Section EZ 54 — Income Tax Act 2007: Expected death strain formulas

EZ 54 Expected death strain formulas Expected death strain formula (life) (1) The expected death strain formula (life) is— claim probability × (opening sum assured − opening actuarial reserves). Expected death strain formula (active annuities) (2) The expected death strain formula (active annuities) is— claim probability × opening actuarial reserves. Definition of items in formulas (3) The items in the formulas are defined in subsections (4) to (6). Claim probability (4) Claim probability is the probability of a claim arising under the policy for the life insured’s death in the income year. It is determined at the start of the income year using the same mortality assumptions as are used to calculate the life insurer’s actuarial reserves at the start of the income year. It is expressed as a decimal. Variations to claim probability are in sections EZ 55(2) and EZ 57(2) . Opening sum assured (5) Opening sum assured is the claim that would be payable under the policy for the life insured’s death in the income year or, if no such claim would be payable, the claim that would be payable under the policy for the life insured’s survival to the relevant date or age specified in the policy. It is determined at the start of the income year. It may be zero. Variations to opening sum assured are in sections EZ 56(2) , EZ 57(3) , and EZ 58(2) . Opening actuarial reserves (6) Opening actuarial reserves is the amount in the life insurer’s actuarial reserves for the life insured under the policy. It is determined at the start of the income year. Defined in this Act: actuarial reserves , amount , claim , income year , life insured , life insurer , pay Section EZ 54: inserted, on 1 July 2010, by section 199(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).