Document ID: chunk:federal_register_of_legislation:F2023L00208:front:0:p10
Version: federal_register_of_legislation:F2023L00208
Segment Type: other
Provision Reference: 
Character Range: 26406–30201

II.

Part V – immediate annuities and fixed term/rate business

                                                                                                                                                                                      PRE              POST
                                                                                                                                                                                        interest rate  interest rate

Immediate annuities and fixed term/rate business                                                                                                              Ordinary:              61% gross rate    70% gross rate

                                                                                                                                                              Superannuation:   85% gross rate         85% gross rate

                                                                                                                                                              Tax exempt:         100% gross rate      100% gross rate
Where gross rate is the greater of :

     *   4% plus the yield on the Commonwealth Government security with a term nearest the outstanding term of the policy at the date of calculation; and

     *   the gross (of tax and expenses) yield implicit in the pricing of the policy at issue.

    Notes:

    1. Where payments are indexed the life company should make an appropriate allowance for the rate of indexation.

    2. The interest rates shown are applicable to non-participating business. The applicable interest rates for participating business are determined as for non-participating business, but using gross rate less 1.0%.

    3. PRE and POST for ordinary fixed term/rate business should be determined on the basis of date of commencement of the policy, or the date of commencement of the current term (if subject to a roll over mechanism).

Attachment 2

Determination of minimum termination values and paid-up values for traditional business and long-term risk business
Refer to Attachment 3 for variations to the requirements for specific types of traditional business.

Part I - In force business at the date of commencement

A.  Minimum termination value

     1. The minimum termination value is calculated as:

where:

       (a)          PUV is the minimum paid-up value at the date of calculation; 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.

B.  Minimum paid-up value

    2.             The minimum paid-up policy, excluding bonus additions, is:
       (a)          for a policy which is not a policy for the whole term of life with premiums payable throughout life, but excluding policies covered by (c) below:

     where:

           (i)            SA is the sum insured under the policy;
           (ii)         t is the number, in complete years and months, of premiums paid;
           (iii)       Factor is 70% where three years premiums have been paid, 80% where four years premiums have been paid and 90% where five or more years premiums have been paid; and
           (iv)        n is the number, in years and months, of premiums originally payable;
       (b)          for a policy which is a policy for the whole term of life with premiums payable throughout life:

           where:

           (i)            SA is the sum insured under the policy;
           (ii)         NP is the net premium;
           (iii)       A is the present value as at the attained age of $1 of sum  insured according to the contingencies upon which it is payable;
           (iv)        a is the present value at the attained