This section applies if the *annuity instrument provides for payments to be made to the *injured person during any part of the period ending 10 years after the *date of the settlement or order (whether the *annuity is expressed to be for the life of the person or for a period of years).
The *annuity instrument may specify a period (the guarantee period) of up to 10 years after the *date of the settlement or order, during which, if the *injured person dies, the payments (the remaining payments) for the remainder of the guarantee period that would have been paid to the injured person are to be paid instead to:
(a) the injured person's estate; or
(b) a reversionary beneficiary.
For tax exemptions in this situation, see sections 54-65 and 54-70.
If the *annuity instrument provides for the remaining payments to be made to a reversionary beneficiary, the instrument must:
(a) name the beneficiary; and
(b) allow the beneficiary to choose either:
(i) to be paid the amounts of the remaining payments when the injured person would have received them; or
(ii) to commute those payments into a lump sum worked out under subsection (5).
The *injured person's estate may only be paid the lump sum worked out under subsection (5) (and not the periodic payments).
The amount of the lump sum under subparagraph (3)(b)(ii) or subsection (4) is the *policy termination value of the *life insurance policy that is the *annuity instrument, as calculated by an *actuary as at the date of the injured person's death. In making this calculation, the following are to be disregarded:
(a) any payments of the annuity due to be made after the end of the guarantee period;
(b) any *structured settlement lump sums that are also provided for by that policy.
In this section:
pay to a person includes pay to the trustee of a trust of which the person is the beneficiary.
pay to the injured person's estate includes pay to the trustee of a trust established by the *injured person's will.