Document ID: chunk:federal_register_of_legislation:F2023L00208:front:0:p2
Version: federal_register_of_legislation:F2023L00208
Segment Type: other
Provision Reference: 
Character Range: 2832–5969

long term risk business
Immediate annuities and fixed term/rate business

Part C - Minimum surrender values
Friendly societies
Life companies other than friendly societies

Part D - Minimum paid-up values
Friendly societies
Life companies other than friendly societies
Traditional business and long term risk business of life companies other than friendly societies
Unbundled investment business of life companies other than friendly societies

Adjustments and exclusions
Determinations made under previous prudential standards

Attachments

Attachment 1 - Prescribed parameters
Attachment 2 - Determination of minimum termination values and paid-up values for traditional business and long-term risk business
Attachment 3 - Calculation of minimum termination values and paid up values for certain types of traditional policies (the specified policies)

Authority
     1. This Prudential Standard is made under paragraph 230A(1)(a) of the Life Insurance Act 1995 (the Act).

Application
    2.             This Prudential Standard applies to all life companies including friendly societies (together referred to as life companies) registered under the Act[1], except where expressly noted otherwise.
    3.             This Prudential Standard only applies to the business of an Eligible Foreign Life Insurance Company which is carried on through its Australian statutory funds but not otherwise.[2]
    4.             This Prudential Standard applies to life companies from 1 January 2013.

Interpretation
    5.             Terms that are defined in Prudential Standard LPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.
    6.             This Prudential Standard has been written in the context of Australian legislation and bases of taxation. Appropriate adjustment should be made, for example, to allow for different bases of taxation (and the implications for parameters prescribed on a net of tax basis) where this standard is being applied to overseas business.
    7.             The date of commencement is defined to be:
       (a)          in the case of a friendly society, 30 June 2002; and
       (b)          in all other cases, 30 June 1998.
    8.             A life company must, before issuing a policy, obtain the written approval of APRA for the method of calculating the minimum termination value, minimum surrender value and minimum paid-up value if the policy does not belong to any of the types of business described in this Prudential Standard.

Part A – Termination values

Definition of termination value
    9.             The termination value of a policy, before adjustments, is the greater of:
       (a)          the amount that would be paid on the basis used in practice from time to time in the event of voluntary termination having regard for the amount the company is obliged to pay in accordance with the policy documentation and promotional material and the reasonable expectations of policy owners based on the company's current practice; and
       (b)          the minimum termination value.
    10.         The termination value of a policy must be