under audit will not have a material effect on the Company’s consolidated financial statements. However, the amounts of these tax liabilities are estimates and could be revised in the future.

11. LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES

Activity in the liability for unpaid claims and claims adjustment expenses, included within future contract and policy benefits, related to the Company’s group life, group disability insurance and stop loss products is summarized below:

		2006	2005

Balance at January 1		$ 33,141	$ 32,571
Less reinsurance recoverable		(5,886)	(6,381)
Net balance at January 1		27,255	26,190
Incurred related to:
	Current year	26,644	23,881
	Prior years	(1,294)	(3,143)
Total incurred		25,350	20,738
Paid losses related to:
	Current year	(14,881)	(13,860)
	Prior years	(6,941)	(5,813)
Total paid		(21,822)	(19,673)

Balance at December 31		36,689	33,141
Less reinsurance recoverable		(5,906)	(5,886)

Net balance at December 31		$ 30,783	$ 27,255

The Company regularly updates its estimates of liabilities for unpaid claims and claims adjustment expenses as new information becomes available and events occur which may impact the resolution of unsettled claims. Changes in prior estimates are recorded in results of operations in the year such changes are made.

As a result of changes in estimates of insured events in prior years, the liability for unpaid claims and claims adjustment expense decreased by $1,294 and $3,143 in 2006 and 2005, respectively. The favorable development experienced in both years was driven mainly by better than expected loss experience in group life.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

12. LIABILITIES FOR CONTRACT GUARANTEES

On January 1, 2004, the Company adopted the AICPA’s SOP 03-1. The major provisions of SOP 03-1 that affect the Company require:

o	Establishment of reserves primarily related to death benefit and income benefit guarantees provided under variable annuity contracts;
o	Deferral of sales inducements that meet certain criteria, and amortization using the same method used for DAC; and
o	Reporting and measuring the Company’s interest in its separate accounts as investments.

The cumulative effect, reported after tax and net of related effects on DAC, upon adoption of SOP 03-1 at January 1, 2004, decreased net income and stockholder’s equity by $8.9 million and reduced accumulated other comprehensive income by $2.1 million. The decrease in net income was comprised of an increase in future contract and policy benefits (primarily for variable annuity contracts) of $46.7 million, pretax, an increase in DAC of $29.5 million, pretax, and the recognition of the unrealized gain on investments in separate accounts of $3.5 million, pretax.

The Company offers various guarantees to certain policyholders including a return of no less than (a) total deposits made on the contract adjusted for any customer withdrawals, (b) total deposits made on the contract adjusted for any customer withdrawals plus a minimum return, or (c) the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death, upon annuitization, or at specified dates during the accumulation period of an annuity.

The table below represents information regarding the Company’s variable annuity contracts with guarantees at December 31, 2006:

Benefit Type	Account Balance	Net Amount at Risk ¹	Average Attained Age
Minimum Death	$ 16,848,818	$ 1,612,783	66.4
Minimum Income	$ 387,699	$ 56,526	60.0
Minimum Accumulation or Withdrawal	$ 3,068,060	$ 41	61.9

The table below represents information regarding the Company’s variable annuity contracts with guarantees at December 31, 2005:

Benefit Type	Account Balance	Net Amount at Risk ¹	Average Attained Age
Minimum Death	$ 16,316,183	$ 2,126,214	66.1
Minimum Income	$ 385,378	$ 68,802	59.3
Minimum Accumulation or Withdrawal	$ 1,669,284	$ 182	61.2

¹ Net amount at risk represents the difference between guaranteed benefits and account balance.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

12. LIABILITIES FOR CONTRACT GUARANTEES (CONTINUED)

The following roll-forward summarizes the reserve for the GMDB’s and GMIB’s at December 31, 2006:

	Guaranteed Minimum Death Benefit	Guaranteed Minimum Income Benefit	Total
Balance at January 1, 2006	$ 41,749	$ 3,000	$ 44,749

Benefit Ratio Change / Assumption Changes	(6,594)	(925)	(7,519)
Incurred guaranteed benefits	51,255	383	51,638
Paid guaranteed benefits	(49,242)	(1,153)	(50,395)
Interest	2,755	143	2,898

