Page 178 - IC46 addendum

Insurance Contracts

the money at inception,
see paragraph AG33(b)
of Ind AS 39).

(c) policyholder can The embedded option to Not applicable. The entire

elect to receive life- benefit from a guarantee contract is an insurance

contingent payments of life-contingent contract (unless the life-

or payments that payments is an contingent payments are

are not life- insurance contract insignificant).

contingent, and the (unless the life-

guarantee relates contingent payments

to both. When the are insignificant). Fair

policyholder makes value measurement is

its election, the not required (but not

issuer cannot prohibited).

adjust the The embedded option to
receive payments that
pricing of the are not life-contingent
(‘the second option’) is
life-contingent not an insurance
contract. However,
payments to reflect because the second
option and the life-
the risk that the contingent option are
alternatives, their fair
insurer assumes at values are inter-
dependent. If they are
that time (see so interdependent that
the issuer cannot
paragraph B29 of

this Standard for

discussion of

contracts with

separate accumul-

ation and payout

phases).

measure the second

option separately (ie

without considering the

life-contingent option),

the second option is

closely related to the

insurance contract. In

that case, fair value

measurement is not

required (but not

prohibited).

2.7 Embedded guarantee The embedded Fair value measurement

of minimum equity guarantee is not an is required.

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