NTUC Income AR 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Fund accounting The assets and liabilities of the Co-operative which relate to the insurance business carried on in Singapore are subject to the requirements of the Insurance Act, Chapter 142 (“the Insurance Act”). Such assets and liabilities are accounted for in the books of the insurance funds established under the Insurance Act. Assets held in the insurance funds may be withdrawn only if the withdrawal meets the requirements stipulated in Section 17 of the Insurance Act and the Co-operative continues to be able to meet the solvency requirement of Section 18 of the Insurance Act. Life Insurance Participating Fund (Par Fund) The Life Insurance Par Fund contains all the individual participating life insurance contracts and certain non- participating life insurance contracts. Participating life insurance contracts are contracts that contain a discretionary participating feature (“DPF”). This feature entitles the policyholders to receive additional benefits in the form of annual and terminal bonuses. The amount or timing of the bonus declaration is not guaranteed, and is at the sole discretion of the Group. Life Insurance Non-Participating Fund (Non-Par Fund) The Life Insurance Non-Par Fund contains the health insurance and group term insurance businesses and non-participating life insurance contracts, which also include the IncomeShield plans, ElderShield Scheme and the Dependants’ Protection Scheme. Investment-Linked Fund The Investment-Linked Fund contains the business of all investment-linked insurance contracts. General Insurance Fund The General Insurance Fund contains the business of all the general insurance contracts. Shareholders’ Fund The Shareholders’ Fund contains the capital contributions made by shareholders, net of transfers to and from the insurance funds and net assets relating to other non-insurance businesses. (c) Insurance contracts (i) Recognition and measurement Life Insurance Contracts Premium revenue Premiums from life insurance in-force insurance contracts, including annuities, are recognised as revenue on the due date. The outstanding premiums are included in “Insurance and other receivables” in the statement of financial position. Premiums received in advance before the due dates are not recognised as revenue. They are recorded as advance premiums and included in “Insurance and other payables” in the statement of financial position until they are recognised as revenue when they fall due or when policy is issued. Claims Claims include maturities, annuities, surrenders and death claims. Maturity and annuity claims are recognised as an expense when due for payment. Surrender claims are recognised when paid. Death claims are recognised when notified. All expense charges deducted from the investment-linked insurance contracts are recognised as income by the Life Insurance Par Fund for products introduced prior to 2009. For products introduced from 2009, these expense charges are recognised as income by the Investment-Linked Fund. ANNUAL REPORT 2017 EVERY DAY MADE DIFFERENT 49