Document ID: chunk:federal_register_of_legislation:F2023L00208:front:0:p12
Version: federal_register_of_legislation:F2023L00208
Segment Type: other
Provision Reference: 
Character Range: 32485–35503

adjustment.
Part II - new business written subsequent to the date of commencement

A.  Minimum termination value

    5.             The minimum termination value is calculated as:
where:

       (a)          SA is the sum insured under the policy;

       (b)          B is the bonus addition;

       (c)          NP is the net premium;

       (d)          A is the present value as at the attained age of $1 of sum insured according to the contingencies upon which it is payable;

       (e)          a is the present value at the attained age of $1 p.a. of future net premiums according to the contingencies upon which they are payable;

       (f)           Factor is as prescribed in Attachment 1 - Part IV;

       (g)          Sprague adjustment is:

           (i)            for regular premium business, as prescribed in Attachment 1 - Part IV; and
           (ii)         for single premium business, not relevant;
       (h)          attained age means the age next birthday of the life insured at the date of issue of the policy plus the duration of the policy in completed years and months.

    6.             The bonus addition for the policy is all reversionary bonuses declared upon, and still attaching to, the original policy, excluding those reversionary bonuses declared between the date of issue of the policy and the earlier of:
       (a)          the date three years subsequent to the date of issue, and

       (b)          the date of the calculation.

    7.             The net premium for the policy is such premium, exclusive of any addition for bonuses, office expenses and other charges, as is sufficient to provide for the risk incurred by the company in issuing the policy. The age at issue is taken as age next birthday at the date of issue of the policy plus the number of years of Sprague adjustment, where relevant. The term at issue (other than for a policy for the whole term of life) is the original term less the number of years of Sprague adjustment, where relevant.
B.  Minimum paid-up value

    8.             The paid-up value is calculated as:

       where:

       (a)          MTV is the minimum termination value at the date of the paid-up policy; and

       (b)          A is the present value of $1 of paid-up value as at that date, according to the contingencies upon which it is payable.

Attachment 3

Calculation of minimum termination values and paid up values for certain types of traditional policies (the specified policies)
These calculations assume that minimum termination values are calculated according to Part I of Attachment 2. If minimum termination values are calculated according to Part II of Attachment 2, appropriate changes must be made to the calculations specified in this Attachment.

Item   Class of life policy  Description of policy within the class                                                                                                                                                   Calculations