Important Points for IC 26 - Life Insurance Finance Exam
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It is to be noted that Schedule A consists of 5 parts, each expressed in a roman number. These five parts state and explain various regulations that are required to be followed while preparing the financial statements of life insurance companies.
An impairment loss shall be recognized as expenses in the Revenue / Profit & Loss Account immediately unless the asset is carried at the revalued amount. Any impairment loss of a revalued asset shall be treated as revaluation decrease of that asset and if the impairment loss exceeds the corresponding revaluation reserve, such excess shall be recognized as expense in the revenue / profit and loss account.
Segregated Funds - Practically speaking, different classes of policyholders have different goals and objectives behind taking an insurance policy. Hence, it is prudent to maintain a separate fund for every class of policyholders. Such separation is done since the risk bearing for every class is different. Since investment income from the finds and the associated risks accrue directly to the policyholders, the assets for each such funds are separately maintained. Such assets are not subject to claims that arise out of any other business of the insurer.
In the Revenue Account the following modification is made : After the Row : "Surplus/(Deficit) (D) = (A)-(B)-(C)" Insert another Row as below : Amount transferred from Policy holders Account (Technical Account)
For the purposes of financial statements, unless the context otherwise requires : (a) The expression provision shall, subject to (II) below mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability or loss of which the amount cannot be determined with substantial accuracy;
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