| THE MINISTRY OF FINANCE ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------- |
| No. 96/2007/QD-BTC | Hanoi, November 23, 2007 |
DECISION
PROMULGATING THE REGULATION ON PROVISION OF THE UNIVERSAL LIFE INSURANCE PRODUCT
THE MINISTER OF FINANCE
Pursuant to the December 9, 2000 Law on Insurance Business;
Pursuant to the Government's Decree No. 45/ 2000/ND-CP of March 27, 2007, guiding the implementation of a number of articles ofthe Law on Insurance Business;
Pursuant to the Government's Decree No. 46/ 2007/ND-CP of March 27,2007, providing financial regulations applicable to insurance enterprises and insurance brokerage businesses;
Pursuant to the Government's Decree No. 77/ 2003/ND-CP of July 1, 2003, defining the Junctions, tasks, powers and organizational structure of the Ministry of Finance;
At the proposal of the Director of the Insurance Department,
DECIDES:
Article 1.- To promulgate together with this Decision the Regulation on provision of the universal life insurance product in the operation of investment-linked insurance.
Article 2.-This Decision takes effect 15 days after its publication in "CONG BAO."
ON PROVISION OF THE UNIVERSAL LIFE INSURANCE PRODUCT
Article 3.- The Director of the Office and the Director of the Insurance Department of the Ministry of Finance, the Chairman of the Stale Securities Commission, life insurance enterprises, concerned organizations, individuals and parties shall implcment this Decision.
| | FOR THE MINISTER OF FINANCE VICE MINISTER Tran Xuan Ha |
REGULATION
ON PROVISION OF THE UNIVERSAL LIFE INSURANCE PRODUCT
(Promulgated together with the Ministry of Finance's Decision No. 96/2007/QD-BTC of November 23, 2007)
(Promulgated together with the Ministry of Finance's Decision No. 96/2007/QD-BTC of November 23, 2007)
Chapter 1
GENERAL PROVISIONS
Article 1.- Scope of regulation
This Regulation provides for the provision of the universal life insurance product by life insurance enterprises and concerned organizations and individuals in the territory of the Socialist Republic of Vietnam.
Article 2.- Characteristics of the universal life insurance product
Universal life insurance means a life insurance product in the operation of investment-linked insurance and characterized by the following:
1. Separation between risk insurance and investment in the structure of insurance premiums and benefits. Insurance buyers may flexibly determine insurance premiums and insurance sums as agreed upon in insurance policies.
2. Insurance buyers enjoy all investment yields brought about by the universal life fund of insurance enterprises at a rate not lower than the minimum investment ratio committed by insurance enterprises in insurance policies.
3. Insurance enterprises enjoy charges paid by insurance buyers as agreed in insurance policies.
Article.3.- Universal life fund
A universal life fund is raised from insurance premiums paid under universal life insurance policies and constitutes part of the policy holder fund. Assets of a uni versal life fund are undi vidable and commonly determined for all universalized insurance policies.
Article 4.- Conditions on insurance enterprises providing universal life insurance
When providing universal life insurance, a life insurance enterprise must satisfy the following conditions:
1. Its solvency margin is at least VND 100 billion higher than the minimum solvency margin.
2. It has an information technology system suitable for managing and controlling the universal life fund in a pnident and efficient manner.
3. Insurance agents selling universal life insurance it has recruited, trained and employed satisfy the qualification requirements specified in Article 19 of this Regulation.
4. The universal life insurance product is approved by the Ministry of Finance.
Chapter 2
PRODUCT DESIGNING
Article 5.- Universal life insurance product
When designing the universal life insurance product, life insurance enterprises shall comply with the provisions of this Chapter and relevant legal provisions.
Article 6.- Universal life insurance benefits
1. Insurance benefits under a universal life insurance policy include risk insurance benefit and investment benefit.
2. Risk insurance benefit:
a/ Insurance enterprises and insurance buyers may agree on the benefit of risk insurance but shall ensure that the minimum insurance sum is not smaller than five times the insurance premium paid in the first year, for insurance policies with periodical premium payments, or 125% of the lump-sum insurance premium.
b/ Provisions on the minimum benefit in case of death are not applicable to additionally paid insurance premiums specified in Article 8 of this Regulation.
c/ Insurance enterprises may provide insurance products supplementary to the universal life insurance product. The mode of payment of premiums for supplementary insurance products must be agreed by the parties when entering into a policy.
