# ASC 944-30: Financial Services—Insurance — Acquisition Costs Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/30/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T02:15:49.991Z to 2026-09-10T02:16:24.166Z Record version: sha256:eb9d31a4aba1646a3325a886e62202f88f0f63ff2182cb9ae9ea668f0450f567 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30: Financial Services—Insurance — Acquisition Costs ### Machine-generated study aids ```json { "summary": "ASC 944-30 governs how insurance entities capitalize, amortize, present, and disclose acquisition costs (DAC) for short-duration contracts, long-duration contracts, investment contracts, and reinsurance, plus deferred sales inducements. Only costs \"related directly to the successful acquisition\" of new or renewal contracts may be capitalized (944-30-25-1A) — incremental direct costs, directly related compensation/fringe benefits for underwriting, policy issuance and processing, medical and inspection, and sales force contract selling, plus certain other direct costs and qualifying direct-response advertising. Post-ASU 2018-12, long-duration DAC is amortized on a constant level basis over the expected contract term (944-30-35-3A), and the Internal Replacement Transactions Subsections determine whether a modified/replaced contract is \"substantially unchanged\" (continuation, DAC carried forward) or \"substantially changed\" (extinguishment, DAC written off).", "key_points": [ "Only costs directly related to the successful acquisition of new or renewal contracts may be capitalized: incremental direct costs, the portion of employee compensation and payroll-related fringe benefits for time spent on underwriting, policy issuance and processing, medical and inspection, and sales force contract selling, and other directly related costs that would not have been incurred but for the acquisition (944-30-25-1A); unsuccessful efforts, idle time, market research, training, general overhead, and dedicated software are expensed as incurred (944-30-55-1B; 944-30-55-1F).", "Direct-response advertising costs are capitalized only if the primary purpose is to elicit sales to customers documented as responding specifically to the advertising and the advertising results in probable future benefits based on verifiable historical patterns for the entity (944-30-25-1AA through 25-1I); probable future benefits include only primary revenues (944-30-25-1P), and costs not capitalized may not be retroactively capitalized (944-30-25-1I).", "Acquisition costs that vary in a constant relationship to premiums or insurance in force, are recurring, or are incurred in level amounts (e.g., recurring premium taxes, ultimate level commissions) are maintenance and other period costs expensed as incurred (944-30-25-4 through 25-5).", "Short-duration DAC is charged to expense in proportion to premium revenue recognized under Subtopic 944-605 (944-30-35-1A; 944-30-35-2), while long-duration DAC is charged to expense on a constant level basis — straight-line for individual contracts, or a constant-level basis approximating individual straight-line for grouped contracts — over the expected contract term, not as a function of revenue or profit emergence, with no interest accrual (944-30-35-3A; 944-30-35-3C).", "The long-duration DAC balance is reduced for actual experience in excess of expected (unexpected terminations), and changes in future estimates are recognized prospectively as revisions of future amortization amounts (944-30-35-3B).", "Sales inducements that are incremental to amounts credited on similar contracts, exceed expected ongoing crediting rates, are recognized as part of the liability under 944-40-25-12, and are explicitly identified in the contract at inception are deferred as an asset and amortized like DAC, with amortization in benefit expense (944-30-25-6 through 25-7; 944-30-35-18; 944-30-45-2).", "An internal replacement is 'substantially unchanged' only if all six conditions in 944-30-35-37 are met (no change in insured event/risk/period of coverage, investment return rights, no additional deposit, no net account value reduction, no change in participation/dividend features, no change in amortization method or revenue classification); continuation carries DAC, unearned revenue liabilities, and deferred sales inducements forward on a prospective basis (944-30-35-38 through 35-40, 35-46), while a substantially changed contract is accounted for as an extinguishment with those balances not deferred (944-30-40-1 through 40-4)." ], "categories": [ "Industry-specific", "Initial measurement", "Subsequent measurement", "Disclosure" ], "audience_level": "advanced", "student_note": "DAC is the signature insurance-accounting asset, and ASU 2018-12 fundamentally changed it: long-duration DAC is now amortized on a constant level basis over the expected term with no interest accrual and no unlocking/retrospective catch-up, and it is no longer subject to the old EGP/gross-profit amortization or to DAC recoverability testing. The most common error is assuming all costs of writing business are deferrable — only costs directly related to *successful* acquisition qualify, so unsuccessful underwriting effort, idle time, marketing, training, and overhead must be expensed as incurred.", "related_topics": [ "944-40", "944-60", "944-605", "944-20", "944-720", "310-20" ], "key_concepts": [ "deferred acquisition costs", "successful efforts capitalization", "constant level amortization", "direct-response advertising", "deferred sales inducements", "internal replacement transactions", "substantially unchanged contract", "integrated vs. nonintegrated contract features" ] } ``` Source downloaded (UTC): 2026-09-10T02:15:49.991Z to 2026-09-10T02:15:49.991Z Record version: sha256:cf4cb6f4405318c6c664559699a51f59abd9bcf3e5cc147fa8271a05ff170125 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/30/#00-status) SEC content: no ##### [944-30-00-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:49.991Z to 2026-09-10T02:15:49.991Z Record version: sha256:f064b90bea0ee30814693fdcb88add469329f538ffdd54f6faab581bce50682c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
Annual Policyholder DividendsSupersededAccounting Standards Update No. 2018-1208/15/2018
Annuitization PhaseSupersededAccounting Standards Update No. 2014-0603/14/2014
Benefit PeriodSupersededAccounting Standards Update No. 2018-1208/15/2018
Contract RateSupersededAccounting Standards Update No. 2018-1208/15/2018
Enhanced-Crediting-Rate BonusAddedAccounting Standards Update No. 2014-0603/14/2014
Enhanced-Yield BonusSupersededAccounting Standards Update No. 2014-0603/14/2014
Guaranteed Minimum Income BenefitAmendedAccounting Standards Update No. 2018-1208/15/2018
Gross PremiumSupersededAccounting Standards Update No. 2018-1208/15/2018
Incremental Direct Cost of Contract AcquisitionAddedAccounting Standards Update No. 2010-2610/13/2010
Investment YieldSupersededAccounting Standards Update No. 2018-1208/15/2018
Involuntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
Market Risk BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
Net Level Premium ReserveSupersededAccounting Standards Update No. 2018-1208/15/2018
Net PremiumsAmendedAccounting Standards Update No. 2018-1208/15/2018
Payout PhaseAmendedAccounting Standards Update No. 2014-0603/14/2014
Sales InducementsAmendedAccounting Standards Update No. 2014-0603/14/2014
TerminationAmendedAccounting Standards Update No. 2014-0603/14/2014
Voluntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
944-30-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-30-15-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-1SupersededAccounting Standards Update No. 2010-2610/13/2010
944-30-25-1AAmendedAccounting Standards Update No. 2018-0907/16/2018
944-30-25-1AAmendedAccounting Standards Update No. 2014-0905/28/2014
944-30-25-1AAddedAccounting Standards Update No. 2010-2610/13/2010
944-30-25-1AAAddedAccounting Standards Update No. 2014-0905/28/2014
944-30-25-1BAmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-1BAddedAccounting Standards Update No. 2010-2610/13/2010
944-30-25-1C through 25-1P
AddedAccounting Standards Update No. 2014-0905/28/2014
944-30-25-1DDAddedAccounting Standards Update No. 2018-0907/16/2018
944-30-25-2AmendedAccounting Standards Update No. 2010-2610/13/2010
944-30-25-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-8AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-8AmendedAccounting Standards Update No. 2015-1006/12/2015
944-30-25-9AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-10SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-25-14AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-30-2AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-1AAmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-3AAmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-3AAddedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-3BAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-3CAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-4 through 35-17
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-10AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-18 through 35-20
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-18AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-19AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-20AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-21SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-22SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-22AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-28AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-36AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-38AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-41 through 35-45
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-46 through 35-52
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-53AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-61AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-62SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-63AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-64AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-40-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-50-1AmendedAccounting Standards Update No. 2024-0311/04/2024
944-30-50-1AmendedAccounting Standards Update No. 2010-2610/13/2010
944-30-50-2SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-50-2AAmendedAccounting Standards Update No. 2025-1112/08/2025
944-30-50-2AAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-50-2BAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-50-3SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-50-4AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-1AmendedAccounting Standards Update No. 2010-2610/13/2010
944-30-55-1A through 55-1G
AddedAccounting Standards Update No. 2010-2610/13/2010
944-30-55-1FAmendedAccounting Standards Update No. 2014-0905/28/2014
944-30-55-2AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-3 through 55-6
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-55-7AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-7AAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-7BAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-8 through 55-10
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-55-11 through 55-14
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-15 through 55-32
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-55-36AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-39AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-40AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-56AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-58AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-65AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-66AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-76AmendedAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:2c024772be79a667c4d6b21d149edb8b4a54321099baf7a2ac75c8548f7e8049 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/30/#05-overview-and-background) SEC content: no ##### [944-30-05-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:472a38035bd3cc4ca911bd62d52148a7a174fa8d2ea35bbb3672e8a9500f61c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") including related considerations for [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transactions. The guidance in this Subtopic is presented in the following five Subsections: 1. a General 2. b Short-Duration Contracts 3. c Long-Duration Contracts 4. d Internal Replacement Transactions 5. e [Reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") Contracts. ### Short-Duration Contracts ##### [944-30-05-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:5a714b3ce8dafb0a26d06fbd8eec27a15536bd0639bbf578dea98cab11dfbb69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") involving short-duration contracts. ### Long-Duration Contracts ##### [944-30-05-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:8449a676e2d34f4e9d8289e006879be1429633a0fa1e9d9c15fa15def47cd57f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") involving long-duration contracts. ### Internal Replacement Transactions ##### [944-30-05-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:06d53ab2fe7cc4842d0cca865afc1cd5bfdaa7807c084359b11014d245966f5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal Replacement Transactions Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of unamortized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") in the event of an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transaction. ##### [944-30-05-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:a7aec4a99fc955a1fb126c94e889b46e2c741bf7978ffa99400bd9cef1a3a288 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policyholders often purchase universal life-type contracts as replacements for other insurance contracts issued by the same entity (sometimes referred to as internal replacement transactions). In those cases, the policyholder often uses the cash surrender value of the previous contract to pay an initial lump-sum premium for the new contract. ### Reinsurance Contracts ##### [944-30-05-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:bfad88ce11303f3a9b5a8c84913c8388c73e7ae67824018a9ed8f1b2564e4e07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") involving [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts. Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:4e0473b97162da2a2c49d0de26d55f8cb1db9e9166e60d8c7d81b8174754dd5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-30-15-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:900d227146099f8cc386b7680707cf1e9128c739cf644475be12679a96f74b18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15, with specific entity qualifications noted below. #### Entities ##### [944-30-15-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:cd88ecc4506444ad62d9aed0ee608005b612247da0effd5634b672d2a4d6a946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to [mortgage guaranty insurance entities](https://asc.understandingaccounting.org/glossary/m/#mortgage-guaranty-insurance-entity "An insurance entity that issues insurance contracts that guarantee lenders, such as savings and loan associations, against nonpayment by mortgagors."). ### Short-Duration Contracts #### Overall Guidance ##### [944-30-15-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:fecd8cdc6727ccaaf8433a13b28abefa89e5ba3fbbfc6113f9cff568a05490fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-30-15-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:451902e4ef760302e62b26cc572dcc2e6222ead9a351ad0fcc3ebe40f26427f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Short-Duration Contracts Subsections of this Subtopic applies only to short-duration insurance contracts. For guidance on identifying a short-duration insurance contract, see the [Short-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. ### Long-Duration Contracts #### Overall Guidance ##### [944-30-15-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:15d30607f88a9a77e95924a284047d3e15120f14c65e3c21c1f6c49acb2d1da9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-30-15-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:a8aa59a70dc4854569310cd1c7ccac9759f6384362a87293df355049e4b95550 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies only to long-duration contracts. For guidance on identifying a long-duration contract, see the [Long-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. ### Internal Replacement Transactions #### Overall Guidance ##### [944-30-15-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:faa11606d7c2c7dd631e1ab4be9ceb1276d2880aab12165eabc244b807a40351 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal Replacement Transactions Subsections follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications and other considerations noted below. #### Instruments ##### [944-30-15-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:97b6318a029631a0659b31ce22111e698adc97d816d75a873b926b230955c404 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Internal Replacement Transactions Subsections applies to modifications and replacements made to short-duration contracts and long-duration contracts (including those contracts defined as [investment contracts](https://asc.understandingaccounting.org/glossary/i/#investment-contracts "Long-duration contracts that do not subject the insurance entity to risks arising from policyholder mortality or morbidity.")). #### Other Considerations ##### [944-30-15-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:63c3e170806157bf33178381127320027fad0b03f70cdbee82b434bb363a9a14 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on modifications and exchanges of debt issued by insurance entities, see Subtopic 470-50. ### Reinsurance Contracts #### Overall Guidance ##### [944-30-15-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:f4e9600cc6629f2d03ab6a993b50d188ac0e71c7a8470a5e440ad4093c71d1bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-30-15-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:a4f4b8b324a3f7452de74e2b2290a0bff39d7522dd29b43c063e24fd53910827 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Contracts Subsections of this Subtopic applies only to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") contracts. For guidance on identifying a reinsurance contract, see the [Reinsurance Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:7c9491759e5d51d79d5b944616091396f6bf41c4420908a84090495f5f81b8c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/30/#25-recognition) SEC content: no ##### [944-30-25-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:e78716a92fd494b90718dbefd74bd57034b307a68ed246ace592a63ee00e1b9b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-26](https://asc.understandingaccounting.org/updates/asu-2010-26/). ##### [944-30-25-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:a1a5ddf84b3cb56e88dd92884c65f57d6b7fbb2472cf7833d9fdc2893999fa8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall capitalize only the following as acquisition costs related directly to the successful acquisition of new or renewal insurance contracts: 1. a [Incremental direct costs of contract acquisition](https://asc.understandingaccounting.org/glossary/i/#incremental-direct-cost-of-contract-acquisition "A cost to acquire an insurance contract that has both of the following characteristics: It results directly from and is essential to the contract transaction(s). It would not have been incurred by the insurance entity had the contract transaction(s) not occurred.") 2. b The portion of the employee's total compensation (excluding any compensation that is capitalized as incremental direct costs of contract acquisition) and payroll-related fringe benefits related directly to time spent performing any of the following acquisition activities for a contract that actually has been acquired: 1. 1 Underwriting 2. 2 Policy issuance and processing 3. 3 Medical and inspection 4. 4 Sales force contract selling. 3. c Other costs related directly to the insurer's acquisition activities in (b) that would not have been incurred by the insurance entity had the acquisition contract transaction(s) not occurred. 4. d [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). - If the application of the guidance in this paragraph results in the capitalization of acquisition costs that had not previously been capitalized by the insurance entity before fiscal years beginning after December 15, 2011, the insurance entity may elect to not capitalize those types of costs. This election shall be made before fiscal years beginning after December 15, 2011. - _\[**Editor's Note**: This accounting policy election was a one-time election upon the adoption of the amendments in Update 2010-26.