Life insurance contracts with fixed premiums and benefits, including traditional life insurance and fixed annuities, use the general model under IFRS.

This model follows three key principles for calculating insurance reserves and how those reserves are released to profit.

All future cash flows are discounted using high-quality corporate bond yields. These discount rates are updated each reporting period, and future cash flows reflect current estimates of those future cash flows, so current estimates of mortality, lapses, and surrenders.

Contract profits are calculated at the start of the contract and are referred to as the contractual service margin, or CSM.

This profit is calculated after deducting all cash flows associated with the contract, and so it's after deducting underwriting costs and acquisition costs.

This means that there is no separate acquisition cost recorded in the balance sheet under IFRS.

IFRS also deducts a risk margin, which reflects the uncertainty in the cash flows due to insurance risk.

So the CSM is calculated as the present value of premiums, less the present value of future benefits and all expenses associated with the contract, less the risk margin.

This means that the CSM is the present value of future profits baked into the insurance contract.

This CSM is then released to profits in the income statement based on the proportion of benefits paid in each period.

It's important to note these profits are recorded in the income statement on a net basis as insurance service revenues.

So there isn't a concept of premiums and benefits expense under the general model. There is only the concept of contract profit or CSM.

However, this means that the model can be applied for all contracts with fixed premiums and benefits regardless of the timing of those cash flows.

So it can be applied for both traditional life insurance contracts and also annuity contracts.