Intellectual Property Rights from Publicly Financed Research and
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Long Term Insurance Act, 1998 (Act No. 52 of 1998)RegulationsRegulations under the Long-term Insurance Act, 1998Part 5 : Requirements and Limitations regarding the Values and Benefits of Policies (Section 54)Part 5A : Policies other than Policies to which Part 5B applies5.1 Application of this Part 5A, and definitions |
[Regulation 5.1 heading substituted by regulation 2.2(a) of Notice No. R. 952 of 2008]
This Part 5A applies to policies other than policies to which Part 5B applies, and in this Part 5A, unless the context indicates otherwise—
[Sentence following the heading substituted by regulation 2.2(a) of Notice No. R. 952 of 2008]
"actuarial basis"
in relation to a policy, means the underlying actuarial rules, specifications and formulae in terms of which the policy operates, which:
| (a) | in compliance with the Act, are approved by the statutory actuary of the insurer, in particular for the purposes of sections 46 of the Act and Rules 15A.1 to 15A.4 of the Policyholder Protection Rules; and |
| (b) | if and while the Insurance Act, 1943 applied to the policy, in compliance with that Act, were approved by the valuator of the insurer, in particular for the purposes of sections 34 and 62(2) of that Act; |
[Definition substituted by regulation 7(a) of Notice No. 1015, GG 41942, dated 28 September 2018]
"basic premium"
means the premium, including a premium paid by virtue of a premium-waiver benefit, less charges (if any) deductible from the premium for rider-benefits;
"basic risk benefit"
means a risk benefit for which the charge is determined periodically with reference to changes in factors pertaining to the risk, including but not limited to the age of the life insured, the amount of the risk cover, or the investment value of the policy, but excluding a rider-benefit;
"benefit"
means a policy benefit, including a consideration payable upon the full or partial surrender of a policy, but excluding a loan in respect of a policy;
"causal event"
in relation to a policy, means one of the following events:
| (a) | the policy becomes fully paid-up; |
| (b) | the basic premium is reduced, without the policy thereby coming to an end or becoming fully paid-up; |
| (c) | the remaining policy term or the remaining premium-paying term is reduced, without the policy thereby coming to an end or becoming fully paid-up; |
| (d) | the policy is surrendered in part, other than for the purpose of a transfer from one fund to another in terms of section 14 of the Pension Funds Act, 1956, or a part of the policy comes to an end for another reason (other than because risk cover under the policy has come to an end); |
| (e) | the policy, in the case of a fund member policy, is surrendered in part for the purpose of a transfer from one fund to another in terms of section 14 of the Pension Funds Act, 1956; |
| (f) | the policy is surrendered in full, other than for the purpose of a transfer from one fund to another in terms of section 14 of the Pension Funds Act, 1956, or the policy comes to an end for another reason (other than because the policy has reached its maturity date); or |
| (g) | the policy, in the case of a fund member policy, is surrendered in full for the purpose of a transfer from one fund to another in terms of section 14 of the Pension Funds Act, 1956; |
"causal event charge"
means a charge, other than an administration charge contemplated in regulation 5.4A, occasioned by and pertaining to a causal event;
[Definition substituted by regulation 6(a) of Notice No. 1437 of 2017]
"charge"
means a charge stipulated in a policy or its actuarial basis, whether or not the actuarial basis has been expressly incorporated in the policy, which charge is deductible in respect of the policy in accordance with its terms or actuarial basis;
"come to an end"
means that the final benefit under a policy has become payable, including in the case of a fund member policy for the purpose of a transfer from one fund to another in terms of section 14 of the Pension Funds Act, 1956, or that the policy has lapsed without a benefit becoming payable;
"component"
has the meaning assigned in Part 3A;
[Definition inserted by regulation 6(b) of Notice No. 1437 of 2017]
"dependant"
has the meaning assigned in section 1 of the Pension Funds Act, 1956;
"effective date"
means 1 December 2006;
"excluded policy"
