Income Tax Regulations — 1401
he coverage at that time; and (b) in any other case, each premium in respect of the coverage that is fixed and determined on the date of issue of the coverage that will become payable, or each cost of insurance charge in respect of the coverage that will be incurred, as the case may be, at a particular time after that time. ( frais d’assurance ou primes futurs ) interpolation time , of a coverage, means the time that is the earlier of (a) the time that is eight years after the date of issue of the coverage; and (b) the first time at which no premiums are payable or cost of insurance charges are incurred, as the case may be, in respect of the coverage. ( moment d’interpolation ) net premium reserve , in respect of a life insurance policy at any time, means the amount determined by the formula A + B + C where A is the total of all amounts, if any, each of which is the present value at that time of the fund value of a coverage under the policy at that time; B is the amount, if any, of the fund value benefit under the policy at that time; and C is (a) in applying paragraph (1)(c) for the purposes of section 307, the total of all amounts each of which is, in respect of a coverage under the policy, (i) if that time is at or after the interpolation time of the coverage, the amount determined by the formula D – E where D is the present value at that time of future benefits to be provided in respect of the coverage at that time, and E is the present value at that time of future net premiums or cost of insurance charges in respect of the coverage at that time, and (ii) if that time is before the interpolation time of the coverage, the amount determined by the formula F/G × (H – I) where F is the number of years that the coverage has been in effect as of that time, G is the number of years that the coverage would have been in effect if that time were the interpolation time, H is the present value at the interpolation time of future benefits to be provided in respect of the coverage at the interpolation time and, if the coverage has a fund value at that time, determined as if the amount of the benefit on death under the coverage at the interpolation time were equal to the amount by which the benefit on death at that time exceeds the fund value of the coverage at that time, and I is the present value at the interpolation time of future net premiums or cost of insurance charges in respect of the coverage at the interpolation time and, if the coverage has a fund value at that time, determined as if the net amount at risk under the coverage after the interpolation time were equal to the amount by which the benefit on death at that time exceeds the fund value of the coverage at that time, and (b) in applying paragraph (1)(c) for the purposes of subsection 211.1(3) of the Act, the total of all amounts each of which is, in respect of a coverage under the policy, the amount determined by the formula J – K where J is the present value at that time of future benefits to be provided in respect of the coverage at that time, and K is the present value at that time of future net premiums or cost of insurance charges in respect of the coverage at that time. ( provision pour primes nettes ) policy anniversary has the same meaning as in section 310. ( anniversaire de la police ) (4) In applying paragraph (1)(c) for the purposes of section 307 in respect of a life insurance policy (other than an annuity contract) issued after 2016, the following rules apply: (a) in computing present values (i) an annual interest rate of 3.5% is to be used, and (ii) mortality rates are to be used; (b) in determining the mortality rates that apply to a life insured under a coverage under the policy, (i) if a single life is insured under the coverage, (A) the age that is to be used 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, depe