I-3, r. 1 - Regulation respecting the Taxation Act

Section 840r2 Disposition versions

2012-09-01

840R2. The amount to be determined under this section for the purposes of paragraph a of the definition of “modified net premium” in section 840R1, in respect of a particular premium under a policy, is determined, subject to the third paragraph, by the formula

A × [(B + C) / (D + E)].

In the formula in the first paragraph,

(a)  A is the amount of the particular premium;

(b)  B is the present value, at the date of the issue of the policy, of the amount of the benefits required to be provided under the policy after the date of the first anniversary of the issue of the policy;

(c)  C is the present value, at the date of the issue of the policy, of the amount of the benefits required to be provided under the policy after the date of the second anniversary of the issue of the policy;

(d)  D is the present value, at the date of the issue of the policy, of the amount of the premiums payable under the policy on or after the date of the first anniversary of the issue of the policy;

(e)  E is the present value, at the date of the issue of the policy, of the amount of the premiums payable under the policy on or after the date of the second anniversary of the issue of the policy.

However, in respect of the particular premium for the second year of the policy, the amount determined by the formula in the first paragraph is deemed to be equal to one-half of the aggregate of the amount that would otherwise be determined under the formula and the amount of a one-year term life insurance premium, determined without regard to the frequency of payment of the premium, that would be payable under the policy.

s. 840R1.1; O.C. 91-94, s. 85; O.C. 1463-2001, s. 96; O.C. 134-2009, s. 1.