| (a) | registered insurer means: |
| (i) | a fund policy; |
| (ii) | a reinsurance policy; |
| (iii) | a policy that provides risk benefits only; |
| (iv) | a whole-life policy that provides risk benefits and has an investment value or a materially equivalent value referred to in regulation 5.2(2)(b), and in respect of which policy, immediately before a causal event, the ratio of the aggregate of the sums insured of all basic risk benefits to the monthly basic premium (or the monthly equivalent where recurring premiums are not paid monthly) is greater than the threshold ratio in the table below: |
|
Age next birthday of the life insured at the inception of the policy |
Threshold ratio |
|
Up to and including 30 |
480 |
|
31 |
468 |
|
32 |
456 |
|
33 |
444 |
|
34 |
432 |
|
35 |
420 |
|
36 |
408 |
|
37 |
396 |
|
38 |
384 |
|
39 |
372 |
|
40 |
360 |
|
41 |
348 |
|
42 |
336 |
|
43 |
324 |
|
44 |
312 |
|
45 |
300 |
|
46 |
288 |
|
47 |
276 |
|
48 |
264 |
|
49 |
252 |
|
50 |
240 |
|
51 |
228 |
|
52 |
216 |
|
53 |
204 |
|
54 |
192 |
|
55 |
180 |
|
56 |
168 |
|
57 |
156 |
|
58 |
144 |
|
59 |
132 |
|
60 and above |
120 |
| (v) | and any other policy that provides primarily risk benefits; |
| (b) | licensed insurer means a policy as defined in section 1 of the Insurance Act: |
| (i) | written under one or more of the following classes of life insurance business as set out in Table 1 of Schedule 2 of the Insurance Act: Risk, Fund Risk, Credit Life, Funeral, Fund Investment and Reinsurance only; |
| (ii) | that is a whole-life policy written under both the— |
| (aa) | Risk, Credit Life or Funeral classes of life insurance business as set out in Table 1 of Schedule 2 of the Insurance Act; and |
| (bb) | Life Annuity, Individual Investment or Income Drawdown classes of life insurance business as set out in Table 1 of Schedule 2 of the Insurance Act; and |
that has an investment value or a materially equivalent value referred to in regulation 5.2(2)(b), and in respect of which policy, immediately before a causal event, the ratio of the aggregate of the sums insured of all basic risk benefits to the monthly basic premium (or the monthly equivalent where recurring premiums are not paid monthly) is greater than the threshold ratio in the table below:
|
Age next birthday of the life insured at the inception of the policy |
Threshold ratio |
|
Up to and including 30 |
480 |
|
31 |
468 |
|
32 |
456 |
|
33 |
444 |
|
34 |
432 |
|
35 |
420 |
|
36 |
408 |
|
37 |
396 |
|
38 |
384 |
|
39 |
372 |
|
40 |
360 |
|
41 |
348 |
|
42 |
336 |
|
43 |
324 |
|
44 |
312 |
|
45 |
300 |
|
46 |
288 |
|
47 |
276 |
|
48 |
264 |
|
49 |
252 |
|
50 |
240 |
|
51 |
228 |
|
52 |
216 |
|
53 |
204 |
|
54 |
192 |
|
55 |
180 |
|
56 |
168 |
|
57 |
156 |
|
58 |
144 |
|
59 |
132 |
|
60 and above |
120 |
| (iii) | and any other policy that provides primarily risk benefits; |
[Definition substituted by regulation 7(b) of Notice No. 1015, GG 41942, dated 28 September 2018]
"fund member policy"
in respect of a—
| (a) | registered insurer means a policy— |
| (i) | of which a fund is or was the policyholder; and |
| (ii) | which is or was entered into by the fund for the purpose of funding exclusively the fund's liability to a particular member (or to the surviving spouse, children, dependants or nominees of the member) in terms of the rules of the fund; |
| (b) | licensed insurer means a policy written under the Life Annuity, Individual Investment or Income Drawdown classes of life insurance business as set out in Schedule 2 of Table 1 of the Insurance Act and— |
| (i) | of which a fund is or was the policyholder; and |
| (ii) | which is or was entered into by the fund for the purpose of funding exclusively the fund's liability to a particular member (or to the surviving spouse, children, dependants or nominees of the member) in terms of the rules of the fund; |
[Definition substituted by regulation 7(c) of Notice No. 1015, GG 41942, dated 28 September 2018]
"growth rate"
means, over a given period, the positive or negative investment return declared for a portfolio, which investment return is net of those portfolio charges that are deducted before the declaration of the investment return, and in the case where a bonus is declared is inclusive of vested and non-vested bonuses;
"insurer"
[Definition deleted by regulation 6(c) of Notice No. 1437 of 2017]
"investment value"
means the value of a policy:
