Thông tư 135/2012/TT-BTC

CIRCULAR

GUIDING THE PROVISION OF UNIT-LINKED INSURANCE PRODUCTS

Pursuant to the Law on Insurance Business No. 24/2000/QH10 dated December 09^th 2000;

Pursuant to the Law on amending and supplementing a number of articles of the Law on Insurance Business No. 61/2010/QH12 dated November 24^th 2010 ;

Pursuant to the Government's Decree No. 45/2007/NĐ-CP dated March 27^th 2007, detailing the implementation of a number of articles of the Law on Insurance Business;

Pursuant to the Government's Decree No. 123/2011/NĐ-CP dated November 28^th 2011,detailing the implementation of a number of articles of the Law on amending and supplementing a number of articles of the Law on Insurance Business, amending and supplementing a number of articles of  the Government's Decree No. 45/2007/NĐ-CP dated March 27^th 2007, detailing the implementation of a number of articles of the Law on Insurance Business;

Pursuant to the Government's Decree No. 118/2008/NĐ-CP dated November 27^th 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of the Director of the Department of Insurance Management and Supervision

The Minister of Finance promulgates a Circular to guide the implementation of unit-linked insurance products.

Chapter I

GENERAL PROVISIONS

Article 1. Subjects and scope of regulation

This Circular prescribes the implementation of unit-linked insurance products of the enterprises providing life insurance (hereinafter referred to as insurers), relevant organizations and individuals in the Socialist Republic of Vietnam.

Article 2. Unit-linked insurance

Unit-linked insurance product is a type of life insurance belonging to investment-linked insurance and have the following characteristics:

1. The insurance premium and insurance benefit are separated between the risk insurance and the investment. The insurance buyer may determine the insurance premium and the indemnity as agreed in the insurance contract.

2. The insurance buyer is entitled to invest their insurance premium to purchase the units of the unit-linked fund established by the insurer, and enjoy the investment benefits as well as incur the investment risk from the unit-linked funds chosen, proportional to the insurance premium invested. The purchase and sale of fund units are done between the insurer and the insurance buyer.

3. The insurer shall receive the payment made by the insurance buyer as agreed in the insurance contract.

Article 3. Interpretation of terms

1. Unit-linked funds are funds established from the insurance premium paid by the insurance buyer, applicable to the unit-linked insurance contracts, and are part of the policyholder fund.

2. Units of a unit-linked fund are assets of the unit-linked fund that is divided into equal parts.

3. The sale price is the price of a unit of the unit-linked fund sold by the insurer to the insurance buyer.

4. The puchase price is the price of a unit of the unit-linked funds purchased from the insurance buyer by the insurer.

5. The valuation day is the day when the insurer determing the purchase price and sale price of the units of the unit-linked fund.

6. The next valuation day is the valuation day after the day the insurer receives the request for purchasing or selling the units of the unit-linked fund from the insurance buyer.

Article 4. Requirements for insurers to provide unit-linked insurance

The providing unit-linked insurance, the insurer must satisfy the following conditions:

1. The solvency margin of the insurer must be at least 200 billion VND higher than the minimum solvency margin. The contributed charter capital must be at least 200 billion VND higher than the legal capital.

2. The information technology system is suitable for managing and controlling the unit-linked funds carefully and efficiently.

3. The insurer is able to valuate the assets and the units of the unit-linked funds objectively and accurately at least every week, and notify the purchase price and sale price of the fund units to the insurance buyers.

4. The unit-linked insurance agents are carefully selected, and satisfy the requirements prescribed in Article 34 and Article 35 of this Circular.

5. The unit-linked insurance product is approved by the Ministry of Finance.

Chapter II

GENERAL PROVISIONS

Section 1. The insurance

Article 5. Unit-linked insurance products

1. The insurer must comply with the regulations in this Section and laws when designing unit-linked insurance products.

2. Name of unit-linked insurance names and unit-linked funds must be clear and suitable for the property of the products, the target of investing the assets of each unit-linked fund, and ensure that the insurance buyer may distinguish them from other products.

3. A unit-linked insurance contract is valid for at least 10 year.

4. The language used in the documents and information relevant to the unit-linked insurance product is Vietnamese. The documents introducing the products, the illustrating documents must use the font Time New Roman, the minimum font size is 12, or other fonts with equivalent font size in conformity with this Circular.

Article 6. Unit-linked insurance benefit

1. The benefit according to the unit-linked insurance contract must include the risk insurance benefit and investment benefit. Depending on the agreement between the insurer and the insurance buyer, the insurer may include more insurance benefit.  The insurance buyer may not participate in investment benefit without participating in risk insurance benefit.

2. The risk insurance benefit: the insurer and the insurance buyer shall reach an agreement on the risk insurance benefit, but the minimum benefit in case the insured dies must be ensured, in particular:

a) For insurance contracts paid in a lump-sum: 50,000,000 VND, or 125% of the insurance premium paid in a lump sum (whichever is bigger);

b) For insurance contracts paid periodically: 50,000,000 VND, or 5 times of the insurance premium annually paid, depending on which one is larger;

c) The insurer may provide the death benefit with a indemnity lower than the minimum amount prescribed above, applicable to the insured at the age of 60 or aboce, but must not be lower than 50,000,000 VND;

d) The regulation on the minimum death benefit is not applicable to the additional insurance premium prescribed in Article 8 of this Circular;

dd) The insurer may provide supplement insurance for unit-linked insurance. The method of paying the insurance premium for the supplement insurance shall be agreed by the parties when concluding the contract.

3. Investment benefit: the insurance buyer is entitled to invest their insurance premium in the unit-linked funds established by the insurer, and enjoy the investment benefits as well as incur the investment risk from the unit-linked funds chosen. proportional to the insurance premium invested.

4. The insurer and the insurance buyer reach an agreement on the content and method of paying the insurance benefit upon occurrence of the insured event as prescribed in Clause 2 and Clause 3 this Article.

