Page 171 - IC46 addendum

Indian Accounting Standards

(b) no liability to policyholders
under the contract.

(c) the assets backing the contract.
1.22 An insurance contract issued Insurance contract within the scope

to employees as a result of of the Standard.
a defined contribution pension If the employer pays part or all of
plan. The contractual benefits the employee’s premiums, the
for employee service in the payment by the employer is an
current and prior periods are employee benefit within the scope
not contingent on future of Ind AS 19. See also Ind AS 19,
service. The insurer also paragraphs 39–42 and 104–104D.
issues similar contracts on the Furthermore, a ‘qualifying insurance
same terms to third parties. policy’ as defined in Ind AS 19 need

not meet the definition of an
insurance contract in this Standard.
1.23 Loan contract containing a Not an insurance contract. Before
prepayment fee that is entering into the contract, the
waived if prepayment results borrower faced no risk
from the borrower’s death. corresponding to the prepayment
fee. Hence, although the loan
contract exposes the lender to
mortality risk, it does not transfer a
pre-existing risk from the borrower.
Thus, the risk associated with the
possible waiver on death of the
prepayment fee is not insurance risk
(paragraphs B12 and B24(b) of
Appendix B of the Standard).
1.24 Loan contract that waives This contract contains a deposit
repayment of the entire loan component (the loan) and an
balance if the borrower dies. insurance component (waiver of the
loan balance on death, equivalent
to a cash death benefit). If specified
conditions are met, paragraph 10 of
the Standard requires or permits
unbundling. If the insurance
component is not unbundled, the

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