Balance at December 31, 2006	$ 39,923	$ 1,448	$ 41,371

The following roll-forward summarizes the reserve for the GMDB’s and GMIB’s at December 31, 2005:

	Guaranteed Minimum Death Benefit	Guaranteed Minimum Income Benefit	Total
Balance at January 1, 2005	$ 28,313	$ 2,422	$ 30,735

Benefit Ratio Change / Assumption Changes	15,205	(172)	15,033
Incurred guaranteed benefits	35,559	560	36,119
Paid guaranteed benefits	(39,308)	-	(39,308)
Interest	1,980	190	2,170

Balance at December 31, 2005	$ 41,749	$ 3,000	$ 44,749

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

12. LIABILITIES FOR CONTRACT GUARANTEES (CONTINUED)

The liability for death and income benefit guarantees is established equal to a benefit ratio multiplied by the cumulative contract charges earned, plus accrued interest less contract benefit payments. The benefit ratio is calculated as the estimated present value of all expected contract benefits divided by the present value of all expected contract charges. The benefit ratio may be in excess of 100%. For guarantees in the event of death, benefits represent the current guaranteed minimum death payments in excess of the current account balance. For guarantees at annuitization, benefits represent the present value of the minimum guaranteed annuity benefits in excess of the current account balance.

Projected benefits and assessments used in determining the liability for guarantees are developed using models and stochastic scenarios that are also used in the development of estimated expected future gross profits. Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based upon factors such as eligibility conditions and the annuitant’s attained age.

The liability for guarantees is re-evaluated regularly, and adjustments are made to the liability balance through a charge or credit to policyholder benefits.

GMAB’s or GMWB’s are considered to be derivatives under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and are recorded at fair value through earnings. The fair value of the embedded derivatives is calculated stochastically using risk neutral scenarios over a fifty-year projection. Policyholder assumptions are based on experience studies and industry standards. The GMAB’s or GMWB’s constituted an asset in the amount of $8.4 million and $0.2 million at December 31, 2006 and 2005, respectively.

Sales Inducements

The Company currently offers enhanced or bonus crediting rates to policyholders on certain of its annuity products. Effective January 1, 2004, upon adoption of SOP 03-1, the expenses associated with offering a bonus are deferred and amortized over the life of the related contract in a pattern consistent with the amortization of DAC. Previously some bonuses were deferred and amortized while others were expensed.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

13. DEFERRED POLICY ACQUISITION COSTS (DAC)

The changes in DAC for the years ended December 31 were as follows:

	2006	2005
Balance at January 1	$ 1,341,377	$ 1,147,181
Acquisition costs deferred	264,648	261,058
Amortized to expense during the year	(391,585)	(226,355)
Adjustment for unrealized investment losses during the year	19,766	159,493
Balance at December 31	$ 1,234,206	$ 1,341,377

14. VALUE OF BUSINESS ACQUIRED (VOBA)

The changes in VOBA for the years ended December 31 were as follows:

	2006	2005
Balance at January 1	$ 53,670	$ 24,130
Amortized to expense during the year	(7,597)	(17,467)
Adjustment for unrealized investment losses during the year	1,671	47,007
Balance at December 31	$ 47,744	$ 53,670

15. SEGMENT INFORMATION

As described below, the Company conducts business principally in three operating segments and maintains a Corporate Segment to provide for the capital needs of the three operating segments and to engage in other financing related activities. Each segment is defined consistently with the way results are evaluated by the chief operating decision-maker.

Net investment income is allocated based on segmented assets by line of business. Allocations of operating expenses among segments are made using both standard rates and actual expenses incurred. Management evaluates the results of the operating segments on an after-tax basis. The Company does not depend on one or a few customers, brokers or agents for a significant portion of its operations.

Effective January 1, 2006, the Company adopted a new capital allocation methodology for measurement of segment operating results to more closely align with rating agency standards. The changes impact the amount of capital and income on capital that is allocated to the Wealth Management, Individual Protection and Group Protection segments from the Corporate segment.