Article 7. Fees

1. The insurer may only collect the following fees:

a) Initial fee is the amount that the insurer may deduct before the insurance premium is distributed to unit-linked funds;

b) The risk insurance fee is the fee for paying risk insurance benefit as agreed in the insurance contract;

c) The insurance contract management fee is the fee for defraying the cost of maintaing the insurance contract and providing information relevant to insurance contracts for the insurance buyer;

d) The fund management fee is used for paying for the management of the unit-linked funds;

dd) The unit-linked fund transfer fee is the fee that the insurance buyer must pay to the insurer when transferring the investment assets among the the unit-linked fund. The insurance buyer may transfer the unit-linked fund for free for the first time of each contractual year;

e) The contract termination fee is the fee paid by the client when terminating the contract before it matures in order to cover the relevant costs;

g) Other fees (if any) must be approved in writing by the Ministry of Finance.

2. The insurer must accurately, equitably, and reasonably calculate the fees above, suitable for the products approved by the Ministry of Finance, and inform them to the insurance buyers when concluding contracts.

3. the unit-linked insurance contract must specify the maximum fees incurred by the insurance buyer. The enterprise must completely announce the fees, the method of calculation, and the ratio of maximum fees incurred by insurance buyers in the introduction documents and illustrating documents.

4. During the performance of the contract, and within the limits agreed in the insurance contract, the insurer may change the ratio of the fees after notifying the insurance buyer and the Ministry of Finance in writing at least 3 months before the official change.

Article 8. Additional insurance premium

1. Apart from the periodic insurance premium agreed in the insurance contract, the insurance buyer may pay additional insurance premium to purchase the units of the unit-linked fund.

2. After dedecting the initial fee, the additional insurance premium shall be invested in the corresponding unit-linked fund according to the selection of the insurance buyer, and used for purchasing fund units at the sale prices determined in the valuation day succeeding the day of paying additional insurance premium.

3. In each contractual year, the total additional insurance premium must not exceed 10 times of the insurance premium of the first year, applicable to instalment contracts, or not exceeding the first insurance premium, applicable to lump-sum contracts.

Article 9. The unit-linked funds of lump-sum insurance contracts

For lump-sum insurance contracts, the insurer must design the insurance product to ensure that the insurance premium paid by the insurance buyer is only able to purchase the units of the funds of which the proportion of the investment inform of bank deposit, Government bonds, and other securities that generate fix incomes, is not lower than 60% of the total value of the assets of such unit-linked funds.

Article 10. Refund value

The refund value of a unit-linked insurance contract is determined based on the purchase price of the units of the unit-linked fund on the valuation day succeeding the day of terminating the insurance contract, after deducting the fee for terminating the insurance contracts.

Article 11. Requirements for insurers to provide unit-linked insurance

1. The insurer must obtain the written approval from the Ministry of Finance before implementing the unit-linked insurance products.

2. The dossier of application for implementing the unit-linked insurance product is composed of:

a) The written application for approving the unit-linked insurance product, made according to the form in Annex I of this Circular;

b) The plan and the explanation for the provision of the unit-linked insurance products in the next 03 years, including:

- Analyzing the insurance market, the finance market, and the client demand;

- Forecasting the market in the next 03 years;

- Summarizing the main content of the unit-linked insurance product planed to be provided, including the information aobu the target market of the products, the insurance benefit, the investment benefit, and the minimum indemnity;

- The areas planned to provide the unit linked insurance products;

- Anticipating result of the insurer and the unit-linked insurance product within the next 03 years, including the income, costs, profit, and solvency of the insurer and unit-linked funds;

- Explaning the technical facilities for providing unit-linked insurance products, including: the information technology system, the accounting system; the process of selecting, training, and managing the distributing agents of unit-linked insurance product; the content and training program for insurance agents about the unit-linked insurance products planned to be provided, the list and documents of the trainers for the unit-linked insurance agents, the method of managing the distribution agents of unit-linked insurance products;

- The unit-linked funds, the methods of analysis, and the sources of the analysis data, the investment policy planned to be applied to the assets of each unit-linked fund by the insurer ;

- The foundation for distributing the insurance premium and costs among the unit-linked funds;

- The plan of the insurer for settling the unit-linked funds in case the client claims the indemnity upon the occurrence of the insured event; the client terminates the insurance contract ahead of time, the client wishes to withdraw part of the insurance premium, advance from the refund value, insurance contracts maturity, the client requests the transfer of the unit-linked fund; the unit-linked fund is incorrectly valuated, and other cases in the terms and conditions of the products approved by the Ministry of Finance.

c) The written commitment enclosed with the detailed explanation for the fulfillment of the conditions prescribed in Article 4 of this Circular;

d) The rules, terms and conditions, and fees for the unit linked insurance products to be provided;

dd) The technical bases of the unit-linked insurance product to be provided, specifying the formula, method, and explanation for the technical bases for calculating prices and technical reserve of the unit-linked insurance product to be provided;

e) The documents introducing the product, the illustrating documents, the form of the request for insurance, the form of the insurance certificate, and other papers that the client must fill and sign when buying insurance;

g) The qualifications proving the education, proficiency, and experience of the members of the Investment Council;

h) The qualifications and certificates proving the education and proficiency of the leader of the team in charge of providing the unit-linked insurance product.

3. The application for approving the unit-linked insurance product must be signed by the legal representative and the actuary of the insurer.

4. In case the insurer applies for providing a new unit-linked insurance product other than the approved one, the dossier of application for approving the new unit-linked insurance product does not include the documents prescribed in Point b, g, and h Clause 2 this Article, unless such documents are changed compared to the last time the unit-linked insurance product is approved by the Ministry of Finance.

Section 2. Concluding the unit-linked insurance contract

Article 12. Analyzing the demand for insurance of the client

1. Before concluding a insurance contracts, the insurer must analyze the demand and the ability to buy insurance of the client to provide consultancy about the insurance product and the insurance premium suitable for the financial condition and the future financial demand of the client.

