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EZ 55: Expected death strain formulas: option when more than 1 life insured
or “Calculating the average risk for multi-person life insurance policies”
You could also call this:

“Calculating the value of annuities paid on death for life insurance policies”

This section applies to life insurance policies that pay an annuity when the insured person dies. When using the expected death strain formula for life insurance, you need to use a special value called the ‘opening sum assured’. This value is the present value of the annuity, which means how much the annuity is worth right now. To work out this value, you need to imagine that the insured person died at the start of the income year. You also need to use the same methods that the life insurance company uses to calculate their financial reserves for that year. This helps make sure the calculations are consistent and accurate.

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Next up: EZ 57: Expected death strain formulas: when annuity payable on survival to date or age specified in policy

or “Calculating insurance payouts for living to a specific age or date”
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Part E Timing and quantifying rules
Terminating provisions: Expected death strain formulas

EZ 56Expected death strain formula (life): when annuity payable on death

  1. This section applies when, and to the extent to which, a life insurance policy provides for the payment of an annuity the start of which is contingent on the life insured’s death.

  2. In using the expected death strain formula (life), the life insurer uses as opening sum assured the present value (net) of the annuity. The present value (net) is determined—

  3. at the start of the income year; and
    1. on the assumption that the life insured died at the start of the income year; and
      1. using the same assumptions and bases of calculation as are used to calculate the life insurer’s actuarial reserves for the income year.

        Notes
        • Section EZ 56: inserted, on , by section 199(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section EZ 56 list of defined terms pay: inserted, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
        • Section EZ 56 list of defined terms payment: repealed, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).