Surrender values of life policies
10.—(1)  Where a policy owner surrenders a life policy under section 60(1) of the Act, the surrender value of the life policy shall be at least —
(a)in the case of a policy issued before 23rd August 2004 —
(i)where the policy is an endowment policy, an amount equal to 80% of the liabilities of the licensed insurer in respect of that policy determined in accordance with paragraph (2); or
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(ii)where the policy is a whole life policy, an amount equal to 95% of the liabilities of the licensed insurer in respect of that policy determined in accordance with paragraph (2),
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less any moneys due under the policy to the insurer; or
(b)in the case of a policy issued on or after 23rd August 2004, the amount that the insurer is contractually liable for on the surrender of the policy,
at the date of the surrender.
(2)  For the purposes of paragraph (1)(a), the liabilities of a licensed insurer shall be determined by the net premium valuation method using —
(a)in the case of any policy introduced before 1st January 1994 —
(i)the A1924-29 Ultimate Mortality Table set out in Table 1 of the Schedule for both male and female lives; and
(ii)an interest rate of 4% per annum; and
(b)in the case of any policy introduced on or after 1st January 1994 —
(i)the 1992 Commissioner’s Valuation Table set out in Table 2 of the Schedule; and
(ii)an interest rate of 4% per annum.
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(3)  In this regulation —
“adjusted value of premiums payable on or after the valuation date” means the actual value of premiums adjusted —
(a)by assuming that the policy provides only for such premiums as are sufficient to provide for the risk incurred by the insurer in issuing it, without provision for any other outgoings such as bonuses and office expenses; and
(b)where the premiums are payable for a whole life policy or an endowment policy (with or without other benefits), by making whichever of the following further adjustments that will produce a lower adjusted value:
(i)to assume that the policy is issued one year after the actual date of its issue (but without thereby postponing the time when the premiums cease or any policy moneys become payable if that time is fixed by reference to the date of issue) and to calculate the premiums referred to in paragraph (a) accordingly; or
(ii)to add to the premiums referred to in paragraph (a), such amount as would have at the date of issue of the policy resulted in a capitalised value equal to 3% of the policy moneys (taking the value of any annuity as the capitalised value the annuity would have on becoming payable);
“net premium valuation method” means a valuation method where the liability in respect of a policy shall be taken as equal to the amount (if any) by which the value, as at the date on which the assets and liabilities of a licensed insurer are valued (referred to in this regulation as valuation date), of policy moneys which would be paid out under the policy, according to the contingencies on which they are payable, exceeds the adjusted value of premiums payable on or after the valuation date (if any), according to the contingencies upon which they are respectively payable.
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