2. The insurer must issue a form of client demand analysis and a set of questions to assess the investment risk acceptance of the client. Based on the information provided by the client when answering the questions, the insurer must determine the investment risk acceptance of the client, according to the following 5 groups of clients: the group of safe investment, the group of relatively safe investment, the group of neutral investment; the group of relatively risky investment, the group of risky investment The client must sign the sheet of assessment of investment risk acceptance.

3. The client must sign and certify that they completely understand the insurance products that they want to buy, are aware of the insurance benefit, investment benefit, and the investment risk thay they may encounter, and the fees charged by the insurer.

4. The insurer must check the result of information provision, and provide consultancy about the unit-linked insurance product to their clients in accordance with law and the internal process of providing the unit-linked insurance product.

Article 13. The insurance contract

The unit-linked insurance contract must be conformable with law and contain the following information:

1. The benefit and mechanism for biding such benefit with the operation of the unit-linked fund selected by the insurance buyer;

2. The investment policy and target of the unit-linked funds;

3. The unit-linked funds selected by the insurance buyer, and the proportion of insurance premium used for buying the units of the unit-linked funds;

4. The proportion, the specific amount, the maximum limit, and the method of calculating the fees relevant to the unit-linked insurance contract;

5. The method and the period of valuation the units of unit-linked funds:

6. The selection for the insurance buyer to change the risk benefit, the proportion of insurance premium distributed to the unit-linked funds, the insurance premium, the transfer among the unit-linked funds and the extension of the deadline for paying insurance premium.

7. Specifying the cases where the insurer may take the measures below to protect and enhance the benefit of the insurance buyer:

a) Closing the unit-linked fund to transfer the assets to a new unit-linked fund with the same investment target;

b) Chaning the name of the unit-linked fund;

c) Dividing, splitting, or merging the existing units of the unit-linked fund;

d) Stopping valuating the units of the unit-linked fund and the transactions relevant to the insurance contract in case the transaction at the Stock Exchange in which the unit-linked fund is investing is suspended;

dd) Other measures at the request of competent State agencies and laws.

When taking the measures prescribed in Point a, b, c and dd Clause 7 this Article, the insurer must send report to the Ministry of Finance, and notify the insurance buyer in writing at least 3 days before the application.

Article 14. Rights and obligations of the insurance buyer

1. The insurance buyer is entitled to:

a) Request the insurer to completely provide the information and explain the terms and conditions of insurance so as to be aware of the relevant risks before concluding the unit-linked insurance contract;

b) Consider the terms and conditions of the insurance contract within at least 21 days as from receiving the insurance contract. While considering, if the insurance buyer wishes to terminate the insurance contract, the insurer must return the entire insurance premium paid after deducting the cost of health examination (if any);

c) Temporarily stop paying insurance premium after the insurance contract takes effect as agreed in the insurance contract. After the client stops paying insurance premium, the insurance contract is in force, the risk management fee and contract management fee shall be deducted from the monthly account of the client;

d) Withdraw part or all the asset value of the contract as agreed in the insurance contract;

dd) Transfer the unit-linked fund by transferring part or all the value of the fund units of the insurance contract from one unit-linked fund to another in a distribution ratio requested by the insurance buyer;

e) Change the proportion of investment in the unit-linked funds as agreed in the insurance contract.  The change is applicable to the paid insurance premium after the change is requested and in the ratio accepted by the insurer;

g) Change the indemnity as prescribed by the insurance contract, unless insurance premium is temporarily stoped being paid.  The increase or decrease of the indemnity only takes effect in the next contractual year after the request of the insurance buyer is accepted;

h) Change the insurance premium as prescribed by the insurance contract. The increase or decrease of the insurance premium only takes effect in the next contractual year after the request of the insurance buyer is accepted; The decreased insurance premium must not be lower than the minimum insurance premium prescribed by the insurer;

i) Terminate the insurance contract before the time agreed in the insurance contract;

k) Recover the insurance contract within 02 years as from the closest date the insurance contract is void;

l) Receive the annual reports relevant to the insurance contract, the unit-linked fund and other relevant information as prescribed  by law;

m) Other rights prescribed in the rules and conditions of the unit-linked insurance product approved by the Ministry of Finance.

2. The insurance buyer is obliged to:

a) Provide sufficient and accurate information requested by the insurer in the request for insurance;

b) Read the introduction documents and illustration documents carefully, and sign the docuemtns provided by the insurer;

c) Pay the insurance premium as agreed in the insurance contract;

d) Fullfill other obligation according to the agreement made by the insurer and the insurance buyer in accordance with the terms and condititons of the unit-linked insurance product approved by the Ministry of Finance.

Article 15. Rights and obligations of the insurer

1. The insurer is entitled to:

a) Collect the fees as prescribed in Article 7 of this Circular;

b) Choose a fund management company and a supervising bank to manage the unit-linked funds;

c) Other rights as prescribed by current laws.

2. The insurer is obliged to:

a) Adhere to the commitment as agreed in the unit-linked insurance contract.

b) When the client’s account is not sufficient for paying the risk insurance fee and the contract management fee for the next month, the insurer must notify the status of the insurance contract to their client;

c) Completely, accuarately, promptly, and clearly record the information of each clients relevant to the conclusion and performance of the unit-linked insurance contract;

d) Other obligation as prescribed by current laws.

Section 3. Establishing and managing the unit-linked funds

Article 16. Unit-linked funds

1. The insurer must establish at least 02 unit-linked fund with different investment targets for each unit-linked insurance product.

2. The insurer must ensure that the assets derived from unit-linked fund must be separated from the owner’s fund, the policyholder’s fund, and among the unit-linked funds of the insurer.

3. After 60 days as from the signing date of the first unit-linked insurance contract, the insurer must ensure that the total value of the unit-linked fund is never lower than 100 billion VND.

