If an insurance contract contains an embedded derivative, but that embedded derivative is also an insurance contract, an entity does not need to separate the elements of the contract.

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According to accounting standards such as IFRS 4, if an embedded derivative is itself an insurance contract, it does not need to be separated from the host insurance contract. This is because the entire contract can be accounted for as an insurance contract, simplifying the accounting process.

If an Insurance Contract Contains an Embedded Derivative, but That