IPTM3310 - Chargeable events: policies and contracts charged: qualifying policies

In general, qualifying policies - IPTM2020 - only give rise to chargeable events in restricted circumstances, namely if

• within 10 years from the making of the insurance, or, if sooner
• within three-quarters of the term for which the policy is to run if not ended by death or disability

any of the following events occur

• surrender or assignment of all rights under the policy
• an ‘excess event’ where a ‘periodic calculation’ shows a gain, see IPTM3555 and IPTM3560
• the end of the insurance year in which a ‘part surrender or assignment event’ gives rise to a gain, see IPTM3555 and IPTM3585.

The full range of chargeable events described at IPTM3400 does, however, apply to a qualifying policy if

• it is converted into paid-up policy within the same 10 year or three-quarter term timetable as above, or
• there is, except in relation to ‘transaction-related calculations’, a company interest in the policy rights, that is

‘transaction-related calculations’ are explained at IPTM3580.

A policy is said to be ‘paid-up’ when all the premiums due under it have been paid, or there has been an agreement to give up some of the benefits in exchange for permanent cessation of premium payments.

Any sum lent under an arrangement with the insurer to or at the direction of the policyholder on a policy or contract made after 26 March 1974 is treated as a part surrender of rights - IPTM3545. Loans relating to qualifying policies are, however, excepted if they carry interest at a commercial rate.

CT&VAT (Technical) Insurance Group will advise in cases of difficulty - see ‘Technical Help’ link on left hand bar.