IPTM3520 - Chargeable events: calculating
gains: death, maturity, full surrender or assignment: replacement
policies
A qualifying policy may be replaced by another qualifying policy
and the two policies together treated as a single qualifying policy
if all the following conditions are met
- both replacement and replaced policies are
regarded as qualifying under the rules of
ICTA88/SCH15/PARA17 - see
IPTM8120 onwards
- the replacement results from a change in
the life or lives assured
- any sum payable by the insurer on the
termination of the replaced policy is retained by it and applied
against premiums due on the replacement policy - referred to as a
retained replacement policy premium
- no consideration in money or money’s
worth is receivable by any person in connection with the
termination of the replaced policy or commencement of the
replacement policy, other than the policy benefits - more details
at
IPTM7340.
This retained replacement policy premium is ignored when
calculating total benefits and total deductions in calculating
gains under
IPTM3510.