Wealth Management

The Wealth Management Segment markets, sells and administers individual and group variable annuity products, individual and group fixed annuity products and other retirement benefit products, and funding agreements. These contracts may contain any of a number of features including variable or fixed interest rates and equity index options and may be denominated in foreign currencies. The Company uses derivative instruments to manage the risks inherent in the contract options. Additionally, the Company consolidates the Trust as a component of the Wealth Management Segment.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

15. SEGMENT INFORMATION (CONTINUED)

Individual Protection

The Individual Protection Segment markets, sells and administers a variety of life insurance products sold to individuals and corporate owners of life insurance. The products include whole life, universal life and variable life products.

Group Protection

The Group Protection Segment markets, sells and administers group life, long-term disability, short-term disability and stop loss insurance to small and mid-size employers in the State of New York through the Company’s subsidiary, SLNY.

Corporate

The Corporate Segment includes the unallocated capital of the Company, its debt financing, certain consolidated investments in VIEs, and items not otherwise attributable to the other segments.

The following amounts pertain to the various business segments:

	Year ended December 31, 2006

	Wealth	Individual	Group
	Management	Protection	Protection	Corporate	Totals

Total revenues	$ 1,386,626	$ 101,447	$ 39,833	$ 100,567	$ 1,628,473
Total expenditures	1,354,554	95,815	35,356	66,068	1,551,793
Income before income tax expense	32,072	5,632	4,477	34,499	76,680

Net income	39,857	3,801	2,910	31,724	78,292

Total assets	$ 41,485,295	$ 5,784,705	$ 78,838	$1,633,710	$ 48,982,548

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

15. SEGMENT INFORMATION (CONTINUED)

The following amounts pertain to the various business segments:

	Year ended December 31, 2005

	Wealth	Individual	Group
	Management	Protection	Protection	Corporate	Totals

Total revenues	$ 1,342,509	$ 74,535	$ 32,604	$ 110,537	$ 1,560,185
Total expenditures	1,220,198	70,991	32,333	64,636	1,388,158
Income before income tax expense and minority interest	122,311	3,544	271	45,901	172,027

Net income	93,570	2,443	176	36,963	133,152

Total assets	$ 38,631,963	$ 6,005,424	$ 55,319	$1,314,140	$ 46,006,846


	Year ended December 31, 2004

	Wealth	Individual	Group
	Management	Protection	Protection	Corporate	Totals

Total revenues	$ 1,284,873	$ 65,366	$ 34,908	$ 162,596	$ 1,547,743
Total expenditures	1,054,852	60,785	31,605	93,470	1,240,712
Income before income tax expense, minority interest and cumulative effect of change in accounting principle	230,021	4,581	3,303	69,126	307,031

Net income	166,309	3,118	2,147	49,702	221,276

Total assets	$ 40,961,145	$ 4,111,638	$ 53,131	$1,561,629	$ 46,687,543

100

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

15. SEGMENT INFORMATION (CONTINUED

As described earlier, effective January 1, 2006, the Company adopted a new capital allocation methodology for measurement of segment operating results to be more closely aligned with rating agency standards. The following provides a summary of the amounts allocated from the Corporate segment to the other segments related to the allocation of income on capital for the years presented:

Year ended December 31, 2006

	Wealth		Individual		Group
	Management		Protection		Protection		Corporate		Totals
Income (loss) before income tax expense and minority interest	$	38,474	$	5,397	$	775	$	(44,646)	$	-

Year ended December 31, 2005

	Wealth		Individual		Group
	Management		Protection		Protection		Corporate		Totals
Income (loss) before income tax expense and minority interest	$	37,108	$	1,429	$	362	$	(38,899)	$	-

Year ended December 31, 2004

	Wealth		Individual		Group
	Management		Protection		Protection		Corporate		Totals
Income (loss) before income tax expense and minority interest	$	31,482	$	1,015	$	277	$	(32,774)	$	-

16. REGULATORY FINANCIAL INFORMATION

The Company and its insurance subsidiaries are required to file annual statements with state regulatory authorities prepared on a statutory accounting basis prescribed or permitted by such authorities. Statutory surplus differs from stockholder's equity reported in accordance with GAAP primarily because policy acquisition costs are expensed when incurred, policy liabilities are based on different assumptions, investments are valued differently, post-retirement benefit costs are based on different assumptions, and deferred income taxes are calculated differently. The Company’s statutory financials are not prepared on a consolidated basis.