4. In case the insurance premium being distributed to the unit-linked fund does not satisfy the requirements in Clause 3 this Article, the insurer must use part of the owner’s fund to make up the assets of the unit-linked fund, and may enjoy the investment benefit proportionally to the amount contributed to the establishment of the unit-linked fund. The insurer may return part or all the contributed amount if such return satisfy the requirements in Clause 3 this Article.

5. The insurance premium and the additional insurance premium, after deducting the initial fees, must be invested in accordance with the targets of the unit-linked fund within 60 days as from the insurer receives the insurance premium.

6. In any case, the unit-linked fund must be managed and invested in accordance with the investment policy, targets, and the financial regime applicable to the insurers.

Article 17. Targets of unit-linked funds;

1. The targets of the unit-linked funds must be clear and specific so that the insurance buyer may objectively assess the efficiency of the unit-linked fund as well as the characteristics of the assets in the unit-linked fund, and the risks that the unit-linked fund may face.

2. The insurer must ensure that the unit-linked fund is invested in accordance with the announced targets, and adhere to the investment limits as prescribed by law and Article 18 of this Circular..

3. The targets and method of distributing the invested assets of the unit-linked fund must be completely and evidently provided in the introduction documents and the insurance contracts.

Article 18. Investment limits of unit-linked funds

1. The investment portfolio of a unit-linked fund must be congruent with the investment policy and targets specified in the terms, conditions, and technical bases of the products approved by the Ministry of Finance.

2. The structure of a unit-linked funds must satisfy the following requirements:

a) Each unit-linked fund must not invest in more than 10%   of the total circulating securities of a issuing organization, except for Government bonds;

b) Each unit-linked fund must not invest more than 20% of the total assets of the fund in the circulating securities of a issuing organization, except for Government bonds;

c) The assets of a unit-linked fund must not be directly invested in real estate, gold, silver, precious metal, and gems;

b) Each unit-linked fund must not invest more than 30% of the total assets of the fund in the companies in the same corporation or a group of companies under mutual ownership;

dd) Do not invest in the securities investment funds and shares of the investment companies established and operated in Vietnam.

3. The investment structure of a unit-linked fund must not vary more than 15% of the investment limits prescribed in Clause 2 this Article. The variations must be the results of the increase or decrease of the value of the investment assets, and the legitimate payment s of the unit-linked fund. In this case, the unit-linked fund must not invest in the assets subject to variation, and within 03 months as from the variation occurs, the insurer must request the fund management company to adjust the investment portfolio in order to ensure the investment limits prescribed in this Article.

The enterprise must sent written reports to the Ministry of Finance, and inform the insurance buyer of the reasons of such variations, the remedial measures, and the results.

4. If the variation is occurs because the insurer or the fund management company does not adhere to the investment limits prescribed in this Article, or the investment policy and targets of the unit-linked fund stated in the technical foundation, the insurer must request the fund management company to adjust the investment portfolio within 15 days as from the variation occurs.

5. The insurer are responsible for paying compensation for the damage caused for the insurance buyer and unit-linked fund in the following cases:

a) Not adhering to the investment pocity and targets specified in the terms, conditions, and technical foundation of the products approved by the Ministry of Finance, or

b) Investing in the restricted assets, or exceeding the investment limits prescribed in this Article.

6. The compensation paid to the insurance buyer and the unit-linked fund is determined based on the actual damage. In case the investments in Clause 5 this 5 generate make profits, the insurer must transfer all profits to the unit-linked fund.

Article 19. Valuating unit-linked funds

1. The insurer must periodically valuate the assets of the unit-linked fund at least evey week, according to the market price or reasonable value (in case the market price is not available) of the assets in the investment portfolio of the unit-linked fund.

2. The valuation of the net asset value of the unit-linked fund must adhere to the rules prescribed in Article 18 and 19 of the Circular No. 183/2011/TT-BTC dated December 16^th 2011 of the Ministry of Finance, guiding the establishment and management of open funds, and the documents amending, supplementing, and superseding the documents above (if any).

3. The supervising bank legally established and operated in Vietnam shall approve the net asset value of the unit-linked fund.

4. The insurer is responsible for any mistake when valuating the units of the unit-linked fund, and must pay compensation to the insurance buyer and the unit-linked fund for the damage caused during the trade of the fund units due to the error when the margin of error reaches:

a) At least  0.25% of the net asset value, when investing in shares;

a) At least 0.75% of the net asset value, when investing in bonds;

a) At least 1.00% of the net asset value, when investing in other assets.

5. In case the fund units are improperly traded when valuating units of the unit-linked fund, the compensation paid to the insurance buyer and unit-linked fund is calculated as follows::

a) If the fund is undervalued, the compensation paid to the insurance buyer and the unit-linked fund is determined nsh:

- If the insurance premium is distributed for purchasing the fund units before the fund is incorrectly valuated, and the fund units have been sold when while the fund is incorrectly valuated, then the compensation paid to the insurance buyer shall be determined based on the margin of error and the amount of fund units sold by the insurance buyers;

- If the insurance premium is distributed for purchasing the fund units while the fund is incorrectly valuated, and they are still held after the fund is incorrectly valuated, then insurer shall pay compensation to the unit-linked fund, the the compensation is be determined based on the margin of error and the amount of fund units purchased and held after the incorrect valuation by the insurance buyers;

a) If the fund is overvalued, the compensation paid to the insurance buyer and the unit-linked fund is determined as follows:

- If the insurance premium is distributed for purchasing fund units before the fund is incorrectly valuatedm and the fund units are sold while the fund is incorrectly valuated, then the insurer shall pay compensation to the unit-linked fund, the compensation is determined based on the margin of error and the amount of fund units sold by the insurance buyers while the fund is incorrectly valuated;

- If the insurance premium is distributed for purchasing the fund units while the fund is incorrectly valuated, and they are still held after the fund is incorrectly valuated, then the compensation is be determined based on the margin of error and the amount of fund units purchased and held after the incorrect valuation by the insurance buyers;

c) The compensation paid to the insurance buyer and the unit-linked fund must be included in the costs of unit-linked fund of the insurer.