| (a) | calculated using a method commonly referred to as a back-end loaded basis, by accumulating the basic premium less deductions at the growth rate that applies to the policy, which deductions comprise: |
| (i) | benefits paid, excluding basic risk benefits and rider-benefits; |
| (ii) | charges for basic risk benefits; |
| (iii) | charges deducted when benefits are paid or the policy is altered; |
| (iv) | charges stipulated as a fixed amount, which amount, over the full term of the policy, is designed to remain unchanged or is designed to be increased at a specified rate at regular intervals; |
| (v) | charges stipulated as a percentage or proportion of premiums, which percentage or proportion is designed to remain unchanged over the full term of the policy; and |
| (vi) | those portfolio charges that are deducted after the declaration of the growth rate, where, in the case of general portfolio charges deducted after the declaration of the growth rate, their percentage or proportion of the value of the portfolio is designed to remain unchanged over the full term of the policy; |
provided that in determining the growth rate to be applied for the purposes of this calculation, the percentage or proportion of the value of the portfolio for general portfolio charges that are deducted before the declaration of the growth rate, is designed to remain unchanged over the full term of the policy; and
| (b) | adjusted, where the growth rate that applies to the policy does not follow the fluctuation in the value of the portfolio on a daily basis, and where that is required by the terms or actuarial basis of the policy, by a market-adjustment factor to take into account the difference between the value of the policy so calculated and the value of the portfolio; |
"member"
in relation to a fund member policy, means the member of the fund in respect of whom the fund had or has taken out the policy;
"nominee"
in relation to a member, means a nominee of the member contemplated in the rules of the fund;
"policy"
means a long-term policy, whether entered into before or after the commencement of the Act;
"portfolio"
means the one or more investment funds representing the underlying assets of a policy;
"portfolio charges"
means charges deducted from a portfolio, being:
| (a) | "specific portfolio charges", namely charges for specific expenses, which expenses include but are not limited to taxes, statutory levies, investment expenses (including investment performance fees), and investment guarantees; and |
| (b) | "general portfolio charges", namely management charges, capital charges and other stipulated general charges, which general portfolio charges are stipulated as a percentage or proportion of the value of the portfolio; |
"rider-benefit"
in respect of a—
| (a) | registered insurer, means a risk benefit for which the charge is a certain amount or a percentage of the premium or is otherwise fixed, which risk benefit excludes a basic risk benefit; and |
| (b) | licensed insurer, has the meaning assigned to it in section 1 of the Insurance Act; |
[Definition substituted by regulation 7(d) of Notice No. 1015, GG 41942, dated 28 September 2018]
"this Part"
means this Part 5A; and
"universal whole of life policy"
means a policy other than a fund member policy that is a whole-life policy that is not an excluded policy and—
| (a) | that provides risk benefits and has an investment value or a materially equivalent value referred to in regulation 5.2(2)(b); and |
| (b) | in respect of which the underlying actuarial basis of the policy, whether or not the actuarial basis has been expressly incorporated in the policy, provides that, at inception of the policy, less than 40% of the total premium payable by the policyholder over the expected lifetime of the policy will be allocated towards the investment benefits; |
[Definition inserted by regulation 6(d) of Notice No. 1437 of 2017]
"values"
means all values of a policy including, but not limited to, its investment value, its remaining value and other values contemplated in Rule 15.11 of the Policyholder Protection Rules, and its maturity value;
[Definition substituted by regulation 7(e) of Notice No. 1015, GG 41942, dated 28 September 2018]
"variable premium increase"
means an increase in an existing recurring premium payable by a policyholder under a policy, which increase is not a regular contractual premium increase provided for and determinable in the policy at the start of that policy.
[Definition inserted by regulation 6(f) of Notice No. 1437 of 2017]
