Amends prior IC Circular Letter
- IC Circular Letter No. 41-2006 dated December 20, 2006 is amended by IC Circular No. 23-2007.
- Rules on contingency funds, future funds, benefit enhancement funds, and similar riders under IC Circular Letter No. 41-2006 are modified by the prohibitions and limits stated in this Circular.
- All other terms and conditions of IC Circular Letter No. 41-2006 that are not inconsistent with IC Circular No. 23-2007 remain in force.
Prohibition on excess-accumulating riders
- The Insurance Commission shall no longer allow insurance companies and MBAs to issue contingency funds, future funds, benefit enhancement funds and other similar riders that accumulate, or permit the accumulation, of fund deposits or contributions in excess of total future premiums under insurance policies after effectivity of IC Circular No. 23-2007.
- Insurance companies and MBAs must not issue such riders in a way that results in fund deposits or contributions being held beyond total future premiums for the relevant policy after effectivity.
Premium Deposit Fund rider conditions
- Insurance companies and MBAs may continue issuing Premium Deposit Fund riders, provided they limit the maximum amount held at any time in the fund to the total future premiums due under the insurance policy.
- For a renewable policy, the maximum amount held in the fund must not exceed the total premiums payable until its last renewal date.
- A policyholder must not make any additional deposit to the Premium Deposit Fund if the existing balance is equal to or greater than the sum of all future premiums payable on the policy.
- Insurance companies and MBAs must structure the Premium Deposit Fund rider so that the above deposit restriction is enforced for the policyholder’s account balance relative to the remaining future premiums.
Treatment of previously issued riders
- The directive requiring insurance companies and MBAs to refund to policyholders the amount in the fund in excess of total future premiums due under the policies is revoked for subject riders already issued.
- Any amounts already refunded under the previously directed refunding requirement may no longer be recovered.
Refunds of excess premium after payment-up
- Excess premium shall be refunded to policyholders only after their policies have been paid-up.
- This refund timing rule operates subject to the provisions of the Premium Deposit Fund rider or agreement.