The Committee on Life Insurance Financial Reporting (CLIFR) has prepared this educational note to provide guidance on the selection of coverage units for the purpose of amortizing the contractual service margin for insurance contracts within the scope of the International Financial Reporting Standard (IFRS) 17.
This educational note is structured into four sections. Section 1 introduces the purpose of this educational note. Section 2 introduces the concept of coverage units and provides general considerations with respect to different aspects related to coverage units. Section 3 discusses considerations in the choice of coverage units for typical Canadian insurance product types, namely individual life insurance, annuities, accident and sickness, segregated funds and group insurance. The final section focuses on the principles for establishing coverage units for groups of contracts that combine more than one type of coverage.