Document ID: chunk:federal_register_of_legislation:F2017L00636:body:0:p2
Version: federal_register_of_legislation:F2017L00636
Segment Type: other
Provision Reference: 
Character Range: 2563–5181

insured person losing the ability to work in a specified occupation.
(B) a change so that the amount payable to the insured person in the event of a claim does not depend on the income of the insured person at or about the time of the claim.
                     Note:  For example, a change in the type of cover provided under an income protection policy from indemnity to agreed value.
policy cost has the same meaning as in section 960 of the Act.

       Part 2—Determination

5 Acceptable benefit ratio
(1) This section determines acceptable benefit ratios for benefits given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product for the purposes of subsection 963BA(2) of the Act.
Benefit given because of issue of product—60% cap
(2) An acceptable benefit ratio for a benefit given for the year in which the product is issued and that is not given because of a client initiated increase is 0.6.
Trailing benefits—20% cap
(3) An acceptable benefit ratio for a benefit given for a year during which the product is continued and that is not given because of a client initiated increase in that year or the previous year is 0.2.
Benefit given because of a client initiated increase in current year—60% cap
(4) An acceptable benefit ratio for a benefit that is given:
           (a) for the year in which the product is issued or for a year during which the product is continued; and
           (b)  because of a client initiated increase in that year;
is the amount worked out using the following formula:
           0.6  days in year
           remaining days in year
where:
days in year means the number of days in the year.
remaining days in year means the number of days from the time of the client initiated increase until the end of the year.
           Note 1: The benefit ratio for the benefit for the year is the ratio between the benefit and the part of the policy cost (increased policy cost) for the year that is payable because of the client initiated increase: subsection 963B(3A) of the Act. Where a client initiated increase occurs part way through a year, subsection (4) permits an upfront benefit of up to 60% of the increased policy cost (calculated over a 12 month period).
           Note 2: For example, if there were a client initiated increase that resulted in an increase in the policy cost of $250 per year, but the client initiated increase occured 292 days into a year, the increase in the policy cost for that year would be $50 (since there would be 73 days remaining in the year): see subsection 963B(3B)