Net income declined to C$502 million ($398 million), or 81 Canadian cents a share, in the quarter ended Dec. 31.
But underlying net income was 59 Canadian cents a share, far below analysts expectations of 78 Canadian cents.
"It is a pretty meaningful miss, even if negative experience of this magnitude is not indicative of a run rate," CIBC World Markets analyst Robert Sedran said in a note to clients.
"The absence of a dividend increase suggests that the better financial position was trumped by a weak underlying result," he said.
Chief Executive Dean Connor said in a statement the fourth quarter was challenging but that Sun Life was "on track to exceed our 2015 earnings objective."
The insurer said assets under management rose 15 percent from a year earlier to end 2014 to a record C$734.4 billion.
(Reporting by Jeffrey Hodgson; Editing by Grant McCool, Chris Reese and Edwina Gibbs)