\]_ ##### [944-30-25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:45c2b266232056abb43b7842baa00d60019f5330a60375b9df577b1bdc4d03f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The costs of direct-response advertising shall be capitalized if both of the following conditions are met: 1. a The primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising. Paragraph [944-30-25-1D](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1D) discusses the conditions that must exist in order to conclude that the advertising's purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising. 2. b The direct-response advertising results in probable future benefits. Paragraph [944-30-25-1G](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1G) discusses the conditions that must exist in order to conclude that direct-response advertising results in probable future benefits. ##### [944-30-25-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:cfd36ff496761dcad1079187b6a943f96bc670a5d3d7077a48cde90f8b9c2dd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To associate [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") with related premium revenue, for acquisition costs that are charged to expense in proportion to premium revenue recognized under Subtopic 944-605, capitalized acquisition costs shall be allocated by groupings of insurance contracts consistent with the entity's manner of acquiring, servicing, and measuring the profitability of its insurance contracts. #### Primary Purpose to Elicit Sales to Customers Responding to the Advertising ##### [944-30-25-1C](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:90fe49231e2ad59fa7f73d1255dae3aea974ca9fb5ecf9818a15f50129940239 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [944-30-25-1AA(a)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA), the first condition for capitalizing direct-response advertising is that the primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising. ##### [944-30-25-1D](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:837eb42505122f12d0af02b8acffaf77a8452c8acc175fddc17cb17753e72ac2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In order to conclude that advertising elicits sales to customers who could be shown to have responded specifically to the advertising, there must be a means of documenting that response, including a record that can identify the name of the customer and the advertising that elicited the direct response. Examples of such documentation include the following: 1. a Files indicating the customer names and the related direct-response advertisement 2. b A coded order form, coupon, or response card, included with an advertisement, indicating the customer name 3. c A log of customers who have made phone calls to a number appearing in an advertisement, linking those calls to the advertisement. ##### [944-30-25-1DD](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1DD) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:805fee41a61f238188d376c4c6f89e4897f5d0bcbacf8ba0411e5fbcd4fdb1a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Direct-response advertising activities exclude advertising that, though related to the direct-response advertising, is directed to an audience that could not be shown to have responded specifically to the direct-response advertising. For example, a television commercial announcing that order forms (that are direct-response advertising) soon will be distributed directly to some people in the viewing area would not be a direct-response advertising activity because the television commercial is directed to a broad audience, not all of which could be shown to have responded specifically to the direct-response advertising. #### Probable Future Benefits of Direct-Response Advertising ##### [944-30-25-1E](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:c004e8f5ab1e6a1877f9a563b166ecbe274933606f8f429c063d9b5a7e548132 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [944-30-25-1AA(b)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA), the second condition for capitalizing direct-response advertising is that the direct-response advertising results in probable future benefits. ##### [944-30-25-1F](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:3df7a0942ddb4f7e4657024696099f2f8ff0e98b7e5270911915c59006b8a041 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The probable future benefits of direct-response advertising activities are probable future revenues arising from that advertising in excess of future costs to be incurred in realizing those revenues. ##### [944-30-25-1G](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:76b915fd55537729462f57aa4988a433e926ebfda4c992230d6a192a1f89b8e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Demonstrating that direct-response advertising will result in future benefits requires persuasive evidence that its effects will be similar to the effects of responses to past direct-response advertising activities of the entity that resulted in future benefits. Such evidence shall include verifiable historical patterns of results for the entity. Attributes to consider in determining whether the responses will be similar include the following: 1. a The demographics of the audience 2. b The method of advertising 3. c The product 4. d The economic conditions. ##### [944-30-25-1H](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1H) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:b12ec0fd458fb463f197dda43de1870a1b945f44e3706d1c21353c1aecf5749b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Industry statistics would not be considered objective evidence that direct-response advertising will result in future benefits in the absence of the specific entity's operating history. If the entity does not have an operating history for a particular product or service but does have operating histories for other new products or services, statistics for the other products or services may be used if it can be demonstrated that the statistics for the other products or services are likely to be highly correlated to the statistics of the particular product or service being evaluated. For example, test market results for a new product or service may be used to support the view that the results of advertising for current new products or services are likely to be highly correlated with the results of advertising for new products or services previously sold by the entity. In the absence of the expectation of a high degree of correlation, a success rate based on historical ratios of successful products or services to total products or services introduced to the marketplace would not be a sufficient basis for reporting a portion of the costs of current-period advertising as resulting in assets. #### Direct-Response Advertising That Does Not Result in Probable Future Benefits ##### [944-30-25-1I](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1I) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:035b7694130b3ea256011e39e9ff76353b7de917138c7bb38319342122adca38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Direct-response advertising costs that are not capitalized because it cannot be demonstrated that the direct-response advertising will result in future benefits shall not be retroactively capitalized in subsequent periods if historical evidence in those subsequent periods indicates that the advertising did in fact result in future benefits. #### Basis of Measurement ##### [944-30-25-1J](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1J) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:3301f40064807a25d86e0ec83f15c20909ae41488989b1e7a7945b2282b76dcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the potential customers and the probable customer response rates, direct-response advertising that is expected to produce future revenues generally is undertaken before the customers' identity is known. Such advertising is undertaken with the expectation that not all targets of the direct-response advertising will provide benefits but that the benefits created by the customers who do respond to the advertising will justify the total advertising costs. Accordingly, the cost of the direct-response advertising directed to all prospective customers, not only the cost related to the portion of the potential customers that are expected to respond to the advertising, shall be used to measure the amounts of such reported assets. #### Period and Extent of Expected Future Benefits ##### [944-30-25-1K](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1K) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:62fe2147365dfe9c8cb83df9cb317578f5b699eff7569e3c09838c33621c0e5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There is no overriding guidance that would either permit or prohibit reporting the costs of direct-response advertising as assets based on the inclusion of future revenues from renewals or repeat sales. Reporting entities with an established operating history, such as certain entities in subscription businesses, may be able to measure such amounts with the required degree of reliability and, if so, shall report assets based on renewal amounts. The reporting entity must exercise judgment about both of the following: 1. a The existence of the degree of reliability required to determine the probability of renewals 2. b Whether those renewals result from the direct-response advertising being accounted for. In order to conclude that the renewals result from the direct-response advertising being accounted for, the renewals must not result from significant direct-response advertising that took place subsequent to the direct-response advertising being accounted for. ##### [944-30-25-1L](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1L) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:f18e5cf217953e9ef82701d62c3437070bcb699143649684e6150f4e98ae0bf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each significant advertising effort establishes a separate standalone cost pool. Examples of situations in which that required degree of reliability may exist, without significant direct-response advertising subsequent to the direct-response advertising being accounted for, include the following: 1. a The sale of subscriptions may be offered only through direct-response advertising. The entity may have objective evidence that, historically, a quantifiable percentage of subscriptions is renewed at the end of each subscription period without a significant advertising effort. After the subscription is purchased, in what is deemed to be an insignificant advertising effort, renewal subscriptions are offered for sale by mailing a renewal card to those who have subscriptions that will lapse soon. The amount of direct-response advertising reported as assets and amortized in future periods ordinarily would be based on the expected total revenue to be realized over both the initial and the renewal subscription periods. 2. b A series of products, such as pieces in a chess set, may be offered for sale only through direct-response advertising. After the first piece is purchased, the remaining pieces are offered for sale by mailing a response card to those who purchased the first piece in what is deemed to be an insignificant advertising effort. The entity may have objective evidence that, historically, each customer who buys the first piece will buy a quantifiable percentage of the remaining pieces. If each of the pieces is bought separately, the amount of direct-response advertising reported as assets and amortized in future periods ordinarily would be based on total revenue from all sales, including estimated future sales. If significant marketing efforts are required to generate subsequent revenues through renewal or repeat sales, those subsequent revenues would not qualify as revenues resulting from the direct-response advertising that resulted in the initial sale and initial standalone cost pool. For instance, in the chess set example in (b), if a pamphlet describing the chess set, its monetary and aesthetic value, and the history of the game of chess is sent to those who purchased the first piece, the amount of direct-response advertising reported as assets and amortized in future periods would be based on sales of the first piece rather than on the total of all sales including estimated future sales. However, subsequent direct-response advertising may result in the capitalization of the costs of that subsequent advertising, with its costs accumulated in a standalone cost pool, if the conditions for capitalization in this Subtopic are met. #### Acquisition Costs of Assets ##### [944-30-25-1M](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1M) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:3fa511e322fdce2db4cebfb37a521956594cf175d45016354188a57dd12b9cf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The costs of materials bought from a supplier in the production of advertising materials shall be reported as costs of assets from direct-response advertising if those materials can be directly attributed to specific direct-response advertising. An example of such costs and activities is the cost of paper bought from a third party used to produce catalogues. #### Tangible Assets Used for Several Advertising Campaigns ##### [944-30-25-1N](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1N) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:0fde17555c7fac4df3d5846328a86c49909a0068bdac7febce1d4e6f110e1269 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Tangible assets, such as blimps or billboards, may be used for several advertising campaigns. The costs of such assets shall be capitalized. #### Revenues to Consider When Evaluating Future Benefits ##### [944-30-25-1O](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1O) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:cf4bd7ae48e5a66cb6e46017aa61014475785aa0d381c6a9ec9be54f5eaf0bc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of considering the probable future benefits of direct-response advertising, revenues associated with such advertising are as follows: 1. a Primary: Revenues from sales to customers receiving and responding to the direct-response advertising 2. b Secondary: Revenues that are not from sales to customers receiving and responding to the direct-response advertising. For example, most publishers receive revenue from customers that subscribe to the publications; these subscription revenues are primary revenues. Publishers also receive secondary revenues such as advertisements in the publications (referred to as placement fees). Placement fee revenues are affected by several factors, including the total number of subscribers to the publication and the selling efforts devoted to obtaining the placement fees. ##### [944-30-25-1P](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1P) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:94db38fb7c70c1b284c7f5d8dd1c65b3ff1b480eff67f0c5842a9ce177d6c3e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When determining probable future revenues, those revenues shall be limited to revenues from sales to customers receiving and responding to the direct-response advertising (primary revenues). When evaluating whether the direct-response advertising results in probable future benefits (see paragraph [944-30-25-1AA(b)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA)), probable future benefits shall include only primary revenues. ##### [944-30-25-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:1810df56e57f4271200d8415a22a59a6d1ad8b17018be4ddd6ceb28aafa437ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-720-25-2](https://asc.understandingaccounting.org/asc/720/944/#720-944-25-2) requires that an insurance entity charge to expense as incurred certain other costs. ### Long-Duration Contracts ##### [944-30-25-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:1f83545cab4fbb5f02626496582f3874034a29d2ad51a23c01ece957876f21f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance does not define the costs to be included in [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") but does describe those that are not eligible to be capitalized. ##### [944-30-25-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:5399d34f89f4c05cd3f8eef70ddfd6ab688b1883e7af177228f7916f4e2342eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs that have any of the following characteristics shall be considered maintenance and other period costs and be charged to expense in the period incurred: 1. a Acquisition costs that vary in a constant relationship to premiums or insurance [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") 2. b Acquisition costs that are recurring in nature 3. c Acquisition costs that tend to be incurred in a level amount from period to period. ##### [944-30-25-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:dd3f5ed9c0b94b6ff05063b8b07dbb89e3ee3312c9e405ff49fc837b4121693f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs such as recurring premium taxes and ultimate level commissions, which vary with premium revenue, shall be charged to expense in the periods incurred. #### Sales Inducements ##### [944-30-25-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:49439d67f019a958ae518f0c394bd50039675876593eec064833dab0be3e0e7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-30-25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-7) addresses [sales inducements](https://asc.understandingaccounting.org/glossary/s/#sales-inducements "Contractually obligated inducements that are identified explicitly in a contract and are in excess of current market conditions. A sales inducement to a contract holder enhances the investment yield to the contract holder. The three main types of sales inducements are an immediate bonus, a persistency bonus, and an enhanced-crediting-rate bonus.") that may be deferrable if the insurance entity can demonstrate that the sales inducement amounts have both of the following characteristics: 1. a The amounts are incremental to amounts the entity credits on similar contracts without sales inducements. 2. b The amounts are higher than the contract's expected ongoing crediting rates for periods after the inducement, as applicable; that is, the crediting rate excluding the inducement should be consistent with assumptions used in contract illustrations and interest-crediting strategies. Due to the nature of [day-one bonuses](https://asc.understandingaccounting.org/glossary/d/#day-one-bonus "See Immediate Bonus.") and [persistency](https://asc.understandingaccounting.org/glossary/p/#persistency "The complement of the termination rate, persistency is the renewal quality of insurance contracts, that is, the number of insureds that keep their insurance in force during a period. Persistency varies by plan of insurance, age at issue, year of issue, frequency of premium payment, and other factors.") bonuses, the criteria in items (a) and (b) generally are met for such sales inducements. ##### [944-30-25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:0f7c048f0a2c6a53f37cec3184cc9e45733c5f94ada83cb1ccb9b938f74d8bbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts specified in the preceding paragraph shall be deferred and amortized using the same methodology and assumptions used to amortize capitalized acquisition costs if the sales inducements have both of the following characteristics: 1. a The sales inducements are recognized as part of the liability under paragraph [944-40-25-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-12). 