6. The insurer must report the plan for correcting the error when vaulating fund unit to the Ministry of Finance within 03 working days as from the discovery of the error. Within 15 working days as from reporting btc, the insurer must pay compensation for the damage to the insurance buyer and the unit-linked fund.

Article 20. Calculating the sale price and purchase price of units of unit-linked funds

1. The sale price and purchase price of units of the unit-linked fund are determined based on the net asset value of each unit of the unit-linked fund on the next valuation day, after the insurer is receives the purchase or trade order from the unit-linked fund. The difference between the sale price and purchase price of units of a unit-linked fund must not exceed 5% of the sale price.

2. The net asset value of each unit of the unit-linked fund equals the total value of the assets in the unit-linked fund minus the relevant debts, divided by the quantity of units of the unit-linked fund.

Article 21. The process of selling and purchasing units of unit-linked funds

1. The insurance buyer is entitled to purchase more or sell the units of the unit-linked fund to the insurer. The units of the unit-linked fund may be sold or additionally purchased via a insurance agent, or directly by the insurance buyer and the insurer at the head office, branch, representative office, or customer care center of the insurer.

2. The insurance buyer may purchase more units of the unit-linked fund when the following requirements are satisfied:

a) The insurance contract of the insurance buyer is unexpired, and the money for additional purchase satisfy the requirements in Clause 3 Article 8 of this Circular;

b) Having a written request for purchasing more units of the unit-linked fund made according to the form of the insurer, specifying the money for additional purchase of units of the unit-linked fund and the percentage in each unit-linked fund and sign on the written request for additional purchase of units of the unit-linked fund.

3. The insurance buyer may sell units of the unit-linked fund when the following requirements are satisfied:

a) The insurance contract of the insurance buyer is unexpired, and the quantity of fund units being sold satisfies the requirements for the minimum amount of money set by the insurer when selling units of the unit-linked fund of the insurance buyer;

b) Having a written request for selling units of the unit-linked fund made according to the form of the insurer, specifying the money for additional purchase of units of the unit-linked fund and the percentage in each unit-linked fund and sign on the written request for additional purchase of units of the unit-linked fund.

4. The insurer must settle the request for purchasing or selling the units of the unit-linked fund on the next valuation day. The sale price or purchase price of units of the unit-linked fund is determined as prescribed in Article 20 of this Circular.

5. The account value according to the unit-linked insurance contract of the insurance buyer is changed when the units of the unit-linked fund are soled, starting from the day the insurer determines the purchase price or sale price, and finish the sale or the purchase of units of the unit-linked fund as requested by the insurance buyer.

6. The insurer must not reject the additional purchase or sale of units of the unit-linked fund when the insurance buyer has satisfied the requirements in Clause 2 and Clause 3 this Article.

Article 22. The Investment council

1. The insurer must establish an Investment council to perform the following tasks:

a) Approving the investment process, policy, and regulation of each unit-linked fund in the most prudent manner in order to ensure the safety of the assets in the unit-linked fund, and suit the investment strategy and target of each unit-linked fund that have been informed to the clients.  All changes in the process, policy, and regulation of each unit-linked fund must be approved by the Investment council before the application;

b) Making decisions on closing a unit-linked fund to transfer the assets to a new unit-linked fund with the same investment target; changing the name of the unit-linked fund; dividing, splitting, or merging the existing units of the unit-linked fund, suspending the valuation of units of the unit-linked fund and the transactions relevant to the insurance contract in special cases are specified in the insurance contract in order to ensure the benefits of the insurance buyer;

c) Approving the selection of investment assets in conformity with the investment limits in Article 18 of this Circular;

d) Other tasks at the request of competent State agencies and laws.

2. The Investment council is composed of at least 3 members, including:

a) 1 actuary of the insurer;

b) 1 member that possesses the certificate of Chartered Financial Analyst (CFA), or an equivalent qualification, and have worked in the management of open funds or unit-linked funds for at least 3 years;

c) 01 lawyer, proficient in investment laws.

3. The Investment council must hold quarterly meetings, and may hold irregular meeting at the request of the insurer. The Decisions made by the Investmet council shall be voted in direct meetings, telephone-based meetings, internet-based meetings, via audio-visual media, or in written opinions.

Article 23. The fund management company

1. The insurer that provides a unit-linked insurance product must authorize a fund management company experienced in managing funds in order to invest the assets of the unit-linked funds in accordance with the investment strategy, limits, and target of each one, and in conformity with law.

2. The insurer must open and separate the investment assets of its unit-linked funds from their other funds and from the clients’. The fund management company must not use the assets of the unit-linked fund to make any transaction or for any purpose other than that prescribed in the authorization of the insurer.

3. At least every week, according to the authorization, and before the next valuation day, the fund management company must provide information about the value of investment assets to the insurer, cooperate with the supervising abnk and the insurer to periodically valuate the net asset of the unit-linked fund and the net asset of a unit of the unit-linked fund, and send reports about the investment porfolion, the valuation, and the operation of the unit-linked fund in accordance with this Circular, in the Circular No. 183/2011/TT-BTC dated December 16^th 2011 of the Ministry of Finance, guiding the establishment and management of open funds, and the authorization contract between the insurer and the fund management company.

The insurer shall compare the investments of the fund management company and the depository account in the bank, ensuring the consistency of the balance of the individual accounts and the net asset value of thee unit-linked fund.

4. The fund management company is responsible for for any error or damage caused by incorrect valuation according to the authorization contract of the insurer about the management of unit-linked funds.

