There are some circumstances where a significant variation is disregarded for the purposes of the qualifying policy rules either by statute or by concession.
Legislation was introduced for changes effected on or after 7
October 2005 that ensure that a change in the method for
calculating the benefits under the policy, whilst still a variation
in contract law, will be disregarded for the purposes of the
qualifying policy rules. This encompasses, for instance, a change
from with-profits to non-profit unit linked, which would otherwise
be treated on first principles as a significant variation, as
described in the penultimate paragraph of
IPTM8150.
This will mean that changes of this kind can be made with no
consequences for the qualifying status of the policies.
However, the new legislation does not extend, for instance,
to changes in the premiums payable or the sum assured, as these are
not changes to the method for calculating benefits.
Certain variations of a policy are not treated as a variation
for the purpose of the qualifying policy rules when there is an
exceptional risk of death or disability - see
IPTM8075 - even if they are significant.
These are where
A reduction in the level of premiums in the first year will not be regarded as a significant variation, provided that the reduction leads to an appropriate reduction in the sum assured and the excess of the premium is either
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