2. b The sales inducements are explicitly identified in the contract at inception. #### Limited-Payment Contracts ##### [944-30-25-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:ea8e250c87f0c0731dedc3c687f16f465367d31282857d36405f09e5abbebf9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs related to the acquisition of new and renewal business that are not capitalized (because they do not meet the criteria for capitalization in paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A)) and costs that are required to be charged to expense as incurred, such as those relating to investments, general administration, policy [maintenance costs](https://asc.understandingaccounting.org/glossary/m/#maintenance-costs "Costs associated with maintaining records relating to insurance contracts and with the processing of premium collections and commissions."), product development, market research, and general overhead (see paragraphs [944-40-30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-15) and [944-720-25-2](https://asc.understandingaccounting.org/asc/720/944/#720-944-25-2)) are period costs that shall be recognized when incurred. Such costs shall not be included in the calculation of [net premium](https://asc.understandingaccounting.org/glossary/n/#net-premiums "For traditional and limited-payment long-duration insurance contracts, the net premium is that portion of the gross premium required to provide for all benefits and expenses, excluding acquisition costs or any costs that are required to be charged to expense as incurred. For long-duration participating life insurance contracts that meet the criteria in paragraph 944-20-15-3, the net premium is a constant ratio of guaranteed maximum gross premiums. The ratio is calculated at issue, so that the present value of all guaranteed death and endowment benefits is equal to the present value of all net premiums.") used in determining the profit to be deferred on [limited-payment contracts](https://asc.understandingaccounting.org/glossary/l/#limited-payment-contracts "Long-duration insurance contracts with terms that are fixed and guaranteed, and for which premiums are paid over a period shorter than the period over which benefits are provided. Limited-payment contracts subject the insurer to risks arising from policyholder mortality and morbidity over a period that extends beyond the period or periods in which premiums are collected.")because the inclusion of such costs in the calculation of net premium would result in their deferral. ##### [944-30-25-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:5a223801b9081e8f6bc152a46ea447bdeeed96200bad246fe1c3ebf03a0911f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs that would be included in the determination of net premium under this Subtopic are policy-related costs that are not primarily related to the acquisition of business (such as termination or settlement costs; see paragraph [944-40-30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-15)). ##### [944-30-25-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:38f3fa3eca5a1b721634362949c64a35a20c032b1375c66dda6811e7e3b7e5a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ### Internal Replacement Transactions ##### [944-30-25-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:de44b0f21d31031974c7510c1653c8f0927e230184c9eed5fee0aa9d91527b7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance applies only to replacements of traditional life insurance contracts by universal life type contracts. If surrender of a life insurance contract is associated with an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") by a universal life-type contract, the entity shall not defer either of the following in connection with the [replacement contract](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction."): 1. a Unamortized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") associated with the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction.") 2. b Any difference between the cash surrender value and the previously recorded liability. ##### [944-30-25-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:dc50000adfea428b5fef3f5159707eb5e405afd49efff257ac5982bb45b9d5cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for other internal replacements shall be based on the circumstances of the transaction. ### Reinsurance Contracts ##### [944-30-25-13](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:8bdf66d8ab3a6abe0825fa0d79f2b1f0dff3ac6306acc8e124d06355e17f56c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The net cost to the assuming entity shall be accounted for as an [acquisition cost](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts."). ##### [944-30-25-14](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:21aefb306689985c335e324725c79725805aa3f0ad7d8bf00f8aa1a1a6cd839a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-30-25-1A through 25-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) provide guidance on recognition of acquisition costs. Source downloaded (UTC): 2026-09-10T02:16:05.010Z to 2026-09-10T02:16:05.010Z Record version: sha256:71886c5eff2a4dcf476705a7ee69748c871be15c7a03ce455ad36b3304b4f7be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/30/#30-initial-measurement) SEC content: no ### Short-Duration Contracts ##### [944-30-30-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:05.010Z to 2026-09-10T02:16:05.010Z Record version: sha256:7e61f8bfe560ab3e175ee3689b7d6dcb09f5c86e1ddc71740c55dfe95bf517fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-30-35-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-2) states that, if [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") for short-duration contracts are determined based on a percentage relationship of costs incurred to premiums from contracts issued or renewed for a specified period, the percentage relationship and the period used, once determined, shall be applied to applicable unearned premiums throughout the period of the contracts. ### Long-Duration Contracts ##### [944-30-30-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:05.010Z to 2026-09-10T02:16:05.010Z Record version: sha256:b871e93a0befc0fc8d8cf5d5ab4aed7c8665e7576a9eee1d80ce02519c97b398 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Incurred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") for long-duration contracts shall be used in determining acquisition costs to be capitalized. Acquisition costs, including future contract renewal costs, shall not be capitalized or amortized before the incurrence of those costs. Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a08064a457c7e03d82025fbfbd04d3eea0a762fb2df9319a203cf2d2305e1605 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/30/#35-subsequent-measurement) SEC content: no ##### [944-30-35-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a1769bc7e16472521bb4a935721843e68e87b29aba43f0545c1ce089cf1f08f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Subsections in this Section address [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") and other costs. ### Short-Duration Contracts ##### [944-30-35-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:6cd163ba425e7e5509ee51a4144e3ae2f5035c763f2325363390d4136c969dde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs capitalized under paragraphs [944-30-25-1A through 25-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) shall be charged to expense in proportion to premium revenue recognized under Subtopic 944-605. ##### [944-30-35-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:8e4b4f481ea5cf5cbde170f55a6db4b30b776b2295e7fc6e58a963e4ec4277bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If acquisition costs for short-duration contracts are determined based on a percentage relationship of costs incurred to premiums from contracts issued or renewed for a specified period, the percentage relationship and the period used, once determined, shall be applied to applicable unearned premiums throughout the period of the contracts. ### Long-Duration Contracts #### Insurance Contracts ##### [944-30-35-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a6df032082b4028a1e643cf32d1fac54f5f7a0b361781064492e61da42ca7170 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Capitalized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") shall be charged to expense using assumptions consistent with those used in estimating the [liability for future policy benefits](https://asc.understandingaccounting.org/glossary/l/#liability-for-future-policy-benefits "An accrued obligation to policyholders that relates to insured events, such as death or disability.")(or any other related balance) for the corresponding contracts (see Subtopic 944-40), as applicable (for example, [terminations](https://asc.understandingaccounting.org/glossary/t/#termination "In general, the failure to renew an insurance contract. Involuntary terminations include death, expirations, and maturities of contracts. Voluntary terminations of life insurance contracts include lapses with or without cash surrender value and contract modifications that reduce paid-up whole-life benefits or term-life benefits.")). For contracts with accumulation and payout phases, the [payout phase](https://asc.understandingaccounting.org/glossary/p/#payout-phase "The period during which the contract holder is receiving periodic payments from an annuity, also referred to as the annuitization phase.") shall be viewed as a separate contract under this Topic and shall not be combined with the [accumulation phase](https://asc.understandingaccounting.org/glossary/a/#accumulation-phase "The period during an annuity contract before annuitization. An insurance entity may call an annuity having an accumulation phase a deferred annuity.") for amortization of capitalized acquisition costs. ##### [944-30-35-3A](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:977228dca2201ddf29d6a20464803d2c8233ecf89c714cdcf34a6ddf744ba63a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs capitalized under paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) shall be charged to expense on a constant level basis—either on an individual contract basis or on a grouped contract basis—over the expected term of the related contract(s) as follows: 1. a Individual contracts. Capitalized acquisition costs shall be charged to expense on a straight-line basis. 2. b Grouped contracts. Capitalized acquisition costs shall be charged to expense on a constant-level basis that approximates straight-line amortization on an individual contract basis. Contracts shall be grouped consistent with the grouping used in estimating the liability for future policy benefits (or any other related balance) for the corresponding contracts. The resulting amortization amount shall not be a function of revenue or profit emergence. The amortization method shall be applied consistently over the expected term of the related contract(s). ##### [944-30-35-3B](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d5fd6fc462c027cf4c84383a50fee64b4f36bd53191d0b0bcbfdbeb9996aba56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The balance of capitalized acquisition costs shall be reduced for actual experience in excess of expected experience (that is, as a result of unexpected contract terminations). The effect of changes in future estimates (for example, revisions of mortality or lapse assumptions as required in paragraph [944-40-35-5(a)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5)) shall be recognized over the remaining expected contract term as a revision of the future amortization amounts. ##### [944-30-35-3C](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:34471d2414c7355c6c518b92ace7a0ed58e7cafd77b429d46287b7061e7aef8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No interest shall accrue on the unamortized balance of capitalized acquisition costs. In determining amortization expense, future deferrable costs shall not be included before the incurrence and capitalization of those costs. ##### [944-30-35-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:27a777f67058b7383400047f8ef829af69208a872e4647fda1cd070839232612 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:f473aa3c221d8c608b348d1e623a973b34542f97dc7a10a8a747c7422f1c156d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:58944ae6d6eee70c38d17fe67dcf6e4d3cd4205c28d0a01c8a9fee66cf993826 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:9029bdc421229990cfdde8ccbc857f028edef7aa49007feef180c7fe77254520 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:5673a949609ce93d4ef30a65cb16610f787f777c2fe0fbf7d8def39344c89f18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:672832159b23b0e5f20c2711a26ad7309cc2c36bd294ae90a2218d36e0c2b4b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:377a6b41330440e3c63e9fa333ec50e81ba59aef091c75a18d47af2c79fba19b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:85de123bc5f7ef256a7a304cb6deccecfdcb6b475ccc6d82451b20a18943502b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:4cd7f1a8f3b9c38d61d8f71790e129743005c1d41802f610589ed2870e6a3235 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-13](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:00251053765673b9f867a72a8196f07148751d4bac0532ff7cbffdb1c59e2432 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-14](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:60d8c865f8d5032065080aab5c8e815b1720428626f21e696abc93813a40c46e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-15](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:e4c96e9137c4bccbe73f4ef36171c13f75c7c0da26c665174dd4b72b99b59fd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-16](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:2b93ccb6a052cabc39a1ef0fd27b0ad7b6e17f6f7d68d7c133de45602c49de09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-17](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:38684edc0f7123acf17891aa23432259e1b97e9dfa026f933b16c4741acacfb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). #### Sales Inducements ##### [944-30-35-18](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:f88d0b2f1e92af023e6cbc041deb6d5f7cd96290ef511d8d49aad0655c69edcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Sales inducements](https://asc.understandingaccounting.org/glossary/s/#sales-inducements "Contractually obligated inducements that are identified explicitly in a contract and are in excess of current market conditions. A sales inducement to a contract holder enhances the investment yield to the contract holder. The three main types of sales inducements are an immediate bonus, a persistency bonus, and an enhanced-crediting-rate bonus.")deferred under paragraph [944-30-25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-7) shall be amortized using the same methodology and assumptions used to amortize capitalized acquisition costs. No interest shall accrue to the unamortized balance of deferred sales inducements. In determining the amortization expense, future deferrable sales inducements shall not be included before the incurrence and capitalization of those sales inducements. The payout phase is viewed as a separate contract under this Topic and shall not be combined with the accumulation phase for amortization of deferred sales inducements. #### Investment Contracts ##### [944-30-35-19](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:b551299353af696a77f1c09425858306e91b2152ce5002c3856cc2028fbe0e43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amortization method described in paragraphs [944-30-35-3 through 35-3C](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3) shall be used to amortize acquisition costs deferred under paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) for [investment contracts](https://asc.understandingaccounting.org/glossary/i/#investment-contracts "Long-duration contracts that do not subject the insurance entity to risks arising from policyholder mortality or morbidity.") that include significant [surrender charges](https://asc.understandingaccounting.org/glossary/s/#surrender-charges "Amounts expected to be assessed against policyholder balances at contract redemption, whole or partial, regardless of how the charges are labeled, such as contingent deferred sales charges.") or that yield significant revenues from sources other than the investment of contract holders' funds. ##### [944-30-35-20](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:467487ebb1e4316119559addde5fbbb6f53083e8cbde4952173af3e132f9fcbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs deferred under paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) for other investment contracts shall be amortized using an accounting method that recognizes costs as expenses at a constant rate applied to net policy liabilities and that is consistent with the [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period.") under Subtopic 310-20. The incidence of surrenders (if they are [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") and can be reasonably estimated) can be anticipated for purposes of determining the amortization period. The rate of amortization shall be adjusted for changes in the incidence of surrenders to be consistent with the handling of principal prepayments under Subtopic 310-20. ##### [944-30-35-21](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:c3ea3f00b7a1b31044715b7670ca62b127e13f6703113e23b097fc4395f79b45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-22](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:7621830ad9301161f554dccfabcc4af69e4309bb768531da545e5a587b8d095e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-23](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:e8f27d624c01f38c39ba5b7f432fdb64d26ca392941736ecfecae20e1f413535 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under some methods, the contract liabilities may be calculated net of deferred acquisition costs. In that event, the amounts of deferred acquisition costs and contract liabilities have to be determined separately. ### Internal Replacement Transactions #### Overall ##### [944-30-35-24](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1edf242f052b193e31b939108c5601135a1bfe701760d8eb88391475237c9ecc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") (as described in this Subsection) occurs and the rights and obligations of the parties to the contract are substantially unchanged (based on an evaluation of the conditions specified in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37)) from those under the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction."), the [replacement contract](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction.") shall be accounted for as a continuation of the replaced contract in accordance with the guidance beginning in paragraph [944-30-35-38](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-38). ##### [944-30-35-25](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:5ae9044301766ea4a5f963da389221a1b1dd4debcce1e233860a6f41ba733901 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the internal replacement occurs and results in a replacement contract that is substantially changed from the replaced contract, the replaced contract shall be accounted for as extinguished in accordance with the guidance in paragraphs [944-30-40-1 through 40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) . ##### [944-30-35-26](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:212ba0cd461e485d590d5101eb5b0a2f56ec8f2a4b06a5262e1cd3b896e266d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Modifications (other than partial withdrawals, surrenders, or reductions in [coverage](https://asc.understandingaccounting.org/glossary/c/#coverage "An insurance entity's exposure to loss. The concept of coverage would typically include policy limits, deductible, insured, and covered property or insured event.") \[see paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29)\]) that result from the election by the contract holder of a benefit, feature, right, or coverage that was within the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") are not internal replacements subject to this guidance as long as all of the following conditions are met: 1. a The election is made in accordance with terms fixed or specified within narrow ranges in the original contract. 2. b The election of the benefit, feature, right, or coverage is not subject to any underwriting. 3. c The insurance entity cannot decline to provide the coverage or adjust the pricing of the benefit, feature, right, or coverage. 4. d The benefit, feature, right, or coverage had been accounted for since the inception of the contract. ##### [944-30-35-27](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d443c9e37c6e4a8c19985fea6c1b616491a8dbbfad768d269f9c65855e2af54f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of (d) in the preceding paragraph include both of the following: 1. a The option to elect the feature is an embedded option within the contract that is required to be accounted for under Subtopic 815-15. 