At December 31, the Company and its insurance subsidiaries’ combined statutory capital and surplus, and net income were as follows:

	Unaudited for the Years ended December 31,
	2006	2005	2004

Statutory capital and surplus	$ 1,610,425	$ 1,778,241	$ 1,822,812
Statutory net income	123,305	140,827	249,010

101

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

17. DIVIDEND RESTRICTIONS

The Company’s and its insurance company subsidiaries’ ability to pay dividends is subject to certain statutory restrictions. Delaware, New York, and Rhode Island have enacted laws governing the payment of dividends to stockholders by domestic insurers.

Pursuant to Delaware's statute, the maximum amount of dividends and other distributions that a domestic insurer may pay in any twelve-month period without prior approval of the Delaware Commissioner of Insurance is limited to the greater of (i) ten percent of its statutory surplus as of the preceding December 31, or (ii) the individual company's statutory net gain from operations for the preceding calendar year. Any dividends to be paid by an insurer from a source other than statutory surplus, whether or not in excess of the aforementioned threshold, would also require the prior approval of the Delaware Commissioner of Insurance. The Company is permitted to pay dividends up to a maximum of $171.2 million in 2007 without prior approval from the Delaware Commissioner of Insurance.

In 2006, the Company’s board of directors approved and the Company paid $300.0 million in dividends to the Parent with the prior approval of the Delaware Commissioner of Insurance. In 2005, the Company’s board of directors approved and the Company paid $200.0 million in dividends to the Parent, consisting of $150.6 million in cash and $49.4 million in notes. In 2004, the Company’s board of Directors approved and the Company paid $150.0 million of cash dividends to the Parent. On December 31, 2004, SCA was distributed in the form of a dividend of $6.6 million to the Parent and became a consolidated subsidiary of SLC - U.S. Ops Holdings.

New York law permits a domestic stock life insurance company to distribute a dividend to its shareholders without prior notice to the New York Superintendent of Insurance, where the aggregate amount of such dividends in any calendar year does not exceed the lesser of: (i) ten percent of its surplus to policyholders as of the immediately preceding calendar year; or (ii) its net gain from operations for the immediately preceding calendar year, not including realized capital gains. No dividends were paid by SLNY during 2006, 2005 or 2004.

Rhode Island law requires prior regulatory approval for any dividend where the amount of such dividend paid during the preceding twelve-month period would exceed the lesser of (i) ten percent of the insurance company’s surplus as of the December 31 next preceding, or (ii) its net gain from operations, not including realized capital gains, for the immediately preceding calendar year, excluding pro rata distributions of any class of the insurance company’s own securities. No dividends were paid by Independence Life during 2006, 2005 or 2004.

102

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

18. COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income as of December 31 were as follows:

	2006	2005	2004
Unrealized gains on available-for-sale securities	$ 38,400	$ 56,493	$ 485,553
Reserve allocation	(9,346)	(22,039)	-
Minimum pension liability adjustment	(1,516)	(2,834)	-
DAC allocation	(2,719)	(12,842)	(172,945)
VOBA allocation	470	(1,201)	(48,208)
Tax effect and other	(11,259)	1,683	(83,762)

Accumulated Other Comprehensive Income	$ 14,030	$ 19,260	$ 180,638

19. COMMITMENTS AND CONTINGENCIES

Regulatory and Industry Developments

Unfavorable economic conditions may contribute to an increase in the number of insurance companies that are under regulatory supervision. This may result in an increase in mandatory assessments by state guaranty funds or voluntary payments by solvent insurance companies to cover losses to policyholders of insolvent or rehabilitated companies. 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. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer's solvency and further provide annual limits on such assessments. Part of the assessments paid by the Company pursuant to these laws may be used as credits for a portion of the associated premium taxes.

