Document ID: chunk:federal_register_of_legislation:F2017L00636:body:0:p8
Version: federal_register_of_legislation:F2017L00636
Segment Type: other
Provision Reference: 
Character Range: 17634–20471

year as determined immediately after the client initiated increase;
           is the amount worked out in accordance with subsections (15) and (16).
(15)  Subject to subsection (16), the amount of the acceptable repayment is:
           (a) in the case of the product being cancelled or not continued—100% of the benefit; and
           (b) in the case of the policy cost for the second year (determined immediately after the reduction) being reduced below the policy cost for the second year (determined immediately before the client initiated increase)—100% of the benefit; and
           (c) otherwise—the amount worked out using the following formula:
benefit × aggregate reduction

            new policy cost

           where:
           aggregate reduction is the amount by which the policy cost for the second year (determined immediately after the reduction) is less than the policy cost for the second year (determined immediately after the client initiated increase).
           new policy cost means the part of the policy cost payable for the second year (determined immediately after the client initiated increase) that is payable because of the client initiated increase.
(16) If there have been any previous applications of subsection (14) in relation to the benefit, the amount of the acceptable repayment determined under subsection (15) is reduced by the aggregate of the acceptable repayments resulting from the previous applications of subsection (14).
           Note: Each application of subsection (14) gives rise to a separate acceptable repayment amount.
Other second year benefits—no clawback
(17) An acceptable repayment in relation to a benefit given for the second year that was not given because of a client initiated increase in the second year is $0.
Calculating policy cost as at a particular time
(18) For the purposes of this section, in determining the policy cost for a product for the first year or the second year at a particular time, the policy cost for the year at that time is taken to be the amount that would have been the policy cost for the year if the product had been held on the terms and conditions applying at that time for the whole of the year.
           Note:  For example, if the policy cost for a product for the first year is $1,200 (payable in monthly instalments of $100) and the policy cost is then reduced after 6 months to $60 per month, the policy cost for the first year (determined immediately after the reduction) is taken to be $720 (based on 12 monthly instalments of $60).
Reductions in policy cost because of prescribed circumstances to be ignored
(19) In this section, in determining whether there has been a reduction in policy cost or the amount of a reduction in policy cost, any reduction because of circumstances prescribed for the purposes of subparagraph