2. b The existence of the option to elect a feature was assessed in the classification of and accounting for the contract, such as the classification of the contract as an insurance contract under Section 944-30-15. ##### [944-30-35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1d09a7c31ace3695d69e71f93222ee373e643f38f4da6cc564360c74a7b78402 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [payout phase](https://asc.understandingaccounting.org/glossary/p/#payout-phase "The period during which the contract holder is receiving periodic payments from an annuity, also referred to as the annuitization phase.") of a contract is separate and distinct from and shall not be accounted for as a continuation of the [accumulation phase](https://asc.understandingaccounting.org/glossary/a/#accumulation-phase "The period during an annuity contract before annuitization. An insurance entity may call an annuity having an accumulation phase a deferred annuity."), even if annuitization is in accordance with terms fixed in the original contract. ##### [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d1a587dc961a855cf6d7b463226b11246743f11b84cf2e40939aeed671d3ad46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Partial withdrawals, surrenders, or reductions in coverage (for example, reduced face amount on a life insurance contract or higher deductibles on a property casualty contract), as allowed by terms that are fixed and specified at contract inception either in the contract or other information available to the contract holder or, if required by state law or regulation, at terms in effect when the reduction is made for that benefit, feature, right, or coverage, whether or not [surrender charges](https://asc.understandingaccounting.org/glossary/s/#surrender-charges "Amounts expected to be assessed against policyholder balances at contract redemption, whole or partial, regardless of how the charges are labeled, such as contingent deferred sales charges.") or other [termination](https://asc.understandingaccounting.org/glossary/t/#termination "In general, the failure to renew an insurance contract. Involuntary terminations include death, expirations, and maturities of contracts. Voluntary terminations of life insurance contracts include lapses with or without cash surrender value and contract modifications that reduce paid-up whole-life benefits or term-life benefits.") charges are assessed, are not internal replacements subject to this guidance, as long as there are no [reunderwriting](https://asc.understandingaccounting.org/glossary/r/#reunderwriting "The reexamination of the insurance risk of the entire contract for purposes of acceptance or rejection or for rating the risk for pricing purposes.") or other modifications to the contract, at that time, that would require evaluation under paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). #### Integrated and Nonintegrated Contract Features ##### [944-30-35-30](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:fd3b25bd98951f01c45392b289805f7c3debbb6272689e59863d68fa8d060b96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For long-duration contracts, [integrated contract features](https://asc.understandingaccounting.org/glossary/i/#integrated-contract-feature "A contract feature in which the benefits provided by the feature can be determined only in conjunction with the base contract.") are those for which the benefits provided by the feature can be determined only in conjunction with the account value or other contract holder balances related to the [base contract](https://asc.understandingaccounting.org/glossary/b/#base-contract "The type of contract specified in the policy form before the addition or election of riders or other contract features. For example, for an annuity with a guaranteed-minimum-income-benefit rider, the annuity would be considered the base contract."), and [nonintegrated contract features](https://asc.understandingaccounting.org/glossary/n/#nonintegrated-contract-feature "A contract feature in which the benefits provided are not related or dependent on the provisions of the base contract.") are those for which the determination of benefits provided by the feature is not related to or dependent on the account value or other contract holder balances of the base contract. Underwriting and pricing for nonintegrated contract features typically are executed separately from other components of the contract, and it is inherent in this concept that the premium charged is not in excess of an amount that is commensurate with the incremental insurance coverage provided. ##### [944-30-35-31](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:359177aeffe2b843aaaac235f0890c8970646f1f483d5ba38428caf2405a9e2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For short-duration contracts, nonintegrated contract features are those that provide coverage that is underwritten and priced only for that incremental insurance coverage, and do not result in the explicit or implicit reunderwriting or repricing of other components of the contract. It is inherent in this concept that the premium charged is not in excess of an amount that is commensurate with the incremental insurance coverage provided. Additional coverage provided by a nonintegrated contract feature would be considered nonintegrated even though the entire coverage provided by the short-duration contract may be subject to only one deductible or limit in the event of an insured loss. For short-duration contracts, integrated contract features are those where there is explicit or implicit reunderwriting or repricing of existing components of the base contract. #### Contract Modifications Involving Nonintegrated Contract Features ##### [944-30-35-32](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:00777353b0e12cc7f9b36fcf220cbcb7d41f93465f833cd92852eaa503a43046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a contract feature or coverage is nonintegrated, the addition or election of that feature or coverage, in and of itself, does not change the existing base contract and, as a result, further evaluation of the base contract under paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) is not required. ##### [944-30-35-33](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:457be6d78380b74b87a70ace09bb0c78c6abef904ace8de64928d2061a4e3a52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nonintegrated contract feature or coverage shall be accounted for in a manner similar to a separately issued contract. ##### [944-30-35-34](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:279ad47b04116e5b777c5e4ec9fb46b1dc7720eea40c49bef70ed6527c645464 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsequent modifications made only to the nonintegrated contract feature or coverage shall be evaluated under paragraphs [944-30-35-26 through 35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) separately from the base contract, and any deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") related to the nonintegrated contract feature or coverage accounted for accordingly. ##### [944-30-35-35](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:fa43c2a3970631c51c549a83928440fb7973b2c23d7d4354fc7d0c4a379c74dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsequent termination of a nonintegrated contract feature or coverage shall be accounted for as an extinguishment of only the balances related to the nonintegrated contract feature or coverage. #### Contract Modifications Involving Integrated Contract Features ##### [944-30-35-36](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:31b6486f95e1436d58c9045ce5728fcc8d08c1ab3120f9d7cd4bdf881ab16e83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contract modifications involving integrated contract features or coverages (other than those contract modifications described in paragraphs [944-30-35-26 through 35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ) the insurance entity shall review the conditions set forth in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) to determine whether the contract has changed substantially as a result of the modification. As a result of that review, either of the following actions shall be taken: 1. a Continuation. A contract modification meeting all of the conditions in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) results in a replacement contract that is substantially unchanged from the replaced contract, and shall be accounted for as a continuation of the replaced contract in accordance with paragraphs [944-30-35-38 through 35-40](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-38) and [944-30-35-46 through 35-60](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-46) . 2. b Extinguishment. A contract modification that fails any of the conditions in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) results in a replacement contract that is substantially changed from the replaced contract, and shall be accounted for as an extinguishment of the replaced contract in accordance with paragraphs [944-30-40-1 through 40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) . ##### [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:2c334ba7146ac0b53700fd407128a4107cf889c89373fc0a8f84a402372f8430 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An internal replacement (other than those described in paragraphs [944-30-35-26 through 35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ) is determined to involve contracts that are substantially unchanged only if all the following conditions exist: 1. a The insured event, risk, or period of coverage of the contract has not changed, as noted by no significant changes in the kind and degree of [mortality risk](https://asc.understandingaccounting.org/glossary/m/#mortality-risk "The obligation to make payments that are contingent upon the death or continued survival of a specific individual or group."), [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk, or other [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."), if any. 2. b The nature of the investment return rights (for example, whether amounts are determined by formulas specified by the contract, pass through of actual performance of referenced investments, or at the discretion of the insurer), if any, between the insurance entity and the contract holder has not changed. 3. c No additional deposit, premium, or charge relating to the original benefit or coverage, in excess of amounts specified or allowed in the original contract, is required to effect the transaction; or if there is a reduction in the original benefit or coverage, the deposit, premiums, or charges are reduced by an amount at least equal to the corresponding reduction in benefits or coverage. 4. d Other than distributions to the contract holder or contract designee or charges related to newly purchased or elected benefits or coverages, there is no net reduction in the contract holder's account value or, for contracts not having an explicit or implicit account value, the cash surrender value, if any. 5. e There is no change in the participation or dividend features of the contract, if any. 6. f There is no change to the amortization method or revenue classification of the contract. If any of the conditions are not met, an internal replacement is determined to involve a replacement contract that is substantially changed from the replaced contract. Example 2 (see paragraph [944-30-55-33](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-33)) illustrates the application of this guidance. ##### [944-30-35-38](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d2633dd6f3e60007edc2c27fb5ccaa5654b1f127d033e0eea2b30df4c6a6bad3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An internal replacement that is determined to result in a replacement contract that is substantially unchanged from the replaced contract shall be accounted for as a continuation of the replaced contract. However, even if both accumulation and payout phase contracts are [investment contracts](https://asc.understandingaccounting.org/glossary/i/#investment-contracts "Long-duration contracts that do not subject the insurance entity to risks arising from policyholder mortality or morbidity.") involving no life contingencies, the payout phase of a contract is separate and distinct from and cannot be accounted for as a continuation of the accumulation phase of the contract. For a short-duration contract, renewal results in a separate and distinct contract that cannot be accounted for as a continuation of the previous contract. Example 1 (see paragraph [944-30-55-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-12)) illustrates the application of this guidance. ##### [944-30-35-39](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1ae7ebc1436d094bf5c4da55623372ef45b9be1e820bcd6458854edc62455f1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized deferred acquisition costs, unearned revenue liabilities, and deferred sales inducement assets associated with the replaced contract shall continue to be deferred and amortized or earned in connection with the replacement contract. If the replaced contract was acquired in a business combination, any present value of future profits shall be accounted for in a similar manner. ##### [944-30-35-40](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:c06c754029ebdad3fd52a305313defa337800d81633a26d3b125ccacf1ffbf51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other balances associated with the replaced contract, such as any liability for minimum guaranteed death benefits or guaranteed minimum income benefits, shall be accounted for in a similar manner, that is, as if the replacement contract is a continuation of the replaced contract. ##### [944-30-35-41](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:05f60d4052757539a4d8a581b39d2ee0d240c79330239a2d62b4477db1c0168e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a8d0e9de38c995550a18edd24f923d2d7308c4b397e420482963734d247f3ce7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-43](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:69b1ba00a9b917ba108e8b67f6647ab02bedec077b3abb395374140047755042 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-44](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:5503487dd5183ce64d21328e81758c6a087ce867baadfacf64a5eeb97dae7097 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-45](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:b6eca9fff21df0a753f4aab17619260e63b28ac8bf96dab71188b669f608a998 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-35-46](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:371591c84ad9f64f69aa4d5698e1e2683c80f789d989c690bde2eaa9f6410f0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For long-duration contracts other than investment contracts described in paragraph [944-30-35-48](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-48), a replacement contract that is substantially unchanged shall be viewed as a prospective revision of the replaced contract with future amortization of unamortized deferred acquisition costs adjusted, accordingly, on a prospective basis. Under the prospective revision methodology for long-duration contracts other than certain investment contracts, the unamortized deferred acquisition costs balance at the time of replacement is unchanged. ##### [944-30-35-47](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:02d58f8a8a47d8b8f5f316bdbe4e597fdc0d53234195aef6e630461c8efb4a28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is not reasonably practicable for an insurance entity to account for a [contract exchange](https://asc.understandingaccounting.org/glossary/c/#contract-exchange "The legal extinguishment of one contract and the issuance of another.") that has resulted in a replacement contract that is substantially unchanged from the replaced contract, the insurance entity shall determine the balance of unamortized deferred acquisition costs related to the replaced contract to carry forward to the replacement contract and determine future amortization on a prospective basis. The total balance of unamortized deferred acquisition costs before the internal replacement shall be allocated between replaced contracts and contracts remaining in the original book of business based on a reasonable and systematic allocation process. ##### [944-30-35-48](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:4397d977433ccb7f5a5c84f289abf45b3eff6864413f836fa30c0edee21a4bdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contracts to which the interest method amortization methodology discussed in Subtopic 310-20 is applied, the replacement contract represents revisions to the cash flows of the replaced contract, and unamortized deferred acquisition costs and deferred sales inducement assets are adjusted accordingly. ##### [944-30-35-49](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:3185a90763f1a30bf6b4b9a462c0f64b683700d5fb5f53823369ec79a58cccc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The balance of unamortized deferred acquisition costs and other contract-related balances shall be updated based on the most current assumptions at the time of the internal replacement. ##### [944-30-35-50](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:63fead322be866dae992b4f5568bcb1b961ac3fb4549af95c7b3149f3d4b4263 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any related liability for future policy benefits or [market risk benefits](https://asc.understandingaccounting.org/glossary/m/#market-risk-benefit "A contract or contract feature in a long-duration contract issued by an insurance entity that both protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk.") for a substantially unchanged contract shall be updated as described in Subtopic 944-40 on claim costs and liabilities for future policy benefits. ##### [944-30-35-51](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:07b873d3a7695f59b7d683f6ff150e16123c0b5f5d7d9d3ddb36a274507a988f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other balances that are determined based on activity over the life of the contract, such as an additional liability for death or other insurance benefits (which, under this Subtopic, is determined based on assessments and benefit costs) shall be calculated considering the entire revised life of the contract, including activity during the term of the replaced contract. ##### [944-30-35-52](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:2333a12062046ecda6f7f1ba502670f607afaf5a196079ee166198d4902a8995 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A revision to a short-duration contract is viewed as a prospective revision with future recognition of unearned premium and amortization of unamortized deferred acquisition costs adjusted, accordingly, on a prospective basis. ##### [944-30-35-53](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:293e2333a1ccf0035b813067bac586cb22327630c30ddc67a8a5586e2e8d6a78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consistent with the guidance in paragraphs [944-30-35-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-1A) and [944-605-25-1](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-1), unearned premium is recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided, amortization of deferred acquisition costs continues to be recognized in proportion to the premium recognized, and the revised amortization ratio is used prospectively. ##### [944-30-35-54](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:7d39e9363cdb385191c89962cb111ba7300d736ea8ba5d0555bf0ce4018a2214 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the modification is a reduction in benefits with a directly proportionate reduction in premiums, the modification shall result in an immediate proportionate reduction in unamortized deferred acquisition costs rather than a prospective revision. ##### [944-30-35-55](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:e85936ec870a1fed9c0f379ca87a91d915ca06f748ee46b20d1037f6deb2c66c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs incurred in connection with an internal replacement that results in a replacement contract that is substantially unchanged from the replaced contract shall be accounted for as policy [maintenance costs](https://asc.understandingaccounting.org/glossary/m/#maintenance-costs "Costs associated with maintaining records relating to insurance contracts and with the processing of premium collections and commissions.") and charged to expense as incurred. ##### [944-30-35-56](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:9658188a96578b4550e7059bcac9ed3789daa79d1f90be55e2e0ca5d50425683 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of renewal commissions paid on the replacement contract that meets the criteria for deferral under this Subtopic, limited to the amount of the future deferrable renewal commissions on the replaced contract that would have met the deferral criteria, continues to be deferrable under those provisions. ##### [944-30-35-57](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:442cd8e41212b2270a6aa96aba19516de020c72cca551fe30de668e9ac938c84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an insurance entity assesses a surrender charge on the replaced contract that is offset by an immediate sales inducement to a contract holder on the replacement contract, the insurance entity shall offset any surrender charges assessed against the contract holder's account balance under the replaced contract against any stated immediate sales inducement to determine whether