Litigation

The Company is not aware of any contingent liabilities arising from litigation, income taxes and other matters that could have a material effect upon the financial condition, results of operations or cash flows of the Company.

103

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the years ended December 31, 2006, 2005 and 2004

19. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Indemnities

In the normal course of its business, the Company has entered into agreements that include indemnities in favor of third parties, such as contracts with advisors and consultants, outsourcing agreements, underwriting and agency agreements, information technology agreements, distribution agreements and service agreements. The Company has also agreed to indemnify its directors and certain of its officers and employees in accordance with the Company’s by-laws. The Company believes any potential liability under these agreements is neither probable nor estimatable. Therefore, the Company has not recorded any associated liability.

Lease Commitments

The Company leases various facilities and equipment under operating leases with terms of up to six years. As of December 31, 2006, minimum future lease payments under such leases were as follows:

2007	$ 5,421
2008	2,554
2009	1,472
2010	1,072
2011	1,031
Total	$ 11,550

Total rental expense for the years ended December 31, 2006, 2005 and 2004 was $7.6 million, $8.5 million and $16.3 million, respectively.

The Company has four noncancelable sublease agreements that expire on March 31, 2008. As of December 31, 2006, the minimum future lease payments under the sublease agreements were as follows:

2007	$ 1,887
2008	293
Total	$ 2,180

20. SUBSEQUENT EVENT

On March 21, 2007, the Parent notified the Partnership that it would redeem the $600 million of 8.526% subordinated debentures and the Partnership notified the Capital Trust, the holders of the $600 million of 8.526% partnership capital securities, that it will use the proceeds from the redemption of the subordinated debentures to redeem the partnership capital securities.

104

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

Sun Life Assurance Company of Canada (U.S.)

Wellesley Hills, Massachusetts

We have audited the accompanying consolidated balance sheets of Sun Life Assurance Company of Canada (U.S.) and subsidiaries (the "Company") as of December 31, 2006 and 2005, and the related consolidated statements of income, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements present fairly, in all material respects, the financial position of Sun Life Assurance Company of Canada (U.S.) and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, effective January 1, 2004, the Company adopted the provisions of the American Institute of Certified Public Accountants’ Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts."

DELOITTE & TOUCHE LLP

Boston, Massachusetts

March 27, 2007

105

PART C

ITEM 26. EXHIBITS

Resolution of the Board of Directors of Sun Life Assurance Company of Canada (U.S.), dated October 29, 1998, authorizing the establishment of Sun Life of Canada (U.S.) Variable Account I (Incorporated herein by reference to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, field with the Securities and Exchange Commission on December 9, 1998.)

None.

C.	Principal Underwriting Agreement (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.)

(1) Flexible Premium Combination Fixed and Variable Life Insurance Policy (Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on February 26, 2001.)

(2) Accelerated Death Benefit Rider (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on April 27, 1999.)

(3) Accidental Death Benefit Rider (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on April 27, 1999.)

(4) Payment of Stipulated Premium Rider (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on April 27, 1999.)

(5) Waiver of Cost of Insurance Rider (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on February 12, 2001.)

(6) Supplemental Insurance Rider (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on February 12, 2001.)

Application for Flexible Premium Combination Fixed and Variable Life Insurance Policy (Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on February 26, 2001.)

F.	(1) Certificate of Incorporation of Sun Life Assurance Company of Canada (U.S.) (Incorporated herein by reference to the Depositor's Form 10-K, File No. 333-82824, filed with the Securities and Exchange Commission on March 29, 2004.)

(2) Bylaws of the Depositor, as amended March 19, 2004 (Incorporated herein by reference to the Depositor's Form 10-K, File No. 333-82824, filed with the Securities and Exchange Commission on March 29, 2004.)

G.	Specimen Reinsurance Contract. (Incorporated herein by reference to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form N-6, File No. 333-100829, filed with the Securities and Exchange Commission on October 30, 2002.)

H. (1) Participation Agreement, dated 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. (Incorporated herein by reference to Post-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-119151, filed with the Securities and Exchange Commission on February 3, 2000.)