Article 24. The supervising bank

1. The insurer must hire a supervising bank to perform the following tasks:

a) Deposit the assets of unit-linked funds as prescribed in the Circular No. 183/2011/TT-BTC dated December 16^th 2011 of the Ministry of Finance, guiding the establishment Decree management of open funds;

b) Supervising the asset management of unit-linked funds of the insurer or the fund management company authorized by the insurer in accordance with the investment limits, the investment target of the insurer, and current law provisions. When detecting a violation of laws and the investment trust contract, the supervising bank must immediately notify the Ministry of Finance (the Department of Insurance Management and Supervision) and notify the fund management company within 24 hours as from detecting the violation, and request the rectification or remedial measures within a specified period;

c) Supervising, ensuring the legitimacy and appropriateness of the payments made from the fund assets;

dd) Cooperate with the insurer and the fund management company in periodically reviewing the net asset value, valuating the unit-linked fund, and the net asset value of a unit of the unit-linked fund, ensuring that these values are accurately and legally calculated;

dd) Supervising and appraising the consolidation, merger, dissolution, and liquidation of assets of unit-linked funds when the insurer is allowed to take such measures;

2. The assets of the unit-linked fund at the supervising under the name of the insurer is the assets under the ownership of the unit-linked fund, not the supervising bank or the fund management company. The supervising bank must not use the assets of the unit-linked fund for making payment or underwriting payment for their debts or for a third party.

3. The supervising bank must make and deposits the documents in the form of paper and electronic files for 10 years, in order to certify the conformity of the fund management company and the insurer to the investment target of the unit-linked fund and to the law. These documents must be provided when the Ministry of Finance requests in writing.

Section 4. Providing information about the insurer

Article 25. Introduction documentss

The introduction documents are compiled by the insurer, and must be used in accordance with law and the regulations below:

1. The information in the introduction documents must be accurate, objective, sufficient, and suitable for the unit-linked insurance product is approved by the Ministry of Finance.

2. Apart from the general regulations in life insurance, the documents introducing the unit-linked insurance product must at least contain the following information:

a) Introducing the basic characteristics of the unit-linked insurance plan;

b) The existing types of unit-linked funds of the insurer, the investment policy of each unit-linked fund, the invesment assets, the proportion of distributing the investment asset of each fund, and the characteristics of investment risks;

c) The benefits according to the unit-linked insurance contract shall vary according to the operation of the unit-linked funds, and the insurance buyer may enjoy all the investment result, and incur all the investment risks from the selected unit-linked funds proportionally to the value of the contract in the unit-linked funds;

d) In some cases, the insurer may suspend the sale or purchase of units of the unit-linked fund;

dd) The proportion of distributing insurance premium for purchasing units of the unit-linked fund, the method of calculation, and the maximum limits of the initial fee, fund management fee, risk insurance fee, insurance contract management fee, and other fees. The information above must have examples about the method of distributing insurance premium for purchasing units of the unit-linked fund;

e) All guaranteed benefits of the insurance buyer must be specified, including death benefit, maturity benefit, and contract termination. The non-guaranteed benefits must be notified to the insurance buyer by the insurer;

g) The foundation and the period of valuating the assets of the unit-linked funds;

h) The result of the existing unit-linked funds in the last 05 fiscal years, or the entire period that the fund has operated if such period is shorter tha 5 years. The insurer must state that the information above is the results in the past and for reference only, not the foundation for ensuring the result of the unit-linked funds in the future. The referred investment results in the past must suit the unit-linked insurance product and the unit-linked funds being introduced;

i) Notice the insurance buyer that the conclusion of the unit-linked insurance contract is a long-term commitment, and the insurance buyer should not terminate the insurance contract be cause the fee payable by the insurance buyer might be very high in the early period of the contract;

k) Notice the insurance buyer to comply with the regulations in the insurance contract in order to ensure their rights and interests.

Article 26. Illustrating documents

The illustrating documents must comply with law and the regulations below:

1. The documents illustrating the unit-linked insurance product must be provided to the client before concluding the insurance contract, and contain the least information according to Annex II of this Circular.

2. The insurer must explain the benefits that the insurance buyer may have when concluding the insurance contract, including the risk insurance benefit and the benefit derived from the unit-linked funds, even the income of the unit-linked fund is negative.

3. The actual investment ratio of each unit-linked fund must be separately calculated every year. The actual investment ratios are calculated based on the net interest of the unit-linked fund in the last 05 years, or the period that the unit-linked fund have been operated if it has not operated for 05 years. The insurer must explain that the enumeration of the investment ratios regardlessof the difference between the sale price and purchase price or other fees may be included for the insurance buyer.  The insurer must not illustrate the investment benefit longer than 20 years.

4. The fees and maximum limits payable by the insurance buyer must be specified, and separated from the insurance premium for risk insurance benefits and other fees.

5. In case the unit-linked insurance contract has supplementaty insurance benefit, the insurer must explain them in the illustrating documents, and their effects on the insurance buyers.

6. The illustrating documents must be evident and comprehensible, without making the insurance buyer have unrealistic expectation on the about the amount of money that they may receive.

Article 27. Providing information to the insurance buyer

1. The insurer must accurately, sufficiently, and promptly provide the information relevant to the concluded unit-linked insurance contract for the insurance buyer. The information provided for the insurance buyer must be congruent with the unit-linked insurance product approved by the Ministry of Finance.

2. The insurer must provide the following documents on its website:

a) The terms and conditions of the insurance products approved by the Ministry of Finance;

b) The introduction documents;

c) The documents illustrating the typical cases;

d) The operation of the unit-linked fund;

dd) The prices of units of the unit-linked fund as prescribed in Article 19 and Article 20 of this Circular.

Article 28. Informing the contract status to the insurance buyer

Within 90 days as from the end of the fiscal year or the contractual year, the insurer must provide the following information to the insurance buyer in writing:

1. The status of the unit-linked insurance contract, including:

a) The quantity and value of the fund units being held at the beginning of the reported year;

b) The total insurance premium paid and the insurance premium distributed for purchasing the fund units in the reported year;

c) The details of each fee paid by the client in the year;

d) The quantity and value of the fund units being purchased and sold in the reported year;

dd) The amount of money that the clients has withdrawn from the value of the contract account, the loans from the insurance contract (if any)

e) Prices, quantity, and value of the fund units being held at the end of the reported year;

g) The risk insurance benefit and the refund value at the beginning of the reported year;

h) The risk insurance benefit and the refund value at the beginning of the reported year.