there has been a net reduction in the contract holder's account value in accordance with paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). ##### [944-30-35-58](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:fb934bf0759575689f49095fc419bac6c1ab177f778a93bc111ed7a98e6dee4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability for a sales inducement to a contract holder offered in conjunction with an internal replacement of a long-duration contract that is determined to result in a replacement contract that is substantially unchanged from the replaced contract shall be accounted for from the date of its addition to the replacement contract in accordance with the guidance in paragraph [944-40-25-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-12). ##### [944-30-35-59](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:040463101c306c5c197266cba88396fd7892a0bc2cc2a7ce729202784a0d57a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Sales inducements](https://asc.understandingaccounting.org/glossary/s/#sales-inducements "Contractually obligated inducements that are identified explicitly in a contract and are in excess of current market conditions. A sales inducement to a contract holder enhances the investment yield to the contract holder. The three main types of sales inducements are an immediate bonus, a persistency bonus, and an enhanced-crediting-rate bonus.") provided to the contract holder, whether for investment or universal life-type contracts, shall be recognized as part of the liability for policy benefits over the period in which the contract must remain [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") for the contract holder to qualify for the inducement or at the crediting date, if earlier, in accordance with paragraphs [944-30-35-46 through 35-51](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-46) . No adjustments shall be made to reduce the liability related to the sales inducements for anticipated surrender charges, [persistency](https://asc.understandingaccounting.org/glossary/p/#persistency "The complement of the termination rate, persistency is the renewal quality of insurance contracts, that is, the number of insureds that keep their insurance in force during a period. Persistency varies by plan of insurance, age at issue, year of issue, frequency of premium payment, and other factors."), or early withdrawal contractual features. ##### [944-30-35-60](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:205c63147118201d77e752edd1184d46aa45d2112ff38a9148cb5978223ba2c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The criteria in paragraphs [944-30-25-6 through 25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) for recognition of a related sales inducement asset cannot be satisfied in these circumstances because the sales inducement was not specifically identified in the original contract. #### Contract Assessments ##### [944-30-35-61](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:be550a3b98f25258dc6eeb990e2031eaba5a873747e9e39013ff8bf1e91b79c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Front-end fees](https://asc.understandingaccounting.org/glossary/f/#front-end-fees "See Initiation or Front-End Fees.") assessed in connection with an internal replacement of a long-duration contract shall be evaluated for deferral in accordance with the guidance in Subtopic 944-605 on revenue recognition. ##### [944-30-35-62](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:7284f292ebac493e0e99f85babede2dbc0c41d336cfd21705cc0f2bc20ca5837 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). #### Recoverability ##### [944-30-35-63](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:93999a95458c65c2a2d98113b6781fe0c352cf6228f5f26787735372508e7634 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized deferred acquisition costs for short-duration contracts and the present value of future profits continue to be subject to premium deficiency testing in accordance with the provisions of Subtopic 944-60. ### Reinsurance Contracts ##### [944-30-35-64](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1c37983d8332c7d309a134dcf3d916156bc94fd3c9909f4abfcff312e240b90f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Proceeds from [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") transactions that represent recovery of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") shall reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense in accordance with the amortization guidance in this Section that applies to those unamortized acquisition costs. Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:4787f82031e038bcf61b6a4194e5e08b9fd258b05c1a7b6b66a037e68d6e22f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/944/30/#40-derecognition) SEC content: no ### Internal Replacement Transactions #### Contracts That Are Substantially Changed ##### [944-30-40-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:58913a73930ebbe9e7997795bfb40d39676c88ae800868e72672cd147cb5be3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") that is determined under paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) to result in a [replacement contract](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction.") that is substantially changed from the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction.") shall be accounted for as an extinguishment of the replaced contract. ##### [944-30-40-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:db2e69de883b12d06d6af9a3e8caf055783f00f8ef381f40dfcab0950701c7f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts."), unearned revenue liabilities, and deferred sales inducement assets from the replaced contract in an internal replacement transaction that results in a substantially changed contract shall not be deferred in connection with the replacement contract. If the replaced contract was acquired in a purchase business combination, any present value of future profits shall be accounted for in a similar manner. ##### [944-30-40-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:a86b11f90b64bec8993b3b1d9d28c262469f9b01fa3ec9ff23d513fbcf756329 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other balances associated with the replaced contract, such as any [liability for future policy benefits](https://asc.understandingaccounting.org/glossary/l/#liability-for-future-policy-benefits "An accrued obligation to policyholders that relates to insured events, such as death or disability.") or [market risk benefits](https://asc.understandingaccounting.org/glossary/m/#market-risk-benefit "A contract or contract feature in a long-duration contract issued by an insurance entity that both protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk."), shall be accounted for based on an extinguishment of the replaced contract and issuance of a new contract. ##### [944-30-40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:b9bd8a97d6a7227d0bb40ec489ecac88ea68efa3481c67a679d761aac922cc72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs related to the replacement contract shall be evaluated for deferral in accordance with Section 944-30-25. Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:978b45324e5eac42f9fad67d57f8a2c894f9e9bcfd110bc3e29f46d13a1a5d21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/30/#45-other-presentation-matters) SEC content: no ##### [944-30-45-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:f0337692372a2abc5fabf3d6ee0added9a74e08509e2878043492246b886f565 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") shall be classified as an asset. ### Long-Duration Contracts #### Deferred Sales Inducement Asset ##### [944-30-45-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:7488861ac6d3b62e2b516826481552cf1bf36bb38915e7b88635100cfb0835fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount deferred under paragraph 944-30-25-7 shall be recognized on the statement of financial position as an asset and amortization shall be recognized as a component of benefit expense. ##### [944-30-45-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:3435cc4bcd840b8137a10a9adbab19dea5f70a250d2d669cf277cff629619c0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-825-45-1](https://asc.understandingaccounting.org/asc/825/944/#825-944-45-1) states that deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") related to [investment contracts](https://asc.understandingaccounting.org/glossary/i/#investment-contracts "Long-duration contracts that do not subject the insurance entity to risks arising from policyholder mortality or morbidity.") shall be reported as an asset to be consistent with the guidance in the preceding paragraph. Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:d71db0ab772ef972ea375294cc6a58451a6563faa30351239565e2b6770c0b56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/30/#50-disclosure) SEC content: no ##### [944-30-50-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:40e777d53582552d148e21a79b0d92a8c9390019029982236278cd02f1dfa2d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities shall disclose all of the following in their financial statements: 1. a The nature and type of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") capitalized 2. b The method of amortizing capitalized acquisition costs 3. c The amount of acquisition costs amortized for the period. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Insurance entities shall disclose all of the following in their financial statements: 1. a The nature and type of [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") capitalized 2. b The method of amortizing capitalized acquisition costs 3. c The amount of acquisition costs amortized for the period. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ### Long-Duration Contracts ##### [944-30-50-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:ef1b920f2c25955cd04cad894e040242cc5509b63880050ffc25154327a05e27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-50-2A](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2A) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:5e593c3ab99f953dd995841725121f453c8a6e3c43ee49a004b59c2e88865dd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, and to the extent required by Topic 270 on interim reporting, an insurance entity shall disclose the following information about deferred acquisition costs and sales inducements: 1. a The nature of the costs deferred 2. b Information about the inputs, judgments, assumptions, and methods used to determine amortization amounts and changes in those inputs, judgments, and assumptions. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For interim and annual reporting periods, an insurance entity shall disclose the following information about deferred acquisition costs and sales inducements: 1. a The nature of the costs deferred 2. b Information about the inputs, judgments, assumptions, and methods used to determine amortization amounts and changes in those inputs, judgments, and assumptions. ##### [944-30-50-2B](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:5c47e3e2abf0d0b8d23e55b83a1a491abe73db36fde77ff5a3a7ed489f6ace37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual and interim reporting periods, an insurance entity shall disclose the following: 1. a A year-to-date disaggregated tabular rollforward of the beginning to the ending balance of unamortized deferred costs—and balances amortized on a basis consistent with deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts."), to the extent that such balances are not included in the tabular rollforwards required in Section 944-40-50—disaggregated in a manner that is consistent with the disaggregation of the related liability disclosures 2. b A reconciliation of the disaggregated rollforwards to the aggregate ending carrying amount in the statement of financial position. ##### [944-30-50-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:c2d8af48da1b053f0af129438336fed173427baec863b24a5db2c66c97eed9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ### Internal Replacement Transactions ##### [944-30-50-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:c79bd3a029539285258362e7579d7c830a254cf5e948214280c7ff330927155d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The notes to financial statements shall describe the accounting policy applied to internal replacements, including whether or not the entity has availed itself of the alternative application guidance outlined in paragraphs [944-30-35-47](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-47) and [944-30-35-49](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-49) and, if so, for which types of [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transactions. ##### [944-30-50-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:313a8c8df7b900618016ffd6abd3b60c4e6239cfef874966a7db698696d8f14a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:934e5851f586653b11348c08e15c66406e5998601b2cc6345b1a932c841d026e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/944/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [944-30-55-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:243c9c43c5ea970fdb9339ce33a13e765c00755d04207737cea4e279580547b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-30-25-1A(a)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) requires that an insurance entity capitalize [incremental direct costs of contract acquisition](https://asc.understandingaccounting.org/glossary/i/#incremental-direct-cost-of-contract-acquisition "A cost to acquire an insurance contract that has both of the following characteristics: It results directly from and is essential to the contract transaction(s). It would not have been incurred by the insurance entity had the contract transaction(s) not occurred."). Such costs include the following: 1. a An agent or broker commission or bonus for successful contract acquisition or acquisitions. 2. b [Subparagraph superseded by Accounting Standards Update No. 2010-26](https://asc.understandingaccounting.org/updates/asu-2010-26/). 3. c Medical and inspection fees for successful contract acquisition or acquisitions. ##### [944-30-55-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:555f187bbde7de756767b6b9cbe67d29463e2f5602f89ab95e2529aa1795d1d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of other costs related directly to the insurer's acquisition activities in paragraph [944-30-25-1A(b)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) that would not have been incurred by the insurance entity had the acquisition contract transaction(s) not occurred include all of the following: 1. a Reimbursement of costs for air travel, hotel accommodations, automobile mileage, and similar costs incurred by personnel relating to the specified activities 2. b Costs of itemized long-distance telephone calls related to contract underwriting 3. c Reimbursement for mileage and tolls to personnel involved in on-site reviews of individuals before the contract is executed. ##### [944-30-55-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:4c214665482ebd9f5c38ff9ee1406bf6756bc64f4052b05b8f8136fc02a221e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs for software dedicated to contract acquisition are not eligible for deferral as deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") under the definition of that term. Such costs are not other costs related to those activities that would not have been incurred but for that contract under the definition of that term. ##### [944-30-55-1C](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:047c3fa078b8d063b278ac1f4b73edecd8bb180d8ae88860f1822d4271b6679d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payroll-related fringe benefits include any costs incurred for employees as part of the total compensation and benefits program. Examples of such benefits include all of the following: 1. a Payroll taxes 2. b Dental and medical insurance 3. c Group life insurance 4. d Retirement plans 5. e 401(k) plans 6. f Stock compensation plans, such as stock options and stock appreciation rights 7. g Overtime meal allowances. ##### [944-30-55-1D](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:1d5ec20fa89d736273caa891b72bffe083ace8ede2db65ed8ee0a31959e4001c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not specify how costs are to be determined but rather what costs must be deferred. In many instances, standard costing may be used to estimate the costs to be deferred in accordance with this Subtopic. For certain contracts, the cost of acquisition may be similar and standard costing may be appropriate for those contracts, while other contracts may be of such a nature that costs must be identified separately. Insurers may use any one or a combination of methods that will provide adequate information to report financial results in accordance with this Subtopic. Development of a standard costing system will require periodic analysis of variances and, if necessary, adjustment of standard costing estimates. Possible standard costing methods that may be used to measure costs applicable to transactions that have occurred include standard costs, actual costs, job process costs (for example, homogeneous policies), or job order costs (for example, specific contracts). ##### [944-30-55-1E](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b1b64f632514e7c67382a22835446deab12c1624f0b75188ba044ee9401e52af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The successful-efforts accounting notion utilized at an entity-wide level may result in a standard costing system that does not accurately reflect the amount of costs that may be deferred and amortized under this Subtopic. Successful acquisition efforts can be determined as a percentage of each function (for example, application, underwriting, and medical and inspection) and may be based on the percentage, adjusted for idle time and time spent on activities for which the related costs cannot be deferred, of successful and unsuccessful efforts determined for each function. ##### [944-30-55-1F](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:e6ee21608b07526bc65904ba809cbc3e7f879693ffdfb49b65cca226027d3775 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All other contract acquisition-related costs, including costs related to activities performed by the insurer for soliciting potential customers (except direct-response advertising capitalized in accordance with paragraph [944-30-25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA)), market research, training, and administration, should be charged to expense as incurred. Employees' compensation and fringe benefits related to those activities, unsuccessful contract acquisition efforts, and idle time should be charged to expense as incurred. Administrative costs, rent, depreciation, and all other occupancy and equipment costs are considered indirect costs and should be charged to expense as incurred. ##### [944-30-55-1G](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:443b29a0995ec5032ee80e2243243ac760b9df99f7e5ff90b49dbf84ecc4dcd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of total compensation of executive employees that relates directly to the time spent approving successful contracts may be deferred as acquisition costs under the definition of that term. For example, the amount of compensation allocable to time spent by members of a contract approval committee is a component of acquisition costs. ### Long-Duration Contracts #### Illustrations ##### [944-30-55-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d4deacf38f037c597bca4f7c356301038d9e94487b841da97e3b43440aab517b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the tabular rollforward that an insurance entity should disclose in its financial statements to meet the requirements of paragraph [944-30-50-2B(a)](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2B). 