Document ID: chunk:federal_register_of_legislation:F2017L00636:body:0:p5
Version: federal_register_of_legislation:F2017L00636
Segment Type: other
Provision Reference: 
Character Range: 9847–12674

circumstances in which the policy cost for the first year is reduced include circumstances in which the policy cost for the first year is increased and subsequently reduced (whether or not the reduced policy cost is less than the initial policy cost).
           Note 2: Where there is a benefit (issue benefit) provided in relation to the issue of the product, a further benefit (increase benefit) provided because of a client initiated increase in the first year and a subsequent cancellation, non-continuation or reduction in the first year, subsections (3) to (5) will apply in relation to each of the issue benefit and the increase benefit.
(4) The amount of the acceptable repayment is:
           (a) in the case of the product being cancelled or not continued—100% of the adjusted benefit; and
           (b) in the case of a reduction in policy cost—the percentage of the adjusted benefit that is equal to the percentage by which the policy cost (determined immediately before and immediately after the reduction) has been reduced.
(5) In subsection (4), adjusted benefit means the benefit less the aggregate of any acceptable repayments in relation to the benefit resulting from any previous applications of subsection (3).
           Note: Each application of subsection (3) gives rise to a separate acceptable repayment amount.
    Acceptable repayment for first year client initiated increase where trigger event occurs in second year and within 12 months—100% clawback
(6) The amount worked out in accordance with subsection (7) is an acceptable repayment in relation to a benefit given for the first year because of a client initiated increase in relation to circumstances where, within the period of 12 months commencing on the date of the client initiated increase:
           (a) the product is cancelled or not continued during the second year; or
           (b) the product is continued for the second year at a reduced policy cost; or
           (c) the policy cost for the product for the second year is reduced to an amount that is less than the policy cost (initial second year policy cost) for the product for the second year as determined at the start of the second year.
              Note: The circumstances in which paragraph (c) applies include where the policy cost immediately before the reduction is less than the initial year policy cost and is then reduced further.
(7) The amount of the acceptable repayment is:
           (a) in the case of the product being cancelled or not continued—100% of the adjusted benefit; and
           (b) in the case of the product being continued for the second year at a reduced policy cost—the percentage of the adjusted benefit that is equal to the percentage by which the policy cost (determined immediately before and immediately after the reduction) has