Page 172 - IC46 addendum

Insurance Contracts

contract is an insurance contract if
the insurance component is
significant in relation to the whole
contract.

1.25 A contract permits the issuer The policyholder obtains an
to deduct a market value additional survival benefit because
adjustment (MVA) from no MVA is applied at maturity. That
surrender values or death benefit is a pure endowment (see
benefits to reflect current IG Example 1.5). If the risk
market prices for the transferred by that benefit is
underlying assets. The significant, the contract is an
contract does not permit an insurance contract.
MVA for maturity benefits.

1.26 A contract permits the issuer The policyholder obtains an
to deduct an MVA from additional death benefit because no
surrender values or maturity MVA is applied on death. If the risk
payments to reflect current transferred by that benefit is
market prices for the significant, the contract is an
underlying assets. The insurance contract.
contract does not permit an
MVA for death benefits.

1.27 A contract permits the issuer The policyholder obtains an

to deduct an MVA from additional benefit because no MVA

surrender payments to is applied on death or maturity.

reflect current market prices However, that benefit does not

for the underlying assets. transfer insurance risk from the

The contract does not permit policyholder because it is certain

an MVA for death and that the policyholder will live or die

maturity benefits. The amount and the amount payable on death

payable on death or maturity or maturity is adjusted for the time

is the amount originally value of money (see paragraph B27

invested plus interest. of the Standard). The contract is an

investment contract.

This contract combines the two
features discussed in IG Examples
1.25 and 1.26. When considered
separately, those two features
transfer insurance risk. However,

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