1. a [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). - Note X: Deferred Acquisition Costs - The balances of and changes in deferred [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") as of and for the years ended December 31, 20X2, and December 31, 20X1, respectively, follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-EDA7E218-86A2-4582-BBBC-F92C926D0AC1-low.gif) "As of December 31, 20X2" Whole Life Universal Life Fixed Annuity Variable Annuity Variable Universal Life Total "Balance, beginning of year" $YYY $YYY $YYY $YYY $YYY $YYY Capitalizations XXX XXX XXX XXX XXX XXX Amortization expense (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) Experience adjustment (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) "Balance, end of year" $ZZZ $ZZZ $ZZZ $ZZZ $ZZZ $ZZZ "As of December 31, 20X1" Whole Life Universal Life Fixed Annuity Variable Annuity Variable Universal Life Total "Balance, beginning of year" $WWW $WWW $WWW $WWW $WWW $WWW Capitalizations XXX XXX XXX XXX XXX XXX Amortization expense (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) Experience adjustment (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) "Balance, end of year" $YYY $YYY $YYY $YYY $YYY $YYY ##### [944-30-55-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:e37dc93293571c81ef3721ba539a6ab582f1358d6555ea468c7523a4a3f7c682 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:c88a12fb0965ead1f18d8b7bc6c92caee9673bc0e1a58c68d78995cbf287dcde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:90785e314042b25a8eb2110d13ee9b33a74d84351671419becabb8be5745d65e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:40c240b5534e83dee5f5ec614e98407d354cbdbfd639e52e2a5894c8c8b876b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:fc0fae76c119702bd548b86f5b7e05666e74b12922133bdb11bb92d87c126fb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the computation of amortization on a constant level basis. In this Example, a block of long-duration guaranteed-renewable five-year term life insurance contracts are grouped and amortized in proportion to the amount of insurance [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") to derive an approximate level amortization amount on an individual contract basis. In 20X1, the insurance entity defers costs totaling $80 and projects the balance of insurance in force over 5 years. The insurance entity would need to include mortality and lapse assumptions to project the balance of insurance in force; however, for ease of illustration, no mortality or lapses are assumed (see paragraph [944-30-55-7B](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7B) for subsequent changes to the mortality and lapse assumptions). - ![](https://asc.understandingaccounting.org/asc-img/GUID-92F8565F-4193-4B28-9C8B-58BBCDEF6242-low.gif) Schedule One Year Balance of Insurance in Force 20X1 " $1,000 " 20X2 " 1,000 " 20X3 " 1,000 " 20X4 " 1,000 " 20X5 " 1,000 " Total " $5,000 " (x) Capitalized acquisition costs $80 (y) Amortization rate = (y) / (x) 1.60% (z) - ![](https://asc.understandingaccounting.org/asc-img/GUID-FF3CC961-CCF3-44F2-AF93-894BF6A7FCCE-low.gif) Schedule Two "Capitalized costs, year one" $80 "Amortization, year one" "Balance of insurance in force of $1,000 (from Schedule One) at rate (z) above" (16) "Balance, end of year one" $64 ##### [944-30-55-7A](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:c2f36c3d780c788b546fc1edf1f1784ddbf6097c2e2e3f04952b55db5798bbf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the beginning of 20X2, the entity incurs an additional $10 of deferrable acquisition costs and computes the amortization rate and expense for 20X2 as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-40584995-946D-4D01-BBEC-16411332B5FE-low.gif) Schedule Three Year Balance of Insurance in Force 20X2 " $1,000 " 20X3 " 1,000 " 20X4 " 1,000 " 20X5 " 1,000 " Total " $4,000 " (x) Capitalized acquisition costs $74 (y) Amortization rate = (y) / (x) 1.85% (z) ##### [944-30-55-7B](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d0bc86e4ce6f043d7a059875c4973b0b57fc34a4813af23a46a1b99ebd05272d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of 20X2, the entity experienced unexpected contract terminations that resulted in the writeoff of deferred acquisition costs at the end of the reporting period. In addition, the entity updated the expected balance of insurance in force for the remaining periods. - ![](https://asc.understandingaccounting.org/asc-img/GUID-DAEB00E2-7F83-49E1-835E-705ECB552371-low.gif) Schedule Four "Capitalized costs, year two" $74 "Amortization, year two" "Balance of insurance in force of $1,000 (from Schedule Three) at rate (z) above" (19) "Experience adjustment, end of year two" Change in balance of insurance in force "$55 × \[(1,000 - 700) / 1,000\]" (17) "Balance, end of year two" $38 - ![](https://asc.understandingaccounting.org/asc-img/GUID-09B368BE-E900-4FF6-8B86-64E51F8599C0-low.gif) Schedule Five Year Balance of Insurance in Force 20X3 $700 20X4 400 20X5 200 Total " $1,300 " (x) Capitalized acquisition costs $38 (y) Amortization rate = (y) / (x) 2.92% (z) - ![](https://asc.understandingaccounting.org/asc-img/GUID-36892719-FF4E-4ECE-91FF-6A0E6C6EE601-low.gif) Schedule Six "Capitalized costs, year three" $38 "Amortization, year three" Balance of insurance in force of $700 (from Schedule Five) at rate (z) above (20) "Balance, end of year three" $18 - ![](https://asc.understandingaccounting.org/asc-img/GUID-9B170E0F-1795-44D6-8D9A-0DF526296C9C-low.gif) Schedule Seven Deferred Acquisition Costs Rollforward Year "Balance, Beginning of Year" Capitalization Experience Adjustment Amortization "Balance, End of Year" 20X1 $- $80 $- $(16) $64 20X2 64 10 (17) (19) 38 20X3 38 - - (20) 18 20X4 18 - - (12) 6 20X5 6 - - (6) - Total $90 $(17) $(73) ##### [944-30-55-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:81afb106b56cd1f523e7039d2237c506f8505454decf18eecb1c753b0f505e3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6761b1dec2e22b1e03d239a9bc5d580fd3e12d138b2ccee0259bc7ea8aead042 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:466ad60a17b409fc5134408617a5b9bb2cfae50637c05fb0ea39fc04046cb6ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ### Internal Replacement Transactions #### Implementation Guidance ##### [944-30-55-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:1ce792e0d10cfdeb388fb5b649c765b17aa603e726db850315474d57901a0278 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A flowchart summarizing the accounting model set out in the Internal Replacement Transactions Subsections of this Subtopic follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-9032F3BA-2C88-4C37-BB6C-9923CF17DE07-low.gif) #### Illustrations ##### [944-30-55-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:34b11e0c32ee392c8dc659a8101241eb84719c80c514c98753de45c7e6739805 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Example illustrates the application of the guidance in the Internal Replacement Transactions Subsections of this Subtopic to an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transaction that results in a substantially unchanged contract. 1. a [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-13](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:45d054044b19b06e35452d14e9149853abf5370e6cacd936201236f5d3c978cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example assumes the following: 1. a An insurance entity is offering to replace its [general account](https://asc.understandingaccounting.org/glossary/g/#general-account "All operations of an insurance entity that are not reported in the separate account(s).") single premium deferred [annuity contracts](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract that provides fixed or variable periodic payments made from a stated or contingent date and continuing for a specified period, such as for a number of years or for life.") with newer general account single premium deferred annuity contracts. 2. b The insurance entity assumes that 50 percent of the [existing contract](https://asc.understandingaccounting.org/glossary/e/#existing-contract "A contract that is currently held by the contract holder and excludes nonintegrated contract features.") holders choose the internal replacement at the end of Year 5. 3. c No [surrender charges](https://asc.understandingaccounting.org/glossary/s/#surrender-charges "Amounts expected to be assessed against policyholder balances at contract redemption, whole or partial, regardless of how the charges are labeled, such as contingent deferred sales charges.") from the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") will be imposed on contract holders who elect to have their contracts replaced. 4. d The contract holder who elects the new contract will receive a higher interest crediting rate than under the older contract but must accept a new surrender charge period. 5. e The insurance entity expects that [persistency](https://asc.understandingaccounting.org/glossary/p/#persistency "The complement of the termination rate, persistency is the renewal quality of insurance contracts, that is, the number of insureds that keep their insurance in force during a period. Persistency varies by plan of insurance, age at issue, year of issue, frequency of premium payment, and other factors.") rates will improve under the [replacement contracts](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction.") as a result of the new surrender charge period and the higher credited interest. ##### [944-30-55-14](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:4f803c9b36b6c234d8f636dff9eea4141c3cbf03567b92395e8cb90c6946b34d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The exchange of the single premium deferred annuity contract for a newer single premium deferred annuity contract in this Example results in the replacement contract being substantially unchanged from the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction."), due to the following: 1. a The insured event or risk, type, or period of [coverage](https://asc.understandingaccounting.org/glossary/c/#coverage "An insurance entity's exposure to loss. The concept of coverage would typically include policy limits, deductible, insured, and covered property or insured event.") of the contract has not changed, as noted by no significant changes in the kind and degree of [mortality risk](https://asc.understandingaccounting.org/glossary/m/#mortality-risk "The obligation to make payments that are contingent upon the death or continued survival of a specific individual or group."), [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk, or other [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."), if any. 2. b The nature of the investment return rights, if any, have not changed. 3. c No additional deposit, premium, or charge relating to the original benefit, in excess of amounts contemplated in the original contract, is required to effect the transaction. 4. d Other than distributions to the contract holder or contract designee, there is no net reduction in the contract holder's account value or, for contracts not having an explicit or implicit account value, the cash surrender value, if any. 5. e There is no change in the participation or dividend features of the contract, if any. 6. f There is no change to the revenue classification of the contract. ##### [944-30-55-15](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:5e70ac9f4759906113f0b714e698d5b06c41095c60aebb4554f521bef9b467b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-16](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:9dfb630761eed017ac079deb27e4580f806863e0f5dff9d065982be50ef98042 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-17](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:2e4b9cd8a1d2684873d7cb70c32014936100e865b562750ddcf1572da6f01193 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-18](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:9455579f1f8ee0c304c8bfa12b5400b7396c1eb6ac5b73c25b9dae6b491b0305 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-19](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6a5abbfccf1093d3270c59aa0136872e434108c2c1944bbb48e45712fd4f117a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-20](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:14722c9aaf917c1d63d92ed54e645d64ef6798b4ddc2112bdf5798391224595d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-21](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:619b6b71760c777f272504b8bcddf863523a89e6a4b47e0f4c275a9e63369ac6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-22](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:5784977f233e9add9175efda6a8d6169f40251400a95fb54491eb7ff2f96c660 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-23](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:9e402ff924f1a378f319155091e32c7186b8c678e638dd5da7452f59206d52a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-24](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:7cdeb4ba207f3ab9e603eb0f1cd24012bba6b39c7f1360c71032db5d6651f67b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-25](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bb7b585a1a65741308d76fe76513e94311f6cf21c190eb7e7ac86c514ee1bf99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-26](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:0e5c53b9fe5d4bcd5eb5c4433a4ff5fcf78dc6b97aa7cb46ca973255ffcdcb8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-27](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:da973a15d6a01b62e74bb5962d006bbf81b4ca8d759af6beb0d2413d070a9f29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:cd78fc31156ae03482bb179d91b81354c7ca1471e1ff2826effa7f8e4c03c7d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:e3375841bccd4c01c4233c04f230a515b99efb1fec49c405c200515753c720be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-30](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:8fb52829941bf74a6b3d69b8da69dcac4e573b2350837bb8a01950cf28935a89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-31](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b57b10c638164443d40b8e2c8c89328c2172a8b22471d0a0a3b3f1d0f31015c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-32](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:55a75bbcd82ff4ac31b249bb9b9d164624d0695f0603e40fc009f3c5401c0503 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-30-55-33](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6cff413ef0f2a576e7b6d4f93db9aeb9cad56fbafd23e13143e58d36938fcaf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following represents implementation guidance for contract modifications and the application of the guidance in Section 944-30-35 for evaluating whether the internal replacements are substantially changed from the replaced contracts. The guidance is based on the specific facts and circumstances; the same conclusions may not be reached for other modifications because of differing facts or circumstances. The following cases represent contract modifications. ##### [944-30-55-34](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:65d7f593963556e5ea47bf0fe41bc008639180fb2b83c620bae1fe59cf75d1ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are several ways in which a contract holder can increase death benefit coverage on a traditional whole life insurance contract. ##### [944-30-55-35](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:cc07973e0aecd527e5d999b339ad51db1e2d30d5eb816ead09e043099461a3dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An option to purchase additional insurance rider gives the contract holder the right to purchase additional insurance coverage with no additional underwriting. That is, the contract holder can increase the face value of the policy for the same type of insurance coverage and in the same form as that provided by the original contract. The additional premium charged is not in excess of an amount that would be commensurate with the additional insurance coverage obtained. The rider could be included in the original contract or added subsequently to its issuance. This is an example of a nonintegrated contract feature. Once purchased, the benefit under the option to purchase additional insurance rider generally is accounted for as a separate contract. ##### [944-30-55-36](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b7ebf069987fbe0c2d217d01535684feaabe08ad80d8d827856f4d5b45c837ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract holder obtains a second life insurance policy for an incremental face amount, with underwriting required on the new policy only. The original contract remains in force without change. This transaction does not fall within the definition of an internal replacement in Section 944-30-35. The accounting for the original contract remains unchanged and the new contract is accounted for independently of the original contract. Any deferrable [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") associated with the new contract are deferred and amortized in accordance with the guidance in Section 944-30-35, as applicable. ##### [944-30-55-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b6ca726041f957e95aece05aa3688e654e15064afe4dfe04904b03ba2d337316 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increased face amount (death benefit) of a traditional life insurance contract effectuated through an amendment or rider to the original contract is considered a nonintegrated feature that should be accounted for separately from the existing life insurance contract, provided that the additional premium charged for that incremental insurance coverage is not in excess of an amount that is commensurate with the incremental insurance coverage and does not result in the explicit or implicit reunderwriting or repricing of other components of the contract. ##### [944-30-55-38](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:2b2aa715dc1823aa460c4fe938e82983ddd4ad08cbda910960e0d8056e33fc1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Universal life-type contracts are long-duration contracts that can provide either death or annuity benefits and are characterized by one of the following features: 1. a One or more of the amounts assessed by the insurer against the policyholder are not fixed and guaranteed by the terms of the contract. 2. b Amounts that accrue to the benefit of the policyholder are not fixed and guaranteed by the terms of the contract. 3. c Premiums may be varied by the policyholder within contract limits without the consent of the insurer. ##### [944-30-55-39](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:a30b2f5bdb7a5ce580ac120e8cd21899ce244feeab3a77343ed0e504527b60ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increase in face amount of a universal life-type contract through an amendment to the original contract is considered an integrated feature as the death benefit under a universal life-type contract is equal to the excess of face amount over contract account value. In this example, only the additional face amount has been underwritten during the contract amendment and the additional premium charged is not in excess of an amount that would be commensurate with the additional insurance coverage obtained. This contract amendment to increase the face amount of a universal life-type contract results in the replacement contract being substantially unchanged from the replaced contract due to the following: 1. a The modification does not result in a change in the insured event, as there is no significant change in the kind and degree of mortality risk. Although the face amount of the contract has increased, it is appropriate in this example to analyze the change in degree of mortality risk by comparing the relationship of the expected cost of the benefit to charges assessed for that benefit, and there was no significant change in this relationship. 2. b There is no change in the nature of the investment return rights from the replaced contract. 3. c There are no changes in the charges related to the original benefits; also, the additional [cost of insurance](https://asc.understandingaccounting.org/glossary/c/#cost-of-insurance "Amounts expected to be assessed for mortality.") is not in excess of an amount commensurate with the additional insurance coverage obtained. 4. d There is no net decrease in the balance available to the contract holder, except to pay the cost of insurance charge for the increased coverage. 5. e There is no change in the participation or dividend feature of the replaced contract. 