Hong Kong Regulations

INSURANCE COMPANIES (DETERMINATION OF LONG TERM LIABILITIES) REGULATION - SECT 10

Options and guarantees

(1) Provision shall be made on prudent assumptions to cover any increase in
liabilities caused-

   (a)  by policy holders exercising options under their contracts; and

   (b)  by the operation of any guarantee included in a contract.

(2) Where a contract includes an option whereby the policy holder could secure
a guaranteed cash payment within 12 months following the valuation date, the
provision for that option shall be such as to ensure that the value placed on
the contract is not less than the amount required to provide for the payments
that would have to be made if the option were exercised. (Enacted 1995)