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

Section 92.11r12.1 Disposition versions

2019-06-19

92.11R12.1. For the purpose of applying subparagraph c of the first paragraph of section 92.11R12.2 in respect of a life insurance policy (other than an annuity contract) issued after 31 December 2016, the following rules apply:

(a)  the following rates are used in computing present values:

i.  an annual interest rate of 3.5%, and

ii.  mortality rates;

(b)  in determining the mortality rates that apply in respect of a life insured under a coverage under the policy,

i.  if a single life is insured under the coverage,

(1)  the age that is to be used is the age of the life insured on the date on which the coverage was issued, or that which is attained on the birthday of the life insured nearest to the date on which the coverage was issued, depending on the method used by the insurer that issued the policy in determining the premium or cost of insurance rates in respect of the life insured,

(2)  if the life insured was determined by the insurer that issued the policy to be a standard life on the date on which the coverage was issued, the Proposed CIA Mortality Tables, 1986–1992 included in the May 17, 1995 Canadian Institute of Actuaries Memorandum, extended to include select mortality rates from age 81 to age 90 developed using the methodology used by the Canadian Institute of Actuaries to derive select mortality rates from age 71 to age 80, applicable for an individual who has the same relevant characteristics as the life insured, are to be used, and

(3)  if the life insured was determined by the insurer that issued the policy to be a substandard life on the date on which the coverage was issued, the mortality rates that are to be applied are equal to the value determined in accordance with the second paragraph,

ii.  if 2 or more lives are jointly insured under the coverage, the mortality rates to be used are those determined by applying the methodology used by the insurer that issued the policy to estimate the mortality rates of the lives jointly insured for the purpose of determining the premium or cost of insurance rates in respect of the coverage to the Proposed CIA Mortality Tables, 1986–1992 included in the May 17, 1995 Canadian Institute of Actuaries Memorandum, extended to include select mortality rates from age 81 to age 90 developed using the methodology used by the Canadian Institute of Actuaries to derive select mortality rates from age 71 to age 80; and

(c)  in determining the net premium reserve of the policy, the present value of future net premiums or cost of insurance charges is to be calculated as if a premium or cost of insurance charge payable or incurred on a policy anniversary were payable or incurred, as the case may be, one day after the policy anniversary.

The value to which subparagraph 3 of subparagraph i of subparagraph b of the first paragraph refers is either of the following values, depending on the method used by the insurer for the purpose of determining the premium or cost of insurance rates in respect of the coverage:

(a)  the lesser of 1 and the product obtained by multiplying the rating attributed to the life by the insurer and the mortality rates that would be determined under subparagraph 2 of subparagraph i of subparagraph b of the first paragraph if the life insured were not a substandard life, or

(b)  the mortality rates that would be determined under subparagraph 2 of subparagraph i of subparagraph b of the first paragraph if the life insured were a standard life and the age of the life insured were the age used by the life insurer for the purpose of determining the premium or cost of insurance rates in respect of the coverage.

S.Q. 2019, c. 14, s. 628.