6. f The modification does not result in a change to either the amortization method or revenue classification of the contract. ##### [944-30-55-40](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bd65a4c0e272759b60536eb67f17b229e1407a11b176cfae4986ce3b91a6a2fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A universal-life type contract may contain a no-lapse guarantee feature that provides for continuing coverage of the contract even if the account value drops to a level that cannot cover the contract charges. The [contract exchange](https://asc.understandingaccounting.org/glossary/c/#contract-exchange "The legal extinguishment of one contract and the issuance of another.") of a universal life-type contract for a universal life-type contract that contains a no-lapse guarantee results in the replacement contract being substantially changed from the replaced contract because the addition of the no-lapse guarantee changes both the period of coverage of the contract as well as introduces a combination of mortality and investment risk. The analysis would be the same if the change had been achieved through the addition of a no-lapse guarantee rider, as it would be considered an integrated benefit (the benefit is a function of the contract account value) and would need to meet the conditions of paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). If, however, the contract holder had elected to add a no-lapse guarantee feature that was included in the original contract (and met the specifications of paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ), the modification would not be considered an internal replacement. ##### [944-30-55-41](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:aea212a6c70792f7ef2de9f13387ed40db5f6b29cf2e7fb6143f4d133b85e6fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A second-to-die feature incorporates multiple mortality events within a single contract, as payment to the beneficiary is made, assuming the contract remains in force, only after both insured individuals die. The contract exchange of a universal life-type contract for a universal life-type contract that contains a second-to-die provision results in the replacement contract being substantially changed from the replaced contract because the addition of the second-to-die feature changes the insured event, as now two mortality events must occur for the beneficiary to obtain the proceeds. If the modification were achieved through amendment, endorsement, or rider rather than through a contract exchange, the analysis and conclusion would be the same as for the contract exchange because the second-to-die provision is an integrated feature. ##### [944-30-55-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:c8596dcc32b2c9b9d01f17c6ca4a2925b0450bfd198d3293b0e97c92e09acb81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An automobile insurance contract is a short-duration contract that generally provides coverage for personal injury and automobile damage sustained by the insured and liability to third parties for losses caused by the insured. A newly purchased car being added to an existing automobile policy with no change in the other vehicles covered or the premium related to the other vehicles under the contract results in additional nonintegrated contract coverage that should be accounted for separately from the existing automobile contract coverage, assuming the underwriting and price for coverage of the new car is determined separately and there is no change, explicit or implicit, in the pricing of the base contract. ##### [944-30-55-43](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:33cb3c36ca0f5086457e3d9d6a55bdb4c6e349a2031817c55c5cbf43e614331d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If one of the existing automobiles under the contract described in paragraph [944-30-55-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-42) above is removed from the automobile contract, it is considered the extinguishment of nonintegrated contract coverage and should be accounted for as an extinguishment of only the balances related to that nonintegrated coverage. The amount refunded to the contract holder from the change in the coverage is determined in accordance with terms that are fixed in the contract or applicable state law or regulation, and no reunderwriting is required for other coverage. The amount refunded to the contract holder reduces the related unearned revenue liability, and unamortized deferred acquisition costs related to the extinguished nonintegrated contract coverage are eliminated. ##### [944-30-55-44](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:87253ad85acc36f0808685c948c89056f6bf2359fa2e6bb4c0ac9afe28f18e8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the automobile insurance contract described in paragraph [944-30-55-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-42) contains one car and one driver, the existing car is sold and replaced with another car, and coverage is changed through a contract endorsement. For accounting purposes, the original automobile contract is extinguished and coverage for a new automobile contract is established for the driver and the new car. The modification is not a reduction in coverage under paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29), as it is a termination of all coverage in the contract, not a partial termination of coverage as described in paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29). It is common practice to net settle the premium and commission adjustments resulting from this contract modification. For accounting purposes, there are in substance two transactions: the extinguishment of one contract, which is accounted for as a contract extinguishment under paragraphs [944-30-40-1 through 40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) , and establishment of a new contract. ##### [944-30-55-45](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:78d2d0cf6fca24f2ff1806403af328b0f58c44e342a9f9261fad8a199208c7f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The addition of a new driver to an existing automobile contract with no other changes in the contract results in additional nonintegrated contract coverage that should be accounted for separately from the existing automobile contract coverage, as the underwriting and price for coverage for the new driver is determined separately. ##### [944-30-55-46](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d7f9566c1c24c3b1cf5ba57c0433e412d0be146f755b1bdfbe68ad25d8bbe521 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If one of the existing drivers under the contract described in paragraph [944-30-55-44](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-44) is removed from the automobile contract, it is the extinguishment of nonintegrated contract coverage and should be accounted for as an extinguishment of only the balances related to that nonintegrated coverage. The amount refunded to the contract holder from the change in the coverage is determined in accordance with terms that are fixed in the contract or applicable state law or regulation, and no reunderwriting is required for other coverage. The amount refunded to the contract holder reduces the related unearned revenue liability, and the balance of the unamortized deferred acquisition costs related to the extinguished nonintegrated contract coverage is eliminated. ##### [944-30-55-47](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b7d3e4ee6461b33bbaed40c1d92f1ec4405fc74965c90db0021adcccfb325728 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An increase in the collision deductible of an automobile contract is, in effect, a reduction in the coverage provided. It is not an internal replacement, but a reduction in coverage under paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29), providing that all the terms that determine the amount refunded from the change in coverage are fixed in the original contract or by applicable state law or regulation and no reunderwriting is required for the continuing coverage. Contractual provisions that allow the contract holder to elect to decrease existing coverage at then-current rates (other than when required by state law or regulation), subject to a stated minimum and maximum, generally are not specific enough to satisfy this requirement. ##### [944-30-55-48](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:3cf826484dfb60a858aff0aadd086ec6e7213faed27b7b25527456bc06075286 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A decrease in the collision deductible of an automobile contract is, in effect, an increase in the coverage provided. It is not an internal replacement, but an election by the contract holder of coverage that was within the original contract as noted in paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) , providing that all the terms that determine the amount of the premium related to the additional coverage are fixed in the original contract or by applicable state law or regulation and no reunderwriting is required of the original coverage. Contractual provisions that allow the contract holder to elect to add future coverage at then-current rates (other than when required by state law or regulation), subject to a stated minimum and maximum, generally are not specific enough to satisfy this requirement. ##### [944-30-55-49](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:238a27ecfdd36e6e587f4222e80109c3efed52f0236dfdb16866e2d3f25dc7b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A homeowner's contract is a short-duration contract that generally provides coverage for loss or damage of property and personal injury occurring on the insured's property. A personal articles floater provides coverage for losses on personal property not covered under the terms of the homeowner's contract. If multiple pieces of jewelry are added to a personal articles floater, each separately identified and priced item constitutes a nonintegrated contract feature. Thus, the addition of a personal articles floater providing coverage for several new pieces of jewelry to an existing homeowner's contract, with no other changes in the contract, results in additional nonintegrated contract coverage that should be accounted for separately from the existing homeowner's contract, as the underwriting and price for coverage for the jewelry is determined separately from the homeowner's contract and does not result in the reunderwriting of the existing coverages provided by the contracts. This is true even though the items covered by the personal articles floater and the homeowner's contract share a deductible and limit in the event of a common loss. The sharing of a common deductible and limit in the event of loss does not determine whether the contract feature or coverage is integrated, as the deductible is a definition of the terms of coverage resulting from a single loss event. ##### [944-30-55-50](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:47a2b390f36c6c65435fc9deb466702923b4c2d7150452c98ac565788487cf30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract holder increases the coverage of a homeowner's contract, which insures a house valued at $350,000 with $300,000 of insurance coverage, to $400,000 to include a recently completed addition to the house worth $100,000. The additional layer of coverage results in a nonintegrated contract feature that should be accounted for separately from the existing homeowner's contract, provided that the additional premium charged for that incremental insurance coverage is not in excess of an amount that is commensurate with the incremental insurance coverage and does not result in the explicit or implicit reunderwriting or repricing of other components of the contract. If, however, there was substantive underwriting of the entire contract, including the original coverage, the contract would be considered to be substantially changed because substantive reunderwriting of existing contract coverage is an indicator that the insurance risk has changed significantly, and would probably also result in the repricing of the entire contract, which would result in failure to satisfy the criteria in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). Additional coverage provided by a nonintegrated contract feature is considered nonintegrated even though the entire coverage provided by the contract is subject to a common deductible and limit in the event of an insured loss. ##### [944-30-55-51](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:55d20cdcdb0c34cdb7dd01fa041cfbfbe8fc99da649aeeb15d9b8ad4fcead04a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract holder currently has an umbrella contract from the same insurance entity as his or her homeowner's contract that provides for liability coverage with a limit of $1 million. The contract holder requests to increase the limit on the umbrella contract to $2 million. This additional layer of coverage results in additional nonintegrated contract coverage that should be accounted for separately from the existing umbrella contract, as the additional premium charged is not in excess of an amount that would be commensurate with the additional insurance coverage obtained ($1 million in excess of $1 million with no additional deductible), and there was no reunderwriting of the original coverage. If, however, there was substantive underwriting of the entire contract, including the original coverage, the contract would be considered to be substantially changed because substantive reunderwriting of existing contract coverage is an indicator that the insurance risk has changed significantly. ##### [944-30-55-52](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bb32fbf55b49a57bbe14c79e233ffda5431631a3228576a81d268524816df6a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A long-term care product provides for a specified payment while the insured qualifies for benefits under the contract; for example, while in a long-term care facility or when receiving care at home. If the long-term care product had an authorized rate increase, the insurance entity may offer the contract holder the option of reducing coverage instead of paying additional premiums (i.e., maintain the current premium rate). For example, if the original contract provided benefit coverage of $100 a day for a $2,000 annual premium and there was an authorized increase of premiums to $2,500, the contract holder could elect to pay the increased premium or, if allowed by the insurance contract, retain annual premiums of $2,000 with reduced benefit coverage of $80 a day. In this example, the increase in premiums from $2,000 to $2,500 is related to a change in the cost of the insurance that is within ranges outlined in the contract and approved by the insurance regulator, and by itself the premium increase is not considered a modification to the contract. The contract holder election of a reduction in benefits is not an internal replacement, but rather a reduction in coverage under paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29), if all the terms for a change in coverage are fixed in the original contract or by applicable state law or regulation and no reunderwriting of the continuing coverage is required. ##### [944-30-55-53](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:524b144cf2505697e635a8ed83a7bc391e147757f123ef0e2225c2f7596496b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the contract holder elected a reduction in benefits under which the terms related to a change in coverage were not fixed in the original contract, the contract modification results in the replacement contract being substantially unchanged from the replaced contract as a result of the following: 1. a The insured event has not changed from the replaced contract. 2. b The exchange does not change the nature of the contract holder's investment return rights. 3. c No additional deposit or premium is required and there are no changes in the charges related to the original benefits in excess of the amounts specified or allowed in the original contract, as the reduction in benefits is not in excess of the corresponding reduction in premiums. (The original contract provided for benefits of $100 a day for $2,000 annual premium, the reduction in benefits to $80 a day is commensurate with the 20-percent reduction in premiums from the increased rate of $2,500 to $2,000.) 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the replaced contract. 6. f There is no change in the amortization method or revenue classification of the replaced contract. ##### [944-30-55-54](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:dcf37a8fc20411ec25ad1a05c7d7ea8b91c1adbcccd3c0bb172421670bd13c66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [single premium deferred annuity](https://asc.understandingaccounting.org/glossary/s/#single-premium-deferred-annuity "A general account fixed deferred annuity with a single premium and guaranteed minimum crediting rate. The crediting rate may vary above the minimum guaranteed rate at the discretion of the insurance entity and typically is declared in advance and set for a defined period (for example, one year or three years), often as a result of a selection made by the contract holder.") typically is classified as an investment contract as addressed in paragraphs [944-20-15-16 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) . ##### [944-30-55-55](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:74743b143f720a7e774460d9be826389548adc9b96404628e162d27426b7c138 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current interest rate guarantee period of a [market value annuity](https://asc.understandingaccounting.org/glossary/m/#market-value-annuity "An annuity that provides for a return of principal plus a fixed rate of return (that is, book value) if held to maturity or, alternatively, a market-adjusted value if surrendered before maturity.") typically does not encompass substantially all of the expected life of the contract. At the end of an interest rate declaration period, a new crediting rate is declared by the insurance entity and may vary above the minimum guaranteed rate. The length of the initial and subsequent interest rate guarantee periods generally is selected by the contract holder. Market value annuities typically are classified as investment contracts. ##### [944-30-55-56](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:3190712b7be2b2c0d53047cef91e5d3710fb47425e261a39e220468d47113e38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this guidance, there is no significant difference in the declared interest crediting rate (further, the change in interest rates is consistent with the change in declaration period), no change in the guaranteed minimum interest rate, no additional deposit or premium is required, and there are no surrender charges or [front-end fees](https://asc.understandingaccounting.org/glossary/f/#front-end-fees "See Initiation or Front-End Fees.") associated with the internal replacement. The contract exchange of a single premium deferred annuity contract for a market value annuity contract results in the replacement contract being substantially unchanged from the replaced contract as a result of the following: 1. a The insured event has not changed from the replaced contract. 2. b The exchange does not change the nature of the contract holder's investment return rights (crediting rate declared by insurance entity, subject to guaranteed minimum crediting rate). The single premium deferred annuity and the market value annuity are both contracts for which the interest rate is periodically reset by the insurance entity subject to a minimum interest rate guaranteed by the contract and, in this example, the current declared interest period does not represent substantially all of the expected life of the contract. The difference between the single premium deferred annuity and the market value annuity results from the manner in which the amount available to the contract holder is determined in the event the contract is terminated prematurely, not the contractual rights and provisions for the determination of the contract holder's investment return in the absence of a premature termination of the contract. 3. c No additional deposit or premium is required, and there are no changes in the charges related to the original benefits. 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the replaced contract. 