(2) Amended and Restated Participation Agreement, dated December 13, 2004, by and among Sun Capital Advisers Trust, Sun Capital Advisers, Inc., Sun Life Insurance and Annuity Company of New York and Sun Life Assurance Company of Canada (U.S.) (Incorporated herein by reference to Post-Effective Amendment No. 8 to the Registration Statement on Form N-4, File No. 333-83516, filed with the Securities and Exchange Commission on April 28, 2005.)

(3) Amended and Restated Participation Agreement, dated September 1, 2004, by and among Sun Life Assurance Company of Canada (U.S.), Variable Insurance Products Fund and Fidelity Distributors Corporation (Incorporated herein by reference to Post-Effective Amendment No. 1 to the Registration Statement Form N-4, File No. 333-119151, filed with the Securities and Exchange Commission on April 28, 2005.)

(4) Participation Agreement, dated September 1, 2002, by and among Sun Life Assurance Company of Canada (U.S.), Clarendon Insurance Agency, Inc., Alliance Capital Management L.P. and Alliance Fund Distributors, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Registration Statement on Form N-4, File No. 333-82957, filed with the Securities and Exchange Commission on July 27, 2001.)

(5) Participation Agreement, dated September 16, 2002, by and among the Franklin Templeton Variable Insurance Products Trust, Franklin Templeton Distributors, Inc., Sun Life Insurance and Annuity Company of New York and Sun Life Assurance Company of Canada (U.S.) (Incorporated herein by reference to the Registration Statement of KBL Variable Account A on Form N-4, File No. 333-102278, filed with the Securities and Exchange Commission on December 31, 2002.)

(6) Participation Agreement, dated February 17, 1998. by and among Goldman Sachs Variable Insurance Trust, Goldman, Sachs & Co., and Sun Life Assurance Company of Canada (U.S.) (Incorporated herein by reference to Post-Effective Amendment No. 13 to the Registration Statement on Form N-4, File No. 33-41628, filed with the Securities and Exchange Commission on April 26, 1999.)

(7) Amended and Restated Participation Agreement, dated November 6, 2002, by and among MFS/Sun Life Series Trust, Sun Life Insurance and Annuity Company of New York, Sun Life Assurance Company of Canada (U.S.) and Massachusetts Financial Services Company (Incorporated herein by reference to Post-Effective Amendment No. 3 to the Registration Statement on Form N-4, File No. 333-107983, filed with the Securities and Exchange Commission on May 28, 2004.)

(8) Participation Agreement, dated July 15, 2002, by and among Sun Life Assurance Company of Canada (U.S.), Deutsche Asset Management VIT Funds and Deutsche Asset Management, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 2 to the Registration Statement on Form S-6, File No. 333-65048, filed with the Securities and Exchange Commission on July 3, 2002.)

(9) Participation Agreement, dated May 1, 2004, by and among Sun Life Assurance Company of Canada (U.S.), Scudder Variable Series II, Scudder Distributors, Inc. and Deutsche Investment Management Americas Inc. (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement on Form N-6, File No. 333-100831, filed with the Securities and Exchange Commission on April 29, 2005.

(10) Participation Agreement, dated September 12, 2002, by and among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, PIMCO Variable Insurance Trust and PIMCO Funds Distributors LLC. (Incorporated herein by reference to Post-Effective Amendment No. 3 to the Registration Statement on Form N-6, File No. 333-59662, filed with the Securities and Exchange Commission on February 26, 2003.)

(11) Participation Agreement, dated February 17, 1998, by and among Sun Life Assurance Company of Canada (U.S.), The Alger American Fund and Fred Alger and Company, Incorporated. (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6, File No. 333-68601, filed with the Securities and Exchange Commission on April 27, 1999.)

(12) Participation Agreement, dated February 17, 1998, by and among Sun Life Assurance Company of Canada (U.S.) and Lord, Abbett & Co. (Incorporated herein by reference to Post-Effective Amendment No. 8 to the Registration Statement on Form S-6, File No. 333-13087, filed with the Securities and Exchange Commission on April 26, 2002.)