3. Investment benefit: Insurance buyers may benefit from investment yields brought about by the universal life fund at the minimum investment ratio stated in insurance policies.
4. Insurance enterprises and insurance buyers may agree on insurance benefits and modes of payment of insurance benefits upon occurrence of insured events under Clauses 2 and 3 of this Article.
Article 7.- Charges
1. An insurance enterprise may only calculate the following kinds of charges:
a/ Initial charge which means the whole money amount the insurance enterprise is allowed to deduct before insurance premiums are distributed to the universal life fund.
b/ Risk insurance premium which means the premium used to pay the risk insurance benefit as committed in the insurance policy.
cl Insurance policy management charge which means a charge paid to cover expenses for maintenance of the insurance policy and supply of information on the insurance policy to the insurance buyer.
61 Fund management charge which is used to pay for activities of managing the universal life fund. In any case, the investment ratio at which payment are paid to the insurance buyer must not be lower than the minimum investment ratio committed in the insurance policy.
e/ Insurance policy cancellation charge which means a charge calculated to be incurred by the insurance client who cancels the policy ahead of the date of the policy maturity to cover related reasonable expenses.
Other charges (if any), which must be approved in writing by the Ministry of Finance.
2. Insurance enterprises shall calculate in an accurate, fair and reasonable manner the above charges to suit technical bases of the product already approved by the Ministry of Finance and notify insurance buyers thereof when entering into insurance policies.
3. Universal life insurance policies must clearly state the above charges, including also maximum charge levels to be applicable to insurance buyers. Insurance enterprises shall clearly and fully publicize kinds of charges and maximum charge levels applicable to insurance buyers in product introduction documents and sale explanation documents.
4. In the course of performance of an insurance policy and within the maximum levels stated in the policy, an insurance enterprise may change applicable charge rates after notifying to and reaching a written agreement with the insurance buyer at least three months in advance.
Article 8.- Additionally paid insurance premiums
1. Apart from insurance premiums already agreed in the insurance policy, the insurance buyer may pay additional insurance premiums for joining in the universal life fund.
2. The whole additionally paid premium will be invested in the universal life fund after subtracting an initial charge.
3. In a contract year, the total amount of additionally paid insurance premium must not exceed five times the insurance premium amount of the first year, for insurance policies with periodical premium payments, or 50% of the initial insurance premium, for insurance policies with lump-sum premium payments.
Article 9.- Refundable value
The refundable value of a universal life insurance policy is determined to be the value of that policy in the universal life fund on the date of cancellation of the insurance policy minus the insurance policy cancellation charge.
Article 10.- Setting up and management of the universal life fund
1. An insurance enterprise shall set up a universal life fund for all its universal life insurance policies. The universal life fund must be separated from the owner fund and other policyholder funds of the enterprise.
2. Within 60 days after the first universal life insurance policy is entered into, the insurance enterprise shall ensure that the total value of the universal life fund is not lower than VND 50 billion.
3. If insurance premiums distributed to the universal life fund fail to meet the requirements specified in Clause 2 of this Article, the insurance enterprise shall use part of the owner fund to create initial assets of the universal life fund and may enjoy investment yields in proportion to the money amount it has contributed to setting up the universal life fund. The insurance enterprise may be refunded pan or the whole contributed money amount if the refund satisfies the requirements specified in Clause 2 of this Article.
4. The universal life fund shall be managed and used for investment in compliance with financial regulations applicable to insurance enterprises.
5. Insurance premiums and additionally paid insurance premiums, after subtracting initial charges, must be invested to achieve the objectives of the universal life fund within 60 days after the insurance business receives insurance premiums.
Chapter 3
RESPONSIBILITY OF INSURANCE ENTERPRISES TO DISCLOSE INFORMATION
Article 11.- Information on universal life insurance
1. Insurance enterprises shall disclose in an accurate, sufficient and prompt manner information on universal life insurance policies already entered into to insurance buyers. Information disclosed to insurance buyers must be with universal life insurance products already approved by the Ministry of Finance.
2. Insurance buyers may request insurance enterprises lo supply sufficient information and explain insurance terms and conditions in order to be aware of risks which may arise when entering into universal life insurance policies.
3. Insurance enterprises shall post on their websites the following documents:
a/ Rules and clauses concerning the insurance product approved by the Ministry of Finance; b/ Product introduction document;
c/ Sale explanation document featuring typical cases;
d/Operation of the universal life fund.