2. The result of each unit-linked fund of which the fund units are held by the insurance buyer, in particular:

a) The summary about the financial status of the unit-linked fund made according to the form in Annex III of this Circular;

b) The analysis of the results of the unit-linked funds, including:

- The investment tagets of the unit-linked funds and the method of distributing assets at the reported time;

- The change of the investment target (if any), and the limitations of the unit-linked funds in the year;

- The analysis about the operation, regarding the net investment ratio, of the unit-linked fund in the last 05 years, or the period that the unit-linked fund have been operated if it has not operated for 05 years;

- The expenditures relevant to unit-linked funds, and the expenditures arising in the year;

- The details about the interest that has been and will be distributed in the reported year; and the effect of the net asset value on each units of the unit-linked fund before and after distributing the interest;

- The assessment of the prospect of the investments, and the anticipated investment policy of the unit-linked fund; and some cases that may change such prospect assessment;

- The indices relevant to the sectors in which the unit-linked funds are investing;

- The certification of the above information given by an independent audit company.

Article 29. Announcing the price of units of the unit-linked fund

1. The insurer must provide the following information on at least one central newspapaer and on its website every week:

a) The sale price of units of the unit-linked fund;

b) The purchase price of units of the unit-linked fund;

c) The net asset value of each unit of the unit-linked fund.

2. The information provision in Clause 1 this Article must suit the period of valuating the units of the unit-linked fund of the insurer, and be done on the working day succeeding the valuation day. The insurer must ensure that their clients may access the values of the fund units of the contiguous weeks in the previous 03 years on their website.

Article 30. Regulations on the information provision and advertisements for unit-linked insurance product

1. The insurer may provide information and  and advertise their unit-linked insurance products as prescribed by law, and bear responsibility for the information provided.

2. The insurer and relevant organizations and individuals must not advertise or providing information about the unit-linked insurance product that have not been approved by the Ministry of Finance.

3. The advertisements must be displayed in Vietnamese, comprehensive, and unequivocal; the information must be correct, objective, and up-to-date. The jargons and terminologies must be explained.

4. The advertisements must be evident, without misleading into thinking that unit-linked funds are financial instruments that generate steady income or guarantee profits. The advertisement and introductions must not contain the opinions that mislead the clients into thinking that the investment value is always increasing; must not commit or forecast the positive investment results of unit-linked funds in the future.

5. The insurer and insurance agents must not compare the advertisements and guarantee that one unit-linked fund will give better results than another or that of another insurer.

6. The use of the opinions and assessments from a third party, or poll results, or rankings to advertise and introduce the unit-linked insurance product, the insurer and relevant organizations and individuals must ensure that:

a) The opinions, assessments, poll results, and rankings must be reliable, objective, and based on real comparison, data, and facts;

b) The opinions, assessments, poll results, and rankings must be announced or organized by an accredited provider of financial information and statistics services;

c) The reference sources, including the document names, the publishers, and the time of publishing must be specified;

d) The rankings and poll results are given within one year (12 months) as from the unit-linked insurance product is voted, ranked, or awarded.

7. The information and advertisements for a unit-linked insurance product must not imply that a State management agency guarantees the information, the advertisements the investment strategy and target of the unit-linked fund, the assets of the unit-linked fund, the value of fund units, the profitability, and the level of risks of the unit-linked fund.

The insurer must not emply tha name, symbol, image, position, reputation, and mails of State management agencies, officers and officials in State management agencies, the thank-you letters from clients to advertise, introduce, and offer the unit-linked insurance products.

8. The following recommendations in the information and advertisements for the unit-linked insurance products must be boldly and evidently printed, and the font size thereof must not be smaller than that of the other content:

a) Clients must carefully read the introduction, the illustrating documents, the terms and conditions before buying the unit-linked insurance product, and pay attention to the fees of the product;

b) The unit-linked insurance product is different from other traditional insurance products, and clients must incur all the investment risks proportional to the paid insurance premium, according to the kind of risk of the unit-linked fund chosen by the clients;

c) The account value of the insurance contract may vary depending on the market, and clients may lose the paid insurance premium in case of investment makes a loss;

d) The information about the results of the previous unit-linked funds (if any) is for reference only, and does not meant these funds will generate a profit in the future.

Section 5. The solvency, the technical reserve, and reporting regime

Article 31. The solvency

1. The insurer must maintain the solvency as prescribed by law.

2. The minimum solvency margin of unit-linked insurance contracts equals 1.5% of the technical reserve plus 0.3% of the risk insurance premium.

3. The solvency margin of the insurer must be 200 billion VND higher than the minimum solvency margin.

Article 32. Making technical reserve

1. The insurer must make the technical reserve as follows:

a) Mathematical reserve, comprising:

- Insurance risk reserve: is the bigger number between the unearned premium reserve or the cash flow reserve in order to cover all the costs in the future in the entire period of the contract.

- The technical reserve for the unit-linked part is the sum of the following amounts:

+ The sum of investment units of the insurance buyer on the valuation day, multiplied by the purchase price of the fund unit on the valuation day;

+ The total insurance premium received from the insurance buyer on the valuation day after deducting the fees payable by the insurance buyer, that is supposed to be used for purchasing fund units, but has not been used.

b) The indemnity reserve: extracted based on each dossier; the extracted amount is calculated based on the indemnity being paid for each dossier that has claim indemnity that has not been settled at the end of the fiscal year;

c) The resilience reserve: this reserve is to ensure the fulfillment commitment of the insurer to its clients as agreed in the insurance contract when the investment market undergoes fluctuations;

d) Other reserves after approved by the Ministry of Finance.

2. The actuary of the insurer must determine the method and foundation for making technical reserve in accordance with the rules and accredited calculation methods in conformity with international practice.

Article 33. Responsibility of insurers and the reporting regime

1. The insurer providing unit-linked insurance products must comply with this Circular and relevant laws.

2. Based on this Circular and relevant laws, the insurers shall promulgate the technical process to provide unit-linked insurance products in accordance with their conditions, characteristics, and charter.

