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Article 1 |
1.Definition of interest-sensitive annuity insurance policy
During the accumulation period, the insurance company shall calculate the annuity policy non-forfeiture value at a declared interest rate, based on the premium paid by the proposer after deduction of expense loading. When annuitization begins, annuity amounts will be calculated based on the annuity policy non-forfeiture value.
Type A: When annuitization begins, a fixed annuity payment will be determined based on the then-current age, an assumed interest rate, and an annuity table.
Type B: When annuity payments begin, the annuity amount for the first year will be calculated on the basis of the then-current age, an assumed interest rate, a declared interest rate, and an annuity table; annuity amounts for each of the second and subsequent years will be adjusted based on another declared interest rate and the assumed interest rate stated above.
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Article 2 |
2.Anticipated risk incidence rate
The anticipated risk incidence rate for calculation of annuity amount shall be determined by each company, based on the annuity table promulgated per Letter No. Taiwan-Finance-Insurance-862397037 of the Ministry of Finance, dated 30 June 1997.
When submitting a product for review, a company shall attach a description of the bases for determination of the anticipated risk incidence rate and other relevant materials.
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Article 3 |
3. Assumed and declared interest rates
3.1 Declared interest rate
A declared interest rate shall be determined by a company in consideration of factors such as the potential return on investment for a relevant asset allocation plan and the company's reasonable profit margin, except that in all cases a declared interest rate shall not exceed the yield rate announced, prior to the declaration thereof, by the Central Bank for 10-year central government bonds on the secondary market for the nearest month, and shall not be negative.
3.2. Assumed interest rate
Annuity payment period: An assumed interest rate shall not exceed the declared interest rate for the month in which the annuity starting date falls, and shall not be negative.
When submitting a product for review, a company shall attach a description of the bases for determination of the assumed interest rate and declared interest rate and other relevant materials.
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Article 4 |
4.Formula for annuity calculations
..
Type A: AnnuityN = V ÷ a
..
Type B: N ＝ 1 , AnnuityN ＝ V + a
1＋ jN-1
N ≧2 , AnnuityN ＝ AnnuityN-1 x ────
1＋ i
Where,
i = assumed interest rate
jN = The declared interest rate for the month in which the annuity date or an annuity anniversary occurs (there is a separate value for each annuity year)
N = the Nth year after annuity payments begin
..
a = annuity present value factor calculated on the basis of the assumed interest rate and anticipated risk incidence rate
V = annuity policy non-forfeiture value
AnnuityN = the annuity amount for the Nth year after annuity payments begin
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Article 5 |
5.Anticipated expense loading factor (annuity accumulation period)
To be determined by a company itself and specified in a contract.
When submitting a product for review, a company shall attach a description of the bases for determination of the anticipated expense loading factor and other relevant materials.
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Article 6 |
6.Policy reserve
6.1 Manner of provisioning:
Annuity accumulation period: provisioned in the full amount of the annuity policy non-forfeiture value.
Annuity payment period:
Type A: provisioned by the level reserve method.
Type B: calculated as follows:
6.1.1 Sample calculation for life annuity:
1＋jN
VN ＝AnnuityN+1 x a = (VN-1－AnnuityN) x ───
1－q
6.1.2 Sample calculation for life annuity with a guaranteed payment period of n years:
(1) During the guaranteed payment period:
1＋jN
VN＝AnnuityN+1 x an-N＋ (VN-1 － AnnuityN × an-N+1) x────
1－q
(2) After the guaranteed payment period:
1＋jN
VN＝AnnuityN+1 x a ＝ (VN-1 － AnnuityN) x ───
1－q
Where,
i = assumed interest rate
jN = The declared interest rate for the month in which an annuity anniversary occurs (there is a separate value for each annuity year)
N = the Nth year after annuity payments begin
q = expected mortality
a = annuity present value factor calculated on the basis of assumed interest rate and anticipated risk incidence rate
VN = policy reserve at the end of the Nth year after annuity benefits begin
AnnuityN = the annuity amount for the Nth year after annuity payments begin
an-N = present value factor for annuity certain, as calculated for the (n-N)th year using an assumed interest rate
n : the number of years for which payment of annuities is guaranteed
Calculated based on 90 percent of the mortality in the annuity table promulgated per Letter No. Taiwan-Finance-Insurance-862397037 of the Ministry of Finance, dated 30 June 1997; and not in any case to exceed the anticipated risk incidence rate used for calculation of annuity amount.
6.3 Assumed interest rate:
Annuity payment period:
Type A: The lower of the assumed interest rate used in calculation of annuity amount or the interest rate calculated in observance of the requirement that "the policy reserve interest rate for a new contract shall be determined using the automatically adjusted actuarial formula".
Type B: Based on the assumed interest rate applicable at the time of calculation
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Article 7 |
7.Surrender value
The method of or standard for calculation of surrender value is to be determined by a company itself subject to the provisions of Article 119 of the Insurance Act, and shall be expressly stipulated in the contract.
When submitting a product for review, a company shall attach the bases for determination of the method of or standard for calculation of surrender value.
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