Commonwealth Consolidated Acts

LIFE INSURANCE ACT 1995 - SECT 42

  (1)   This section applies to a statutory fund if:

  (a)   the business of the fund consists of the provision of investment - linked benefits; and

  (b)   any of the policies referable to the fund includes an investment performance guarantee.

  (2)   A life company must at all times ensure that the investment performance guarantee factor of a statutory fund to which this section applies does not exceed 5%.

  (3)   The investment performance guarantee factor of a statutory fund at a particular time is the proportion of the amount of the current policy liabilities of the fund at that time that represents the total cost, as at that time, of providing the investment performance guarantees included in policies referable to the fund.

  (4)   For the purposes of this section:

  (a)   the amount of the current policy liabilities of a statutory fund at a particular time is the amount that, in accordance with the prudential standards, is to be taken to be the total value, at that time, of all policy liabilities of the company in relation to policies referable to the fund; and

  (b)   the total cost, as at a particular time, of providing the investment performance guarantees included in policies referable to a statutory fund is the amount calculated, as at that time, in accordance with the prudential standards.

  (5)   In this section:

"investment performance guarantee" , in relation to a policy, means a provision that the amount payable under the policy at a particular time by way of investment - linked benefits is not less than an amount specified in, or calculated in accordance with, the policy.