3. The actuaries shall assess the conformity of the insurers to this Circular during the provision of unit-linked insurance products. The assessment of the actuary shall be sent to the Ministry of Finance within 05 working days as from the end of the month. When detecting misconduct of the insurer, the actuary must send reports to the Ministry of Finance within 03 working days as detecting the misconduct.

4. The insurer shall send reports on the result of the unit-linked insurance products to the Ministry of Finance every month, using the form in Annex IV promulgated together with this Circular.

5. The insurer shall send reports on data of the technical reserve for unit-linked insurance products every quarter, using the form in Annex V promulgated together with this Circular.

6. The insurer must cooperate and report the provision of unit-linked insurance product at the request of the Ministry of Finance.

Section 6. The insurance agents, insurance commission, and insurance distribution

Article 34. The requirements for insurance agents

1. In order to provide unit-linked insurance product, the insurer must choose insurance agents that satisfy the following requirements:

a) Not violating the rules professional ethics while running the agent;

b) Having a certificate of agents unit-linked insurance agent as prescribed by law. These regulations are not applicable to the qualified insurance agents that have been employed by the insurer to sell unit-linked insurance product before this Circular takes effect.

c) Satisfying one of the requirements for experience below:

- Being a insurance agent and having at least 01 year of experience in running a insurance agent; or

- Being a insurance agent and having at least 06 months of experience in the finance, banking, insurance, and having professional qualifications in securities issued by the State Securities Commission; or

- Being a insurance agent and having at least 06 year of experience in running a insurance agent, and having at least a college degree in finance, banking, or insurance.

2. The insurer is responsible for the damage or loss caused by their agents as agree in the insurance agent contract.

Article 35. The training program for unit-linked insurance agents

1. Apart from the general knowledge about insurance agents, the training program for unit-linked insurance agents must include the following content:

a) The general knowledge about the financial market;

b) The basic knowledge about investment;

c) The content about the unit-linked insurance products that the insurer may sell;

d) The laws on insurance business applicable to unit-linked insurance products;

dd) The skills in selling unit-linked insurance products;

e) The practice of consultancy and sale of unit-linked insurance products;

2. The period of the training program for unit-linked insurance agents:

a) For students that have professional qualifications in securities issued by the State Securities Commission, the minimum training period is 24 hours;

b) For students that have qualifications or experience in the finance, banking, or insurance, the minimum training period is 28 hours;

c) For other subjects, the minimum training period is 40 hours;

d) Apart from the first training to be issued with the certificate of unit-linked insurance agent prescribed in Point a, b, and c Clause 2 this Article, the period of quarterly training provided for unit-linked insurance agents is 08 hours.

Article 36. Insurance commission

The maximum commissions that the insurer may pay the insurance agent in each insurance contract are provided in Annex VI of this Circular.

Article 37. Technical instruction

The insurer that provide unit-linked insurance products must issues handbooks guiding the unit-linked insurance products, and supervise the implementation of such handbooks in accordance with following requirements:

1. The handbook must be enclosed with the rules professional ethics when distributing unit-linked insurance products in order to avoid misconduct when distributing unit-linked insurance products;

2. The request for insurance of the client must include the documents proving that the client has read, consulted, and understood the chosen unit-linked insurance product;

3. Including the process and requirement of cross inspection of the consultancy results for the unit-linked insurance contracts;

4. Including the technical process relevant to the distribution of unit-linked insurance products, the duty assignment, the responsibility, and cooperation among the departments of the insurer during the distribution of unit-linked insurance products;

5. Including the internal inspection of the provision of unit-linked insurance products as prescribed by law.

6. Including the uniform method of calculating the price of fund units;

7. Including the responsibility for raising the clients’ awareness about the unit-linked insurance products. The clients participating in unit-linked insurance products must be aware of the risks, terminologies, fees, terms and conditions of the insurance contract.

Article 38. The distribution of unit-linked insurance products

That agents that distribute unit-linked insurance products must perform the following tasks:

1. Complying with the laws on insurance agents, the insurance agent contract signed with the insurer, and the rules professional ethics issued by the insurer.

2. Provide consultancy in accordance with the guided process and other processes issued by the insurer. During the consultation , the insurance agent must analyze the client’s information, including their demand and financial resources, survey the risk acceptance, and  suggest appropriate products.

3. The insurance agent must ensure that all clients receive explanation about the benefit of the products, are aware of the typical risks of the chosen products before signing the request for insurance; have documents proving that the clients under stand the chosen insurance products, and such insurance products suit their demand and financial resources.

4. The insurance agent must report the consultancy results to the insurer, including their basic information and financial resources for participating in insurance, and describe the consultation. This report is part of the request for insurance.

5. The insurance agent must not induce clients to replace or terminate their existing insurance contracts for participating in unit-linked insurance.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 39. The supervision and penalties for violations

1. Insurers, insurance agents, relevant organizations and individuals are subject to the supervision from the Ministry of Finance (the Department of Insurance Management and Supervision) during the provision of unit-linked insurance products as prescribed by law.

2. The Department of Insurance Management and Supervision shall assess the provision of unit-linked insurance products every quarter; cooperate with relevant units in requesting the Ministry of Finance to appropriately amend and supplement this Circular.

3. The violations committed by insurer, insurance agents, relevant organizations and individuals shall be penalized as prescribed by law.

Article 40. Effects

1. This Circular takes effect on October 01^st 2012.

2. This Circular supersedes the Decision No. 102/2007/QĐ-BTC dated December 14^th 2007, promulgating the Regulation on the provision of unit-linked insurance products.

3. Within 12 months as from this Circular takes effect, the insurers that have provided unit-linked insurance products according to the Decision No. 102/2007/QĐ-BTC must implement this Circular.

4. The difficulties arising during the course of implementation should be reported to the Ministry of Finance for consideration and settlement./.