Commonwealth Numbered Regulations

1988 No. 180 LIFE INSURANCE REGULATIONS (AMENDMENT) - REG 1

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
               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.

        (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.".