(13) Amended and Restated Participation Agreement, dated August 1, 2004, by and among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, T. Rowe Price Equity Series, Inc. and T. Rowe Price Investment Services, Inc. (Incorporated herein by reference to Post-Effective Amendment 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.)

(14) Amended and Restated Participation Agreement, dated May 1, 2004, by and among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement on Form N-6, File No. 333-100831, filed with the Securities and Exchange Commission on April 29, 2005.)

(15) Participation Agreement, dated August 6, 2004, by and among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, Delaware VIP Trust, Delaware Management Company and Delaware Distributors, LP. (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement on Form N-6, File No. 333-100831, filed with the Securities and Exchange Commission on April 29, 2005.)

(16) Participation Agreement, dated August 6, 2004, by and among Sun Life Insurance and Annuity Company of New York, Van Kampen Life Investments Trust, Van Kampen Funds Inc., Van Kampen Asset Management. (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement on Form N-6, File No. 333-100831, filed with the Securities and Exchange Commission on April 29, 2005).

(17) Participation Agreement, dated December 31, 2002, by and among Oppenheimer Variable Account Funds, OppenheimerFunds, Inc. and Sun Life Assurance Company of Canada (U.S.) (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Registration Statement on Form N-6, File No. 333-100831, filed with the Securities and Exchange Commission on April 29, 2005).

None.

J. (1) Powers of Attorney.

(2)

Resolution of the Board of Directors of the Depositor dated July 24, 2003, authorizing the use of Powers of Attorney for Officer signatures. ((Incorporated herein by reference to the Registration Statement of Keyport Variable Account A on Form N-4, File No. 333-112506, filed with the Securities and Exchange Commission on February 5, 2004.)

K. Legal Opinion.

L. None.

M. None.

N. Consent of Independent Registered Public Accounting Firm.

O. None.

P. None.

Q. None.

ITEM 27. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Name and Principal

Business Address

Positions and Offices

With Depositor

Thomas A. Bogart Sun Life Assurance Company of Canada 150 King Street West Toronto, ON M5H 1J9	Director
Ronald Hiebert Friesen Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Director and Senior Vice President and Chief Financial Officer and Treasurer
Scott M. Davis Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Director and Senior Vice President and General Counsel
Richard Paul McKenney Sun Life Assurance Company of Canada 150 King Street West Toronto, Ontario Canada M5H 1J9	Director
Mary Martha Fay Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Director and Senior Vice President and General Manager, Annuities
Robert C. Salipante Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Director and President
Donald A. Stewart Sun Life Assurance Company of Canada 150 King Street West Toronto, Ontario Canada M5H 1J9	Director and Chairman
Michele G. Van Leer Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Vice President and General Manager, Individual Insurance
James M.A. Anderson Sun Life Assurance Company of Canada 150 King Street West Toronto, ON M5H 1J9	Executive Vice President and Chief Investment Officer
Keith Gubbay Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Vice President and Chief Actuary
Michael S. Bloom Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Assistant Vice President and Senior Counsel and Secretary
Michael K. Moran Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Vice President and Chief Accounting Officer and Controller
John R. Wright Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Executive Vice President, Sun Life Financial U.S. Operations

ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR THE REGISTRANT

No person is directly or indirectly controlled by the Registrant. The Registrant is a separate account of Sun Life Assurance Company of Canada (U.S.), which is ultimately controlled by Sun Life Financial

The organization chart of Sun Life Financial is incorporated by reference to Post-Effective Amendment No. 4 to the Registration Statement on Form N-4 of Keyport Variable Account A, File Nos. 333-114126, filed April 25, 2007.

None of the companies listed in such organization chart is a subsidiary of the Registrant; therefore, the only financial statements being filed are those of Sun Life Assurance Company of Canada (U.S.).

ITEM 29. INDEMNIFICATION

Pursuant to Section 145 of the Delaware Corporation Law, Article 8 of the By-laws of Sun Life Assurance Company of Canada (U.S.) provides for the indemnification of directors, officers and employees of Sun Life Assurance Company of Canada (U.S.). Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Sun Life Assurance Company of Canada (U.S.) pursuant to the certificate of incorporation, by-laws, or otherwise, Sun Life (U.S.) 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 Sun Life (U.S.) of expenses incurred or paid by a director, officer, controlling person of Sun Life (U.S.) 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, Sun Life (U.S.) will submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Act, unless in the opinion of their counsel the matter has been settled by controlling precedent, and will be governed by the final adjudication of such issue.