6. f There is no change in the amortization method or revenue classification of the replaced contract. ##### [944-30-55-57](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:218f57e4aa783d64e2e66d5704d3c0ba1a3dd4af6945c81601b9c8cfb3fa8d96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The single premium deferred annuity and the market value annuity are both contracts for which the interest rate is periodically reset by the insurer subject to a minimum interest rate guaranteed by the contract; the only significant substantive difference between these two contracts is the manner in which amounts are determined in the event of a premature surrender. If the declared interest rate period of the market value annuity constituted substantially all of the expected life of the contract, the change from a contract for which interest is set at the discretion of the insurer to one for which the rate is set by contract would result in a substantially changed contract. ##### [944-30-55-58](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:02511d2e8440f11d5fbba4f6df173fd597ea05395bc7663385ce492a9f3eee50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A single premium deferred annuity has a crediting rate that is set at the discretion of the insurance entity. An equity-indexed annuity is a deferred fixed annuity contract with a guaranteed minimum crediting rate plus a contingent return based on a contractually specified internal or external equity index. Equity-indexed annuities typically are classified as investment contracts with embedded derivatives that are required to be bifurcated from the contract and accounted for separately under Topic 815 (see paragraphs [815-15-55-62 through 55-72](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-62) ). Generally, the equity index feature represents a periodic crediting rate mechanism that affects the amounts credited to the contract holder's account balance, rather than representing a benefit in addition to the account balance that protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk. Periodic crediting rate mechanisms are required to be evaluated for possible bifurcation under Topic 815. However, an equity-indexed annuity also may contain one or more [market risk benefits](https://asc.understandingaccounting.org/glossary/m/#market-risk-benefit "A contract or contract feature in a long-duration contract issued by an insurance entity that both protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk.") (see paragraphs [944-40-55-29A through 55-29D](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29A) ). ##### [944-30-55-59](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:06f3a642622937b2f657bf5bf736496423173ab7ee750e4ff52a37b7c45f9409 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a single premium deferred annuity contract for an equity-indexed annuity results in the replacement contract being substantially changed from the replaced contract because the nature of the contract holder's investment return rights differs significantly between the two contracts. The crediting rate of the single premium deferred annuity contract is declared at the discretion of the insurance entity, while the crediting rate on the equity-indexed annuity is contractually determined by reference to a pool of assets, an index, or other specified formula. ##### [944-30-55-60](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:4dc1e5447079afa64a22f345a788d0dba0b27235fe43e3359ccf0a182304994c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A single premium deferred annuity has a crediting rate that is set at the discretion of the insurance entity. A multi-bucket annuity is a general account deferred annuity for which, subject to a contractually specified minimum crediting rate, the interest rate to be credited on the contract holder's account balance is determined based on the returns achieved on a specified category of investments or investment strategy selected by the contract holder. The contract specifies the rights and provisions for the determination of investment return to the contract holder. ##### [944-30-55-61](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:60061fd547443a76d1a4816deec3a56d5788eebdbc08785f9bb0e59bceb62307 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a single premium deferred annuity contract for a multi-bucket annuity results in the replacement contract being substantially changed from the replaced contract because the nature of the investment return rights are different between the two contracts. In the case of the typical single premium deferred annuity, the interest rate is declared at the discretion of the insurance entity whereas, in the case of the multi-bucket annuity, the interest rate is determined by reference to a specific category of assets or investment strategy selected by the contract holder as defined in the contract. ##### [944-30-55-62](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bd31100eef365ae452d3af81f076d1d0b48d1e5c2e7ace35af2bfe6a049e25f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A fixed-interest rate guaranteed investment contract has a stated fixed crediting rate guaranteed for a specified period. An example of a variable-interest rate guaranteed investment contract is a contract with a credited interest rate defined as London Inter Bank Offered Rate (LIBOR) plus a specified spread. Both types of guaranteed investment contracts are classified investment contracts under paragraphs [944-20-15-16 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) . ##### [944-30-55-63](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:fc3ebeabfb71b65701703f3ad8ca07c63b6ed3f29bd718aebe1f73ff614e3e02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a fixed-rate guaranteed investment contract for a variable-rate guaranteed investment contract results in the replacement contract being substantially changed from the replaced contract because the investment return rights for the determination of the contract holder's investment return are different between the two contracts. In the case of the fixed-rate guaranteed investment contract, the interest rate is fixed and guaranteed whereas, in the case of the variable-interest rate guaranteed investment contract, the investment return to the contract holder is contractually specified to be determined based on the returns achieved on a specified category of investments or tied to a specific index. ##### [944-30-55-64](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:3903a2e45a2e93cea21fc6853032116bc090fb6a3b02db89eb141a1a7bbc9c1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity is a product offered by an insurance entity in which the contract holder's payments are used to purchase units of a [separate account](https://asc.understandingaccounting.org/glossary/s/#separate-account "A separate investment account established and maintained by an insurance entity under relevant state insurance law to which funds have been allocated for certain contracts of the insurance entity or similar accounts used for foreign originated products. The term separate accounts includes separate accounts and subaccounts or investment divisions of separate accounts."). The contract holder directs the allocation of the account value among various investment allocation alternatives and bears the investment risk. The units may be surrendered for their current value in cash (often less a surrender charge) or applied to purchase annuity income contracts. The insurance entity periodically deducts mortality and expense charges from the account. A common feature in variable annuities is a [minimum guaranteed death benefit](https://asc.understandingaccounting.org/glossary/m/#minimum-guaranteed-death-benefit "A feature in an annuity, life insurance, or similar contract that provides that in the event of an insured's death, the beneficiary (or insurer in the case of a reinsurance contract) will receive the higher of the current account balance of the contract or another amount defined in the contract."), with some minimum guaranteed death benefit designs providing more extensive benefits than others. ##### [944-30-55-65](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:5f7d5ca149734ebbf5cc402aa6e4d5a0d4c8379e0a24d80ebbf2e86c7044887c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a variable annuity with a return of premium death benefit guarantee, that in this example is determined to have a minimal degree of mortality risk (although sufficient to result in classification as an insurance contract), for a variable annuity that contains a ratchet death benefit guarantee, that in this example is determined to be a "rich" death benefit, results in the replacement contract being substantially changed from the replaced contract as the change in death benefits substantively changes the degree of mortality risk. The nature of a minimum guaranteed death benefit provision is essentially a combination of mortality and investment events. Although the actual mortality event itself is the same in the return of premium and ratchet guaranteed minimum death benefits (death of the contract holder), the risk has changed because of the combined effects of mortality and investment events. In this instance, the preparer analyzed and concluded that a significant change in the actuarially determined expected mortality costs was indicative of a significant change in the degree of mortality risk. It should be noted that other methods and approaches could have been used to evaluate the change in degree of mortality. ##### [944-30-55-66](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6ce36c66b7e2b29f139d5ab0699c0c3d55808b16bec0fd3c52edb8ed56d24be1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this guidance, it is assumed that both the variable annuity with the rollup death benefit guarantee and the variable annuity with the ratchet death benefit guarantee offered as an internal replacement are determined to have similar degrees of mortality risk. In this instance, the preparer compared actuarially determined expected mortality costs, and since the costs were similar, it was indicative that the degree of mortality risk was also similar. It should be noted that other methods and approaches could have been used to evaluate the change in degree of mortality. It is also assumed that there is no reunderwriting required for the transaction, no additional deposit required to effect the transaction, and no net decrease in the balance available to the contract holder prior to surrender charges. In this guidance, the replacement results in additional mortality and expense charges due to the enhanced death benefit guarantee not in excess of an amount commensurate with the added benefit. A contract exchange of a variable annuity contract that contains a minimum guaranteed death benefit that is determined to have significant mortality risk with a variable annuity contract that contains another kind of minimum guaranteed death benefit that is determined to have a comparable degree of mortality risk, results in the replacement contract being substantially unchanged from the replaced contract as a result of the following: 1. a The exchange does not result in a significant change in the kind and degree of mortality risk. 2. b The exchange does not change the nature of the contract holder's investment return rights. 3. c No additional deposit or premium is required relating to the variable annuity (the original benefit), and the additional charges for the ratchet death benefit guarantee are not in excess of an amount commensurate with the benefit. 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the contracts. 6. f There is no change to the revenue classification of the replaced contract. ##### [944-30-55-67](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:19e0d21aef46afe538d5cb44e7ebffd783a450ad16923c939093db064a999004 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the modification were achieved through amendment, endorsement, or rider rather than through a contract exchange, the analysis and conclusion would be the same as for the contract exchange because the minimum guaranteed death benefit is an integrated feature. ##### [944-30-55-68](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:fbc7ba37c19008289ca24f1bd970deada214a8e252488e8186bf891a18aede7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A long-term care rider provides that in the event the insured enters a covered facility, the feature will provide a specified fixed payment while the insured is being treated at a covered facility. ##### [944-30-55-69](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b5aeab99d4d8bf7e99f1a03f9884a39f47acda9ad99fb3b39948360c756dbdf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this guidance, the contract holder exchanges the original variable annuity contract for a new variable annuity contract that contains an long-term care rider. This is a contract exchange in which the replacement contract contains a nonintegrated contract feature, as the long-term care rider is not related to the provisions of the replacement variable annuity contract. This contract exchange results in the base annuity contract being substantially unchanged from the replaced contract as a result of the following: 1. a The modification does not result in a change in the insured event, as there is no significant change in the kind and degree of mortality risk from the replaced contract. 2. b There is no change in the nature of the investment return rights from the replaced contract. 3. c There are no changes in the charges related to the variable annuity (the original benefit), and the additional premium for the long-term care benefit is not in excess of an amount commensurate with the additional insurance coverage obtained. 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the replaced contract. 6. f The modification does not result in a change to either the amortization method or revenue classification of the contract. ##### [944-30-55-70](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:ae918310c42e2fc7257a8c562987b9a299b06303ff566978060f02097511db41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The long-term care rider should be accounted for as a separate contract, as it is a nonintegrated contract feature. This accounting would be the same if the modification had been achieved through the addition of a long-term care rider to the original annuity contract rather than through an exchange. ##### [944-30-55-71](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d59fe030ab910c5c22eab68061b78d99c1b048afb49ec34d4dd8603754110fa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Variable annuities generally have a number of investment allocation alternatives from which the contract holder may select. In the normal course of business, companies modify these elections for a number of reasons, including competition and changes in investment management and distribution relationships. Throughout the life of the contract, the contract holder has the option to select new allocations for the investment of his or her annuity account balance. Generally, the addition of new investment allocation alternatives to variable life insurance or annuity contracts does not result in a substantive change to the original contract because the contractual rights and provisions for the determination of the contract holder's investment return have not changed. ##### [944-30-55-72](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bcacc53cab295bf9c4e4524a6a984209ca572692ea5941eb66940f62510291c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is possible that one of the investment allocation alternatives added or elected could be a fixed return option. As long as the contract remains a variable annuity contract and the contract holder retains the right to reallocate amounts to other investment alternatives, neither the addition of the investment alternative nor the contract holder's utilization of that investment alternative would constitute an internal replacement that results in a substantially changed contract. If, however, the contract holder's election of a fixed allocation alternative results in a conversion or partial conversion to a fixed annuity contract or the contract remains a variable annuity contract but the transfer is effectively a conversion or partial conversion because there are substantive restrictions on the contract holder's ability to reallocate amounts to other investment alternatives, the modification would result in a substantially changed contract to the extent of the conversion or substantially restricted balance. ##### [944-30-55-73](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:a145d4eb9a49e5cea9369bd0d50f31d339becd21c329ab6afde380af359f592b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity contract is replaced with a variable annuity contract that also provides a [guaranteed minimum accumulation benefit](https://asc.understandingaccounting.org/glossary/g/#guaranteed-minimum-accumulation-benefit "A minimum accumulation benefit or a guaranteed account value floor that is available to a deferred annuity contract holder in cash."), in this example, a 5-percent annual rollup of contract value in 10 years. The contract exchange of a variable annuity for a variable annuity that contains a guaranteed minimum accumulation benefit results in the replacement contract being substantially changed from the replaced contract because the addition of a guaranteed minimum accumulation benefit, an integrated benefit feature, changes the investment return rights of the contract holder by providing a minimum investment return guarantee. The analysis would be the same if the change had been achieved through the addition of a guaranteed minimum accumulation benefit rider. If, however, the contract holder had elected to add a guaranteed minimum accumulation benefit feature that was included in the original contract (and met the specifications in paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ), the modification would not be considered an internal replacement. ##### [944-30-55-74](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:2b497a71c9a5c437600e5fe2b71a4c8a2fc6ed8912f0dbd32d0663870dcadcea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity contract is replaced with a variable annuity contract that also provides a [guaranteed minimum income benefit](https://asc.understandingaccounting.org/glossary/g/#guaranteed-minimum-income-benefit "A guarantee that, regardless of account balance performance, the contract holder will be able to annuitize after a specified date and receive a defined minimum periodic benefit. These benefits are available only if the contract holder elects to annuitize."), in this guidance, a 5-percent annual rollup of contract value. A guaranteed minimum income benefit, an integrated contract feature, specifies a manner in which an annuitization benefit is determined if the contract holder elects to annuitize. The guaranteed minimum income benefit cannot be withdrawn or net settled. The contract exchange of a variable annuity for a variable annuity that contains a guaranteed minimum income benefit results in the replacement contract being substantially changed from the replaced contract because the addition of a guaranteed minimum income benefit changes the investment return rights of the contract holder, as a minimum investment return provision, via the guaranteed amount for annuitization, has been added to the variable annuity. The analysis would be the same if the change had been achieved through the addition of a guaranteed minimum income benefit rider. If, however, the contract holder had elected to add a guaranteed minimum income benefit feature that was included in the original contract (and met the specifications in paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ), the modification would not be considered an internal replacement. ##### [944-30-55-75](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:1623c5d377752562ee658cd46d84346f7ee05779db06006022366adfe21e123e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance entity either replaces deferred annuity contracts with annuity contracts that contain the [guaranteed minimum withdrawal benefit](https://asc.understandingaccounting.org/glossary/g/#guaranteed-minimum-withdrawal-benefit "A benefit that provides a contract holder a guarantee that a minimum amount (usually stated as a percentage of premiums) will be available for withdrawal over a specific period. Regardless of the contract value, the contract holder is guaranteed the right to periodic withdrawals from the contract until the amount of premiums deposited into the contract is withdrawn.") feature or the insurance entity adds a guaranteed minimum withdrawal benefit rider to existing inforce business (that is, deferred annuity contracts). ##### [944-30-55-76](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:922ca0500f461aad2abb8405aa6857373c17bed5f4188ffb6ab5b2f89ef9c647 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity with a guaranteed minimum withdrawal benefit is classified as an investment contract with a market risk benefit. The contract exchange of a variable annuity for a variable annuity that contains a guaranteed minimum withdrawal benefit results in the replacement contract being substantially changed from the replaced contract because the addition of a guaranteed minimum withdrawal benefit, an integrated contract feature, changes the investment return rights of the contract holder, as a minimum investment return provision, via the guaranteed withdrawal amount, to the variable annuity. The analysis would be the same if the change had been achieved through the addition of a guaranteed minimum withdrawal benefit rider. If, however, the contract holder had elected to add a guaranteed minimum withdrawal benefit feature that was included in the original contract (and met the specifications in paragraph [944-30-35-26](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26)), the modification would not be considered an internal replacement.