Life Insurance (prudential standard) determination No. 3 of 2023 (Cth)

Life Insurance (prudential standard) determination No. 3 of 2023

Prudential Standard LPS 360 Termination Values, Minimum Surrender Values and Paid-up Values

Life Insurance Act 1995

I, Clare Gibney, a delegate of APRA:

(a) under subsection 230A(5) of the Life Insurance Act (the Act) revoke Life Insurance (prudential standard) determination No. 13 of 2012, including Prudential Standard LPS 360 Termination Values, Minimum Surrender Values and Paid-up Values made under that Determination; and

(b) under subsection 230A(1) of the Act, determine Prudential Standard LPS 360 Termination Values, Minimum Surrender Values and Paid-up Values, in the form set out in the Schedule, which applies to all life companies, including friendly societies.

This instrument commences on 29 March 2023.

Dated: 7 March 2023

Clare Gibney Executive Director Policy and Advice Division

Interpretation

In this instrument:

APRA means the Australian Prudential Regulation Authority. friendly society has the meaning given in section 16C of the Act. life company has the meaning given in the Schedule to the Act.

Schedule

Prudential Standard LPS 360 Termination Values, Minimum Surrender Values and Paid-up Values comprises the document commencing on the following page.

Prudential Standard LPS 360

Termination Values, Minimum Surrender Values and Paid-up Values

Objective and key requirements of this Prudential Standard

This Prudential Standard sets out the requirements for determining termination values, minimum surrender values and minimum paid-up values. The key requirements of this Prudential Standard are:

* a life company must calculate the termination values of policies using the methods prescribed in this standard. Termination values cannot be less than the minimum termination values prescribed in this standard. Termination values are used in determining the capital base of a life company and its statutory funds (refer to Attachment H of Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital); * section 207 of the Life Insurance Act 1995 requires a life company to pay a surrender value to a policy owner in some circumstances. This Prudential Standard specifies the minimum surrender value that must be paid; and * section 209 of the Life Insurance Act 1995 requires a life company to vary a policy in some circumstances if the policy owner requests that no further premiums be paid. This Prudential Standard specifies the minimum amount of a paid-up policy.