ITEM 30. PRINCIPAL UNDERWRITERS

Clarendon Insurance Agency, Inc., which is a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.), acts as general distributor for the Registrant, Sun Life of Canada (U.S.) Variable Accounts C, D, E, F, G and K, Keyport Variable Account A, KMA Variable Account, Keyport Variable Account I, KBL Variable Account A, KBL Variable Annuity Account, Sun Life (N.Y.) Variable Accounts A, B, C, D, J and N and Money Market Variable Account, High Yield Variable Account, Capital Appreciation Variable Account, Government Securities Variable Account, World Governments Variable Account and Total Return Variable Account.

Name and Principal	Position and Offices
Business Address*	with Underwriter

Katherine E. Sarvary	President
Scott M. Davis	Director
Michele G. Van Leer	Director
Mary M. Fay	Director
Ann B. Teixeira	Assistant Vice President, Compliance
Michael S. Bloom	Secretary
Kathleen T. Baron	Chief Compliance Officer
Michael L. Gentile	Vice President
Raymond Scanlon	Vice President
William T. Evers	Assistant Vice President and Senior Counsel
Nancy C. Atherton	Assistant Vice President & Tax Officer
Jane F. Jette	Financial/Operations Principal and Treasurer
Amy E. Mercer	Assistant Secretary
Alyssa M. Gair	Assistant Secretary

*The principal business address of all directors and officers of the principal underwriter is One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

Accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are maintained, in whole or in part, by Sun Life Assurance Company of Canada (U.S.) at its offices at One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481 or at the offices of Clarendon Insurance Agency, Inc., at One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

ITEM 32. MANAGEMENT SERVICES

Not applicable.

ITEM 33. FEE REPRESENTATION

Sun Life Assurance Company of Canada (U.S.)("Sun Life 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 (U.S.).

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment to the Registration Statement and has caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf, in the Town of Wellesley Hills, and Commonwealth of Massachusetts on this 25th day of April, 2007.

	SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
	(Registrant)

	SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
	(Depositor)

	By: /s/ Robert C. Salipante*
	Robert C. Salipante
	President

*By:	/s/ Sandra M. DaDalt
	Sandra M. DaDalt
	Assistant Vice President & Senior Counsel

As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities with the Depositor, Sun Life Assurance Company of Canada (U.S.), and on the dates indicated.

SIGNATURE	TITLE	DATE

/s/ Robert C. Salipante*	Director and President	April 25, 2007
Robert C. Salipante	(Principal Executive Officer)

/s/ Ronald H. Friesen*	Director and Senior Vice President and	April 25, 2007
Ronald H. Friesen	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

/s/ Michael K. Moran*	Vice President and Chief Accounting Officer and	April 25, 2007
Michael K. Moran	Controller
	(Principal Accounting Officer)

*By: /s/ Sandra M. DaDalt	Attorney-in-Fact for:	April 25, 2007
Sandra M. DaDalt	Donald A. Stewart, Director
	Richard P. McKenney, Director
	Thomas A. Bogart, Director
	Scott M. Davis, Director
	Mary M. Fay, Director

*Sandra M. DaDalt has signed this document on the indicated date on behalf of the above Directors and Officers for the Depositor pursuant to powers or attorney duly executed by such persons and a resolution of the Board of Directors authorizing use of powers of attorney for Officer signatures. Resolution of the Board of Directors is incorporated herein by reference to the Registration Statement of Keyport Variable Account A on Form N-4, File No. 333-112506, filed on or about February 5, 2004. Powers of attorney are enclosed herein.

EXHIBIT INDEX

J1	Powers of Attorney

K	Legal Opinion

N	Consent of Independent Registered Public Accounting Firm

	Representation of Counsel Pursuant to Rule 485(b)