Income Tax Regulations — 1401
ed is the age of the life insured at the time at which the coverage was issued, or that which is attained on the birthday of the life insured nearest to the time at which the coverage was issued, depending on the method used by the insurer that issued the policy in determining the premium or cost of insurance rates in respect of the life insured, (B) if the life insured was determined by the insurer that issued the policy to be a standard life at the time the coverage was issued, the Proposed CIA Mortality Tables, 1986–1992 included in the May 17, 1995 Canadian Institute of Actuaries Memorandum , extended to include select mortality rates from age 81 to age 90 developed using the methodology used by the Canadian Institute of Actuaries to derive select mortality rates from age 71 to age 80, applicable for an individual who has the same relevant characteristics as the life insured, are to be used, and (C) if the life insured was determined by the insurer that issued the policy to be a substandard life at the time the coverage was issued, the mortality rates that apply are to be equal to, depending on the method used by the insurer for the purpose of determining the premium or cost of insurance rates in respect of the coverage, (I) the lesser of one and the product of the rating attributed to the life by the insurer and the mortality rates that would be determined under clause (B) if the life were not a substandard life, or (II) the mortality rates that would have been determined under clause (B) had the life insured been a standard life and the age of the life insured been the age used by the life insurer for the purpose of determining the premium or cost of insurance rates in respect of the coverage, and (ii) if two or more lives are jointly insured under the coverage, the mortality rates to be used are those determined by applying the methodology used by the insurer that issued the policy to estimate the mortality rates of the lives jointly insured for the purpose of determining the premium or cost of insurance rates in respect of the coverage to the Proposed CIA Mortality Tables, 1986–1992 included in the May 17, 1995 Canadian Institute of Actuaries Memorandum , extended to include select mortality rates from age 81 to age 90 developed using the methodology used by the Canadian Institute of Actuaries to derive select mortality rates from age 71 to age 80; and (c) in determining the net premium reserve in respect of the policy, the present value of future net premiums or cost of insurance charges is to be calculated as if a premium or cost of insurance charge payable or incurred on a policy anniversary were payable or incurred, as the case may be, one day after the policy anniversary. (5) In applying paragraph (1)(c) for the purposes of subsection 211.1(3) of the Act in respect of a life insurance policy (other than an annuity contract) (a) if the policy is issued after 2016, (i) the rates of interest, mortality and lapses described in subsection 1403(1) are to be used in computing present values, determined as if (A) subsections 1403(2) to (8) did not apply, and (B) the reference to “premiums for the policy” in paragraph 1403(1)(e) were read as a reference to “premiums or cost of insurance charges in respect of a coverage under the policy”, (ii) subparagraph (1)(c)(i) is to be read without reference to “determined without reference to surrender charges”, and (iii) in determining the net premium reserve in respect of the policy, the present value of future net premiums or cost of insurance charges is to be calculated as if a premium or cost of insurance charge payable or incurred on a policy anniversary were payable or incurred, as the case may be, one day after the policy anniversary; and (b) if the policy is issued before 2017 and at a particular time after 2016 life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates appl