Life Insurance Regulations (Amendment) (Cth)

Statutory Rules 1988 No. 1801

Life Insurance Regulations2 (Amendment)

I, THE GOVERNOR-GENERAL of the Commonwealth of Australia, acting with the advice of the Federal Executive Council and on the recommendation of the Insurance and Superannuation Commissioner appointed under the Insurance and Superannuation Commissioner Act 1987, hereby make the following Regulation under that Life Insurance Act 1945.

Dated 30 June 1988.

N. M. STEPHEN Governor-General

By His Excellency’s Command,

PETER MORRIS

Minister of State for Transport and Communication Support

for and on behalf of the Treasurer

_________

Modifications of provisions of Act in case of certain policies

Regulation 8 of the Life Insurance Regulations is amended:

(a)	by omitting from paragraph (d) “Altered Ordinary Policies” and substituting “Ordinary Policies Varied to Alter the Date on which the Sum Insured Becomes Payable or the Term During which Premium Payments are to be Made, or Both”; and
(b)	by inserting after paragraph (d) the following paragraph:
“(da) Increased Ordinary Policies-Where, since the issue of an ordinary policy, the contract under that policy has been varied at the request of the policy owner in such a manner as to increase the sum insured and premium payments, or to grant an increase in the sum insured upon the making of additional premium payments, but not so as to alter either the date on which the sum insured becomes payable or the term during which premium payments are to be made:

(i) The following rules apply to the calculation of a paid-up policy:

(A) The total paid-up policy value in respect of a policy in respect of which the sum insured has been increased shall be the sum of the paid- up policy value calculated in accordance with rule (B) and the paid-up policy values in

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respect of increases in the sum insured

calculated in accordance with rule (C).

(B) The paid-up policy value shall be calculated according to the rules set out in Part I of the Sixth Schedule to the Act as if the contract had not been so varied.

(C) Except in the case of increases in the sum insured for which less than 3 years’ premiums have been paid in cash, there shall be calculated in respect of each increase according to the rules set out in Part I of the Sixth Schedule to the Act a paid-up value that would be applicable to a policy effected at the date of that increase in the sum insured and having a sum insured equal to the amount of that increase.

(ii) Subject to subparagraph (iii), the following rules apply to the calculation of the surrender value of a policy:

(A) The surrender value in respect of a policy in respect of which the sum insured has been increased shall be the sum of the surrender value calculated in accordance with rule (B) and the surrender values in respect of each increase in the sum insured calculated in accordance with rule (C).

(B) The surrender value shall be calculated according to the rules set out in Part II of the Sixth Schedule to the Act as if the contract had not been so varied.

(C) Except in the case of increases in the sum insured for which less than 6 years’ premiums have been paid in cash, there shall be calculated in respect of each increase according to the rules set out in Part II of the Sixth Schedule to the Act a surrender value that would be applicable to a policy effected at the date of that increase in the sum insured and having a sum insured equal to the amount of that increase.

(iii) In calculating the surrender value of a policy for the purposes of paragraph 100 (1) (b) of the Act, subparagraph (ii) applies as if in sub-subparagraph (C) the reference to 6 years’ premiums were a reference to 3 years’ premiums.

(iv) The amount of overdue premium for the purposes of paragraph 100 (1) (b) of the Act does not include overdue premium in respect of any increases in the sum insured that have been in force for less than 3 years.

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(v) The surrender value calculated, for the purposes of paragraph 100 (1) (b) of the Act, by reference to subparagraph (ii) as modified by subparagraph (iii) does not include a surrender value in respect of an increase in the sum insured that has been in force for less than 3 years and subsection 100 (1) of the Act applies in respect of an increase in the sum insured that has been in force for less than 3 years as if that increase were a separate policy that has been in force for less than 3 years and as it would apply to a policy effected at the date of that increase in the sum insured and having a sum insured equal to the amount of that increase.”.

NOTES

1. Notified in the Commonwealth of Australia Gazette on 8 July 1988.

2. Statutory Rules 1946 No. 136 as amended by 1959 No. 98; 1962 Nos. 3 and 12; 1966 No. 36; 1969 No. 51; 1971 No. 100; 1974 Nos. 68 and 224; 1978 No. 31; 1980 No. 54; 1981 No. 262; 1983 No. 240; 1984 No. 248; 1985 No. 44.