Important Points for IC 26 - Life Insurance Finance Exam
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Outstanding accounts and bills of capital nature should be brought into the accounts only if the relevant assets have been delivered on or before the close of the accounting year and taken in stock.
Only net amount of claims payable after deducting the recovery of dues from Sum Assured and Bonus is to be noted as a contingent liability.
The liability on policies has to be determined by the appointed actuary. Actuary is a professional who uses certain mathematical and statistical techniques to determine the value of the said liability.
All the securities are transferred to policyholders account at cost or market price, whichever is lower. This is in line with the principle of conservatism. It prohibits from booking unrealized profits in the books of accounts.
The debit balance in profit and loss account (which means a loss) has to be adjusted by reduction from any uncommitted reserve.
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