SCHEDULES
C1C2SCHEDULE 15 QUALIFYING POLICIES
Sch. 15 modified (1.5.1995) by Finance Act 1995 (c. 4), Sch. 10 para. 4(2)(3)
PART I QUALIFYING CONDITIONS
Other special provisions
(i) Short-term assurances
10
M1 A policy which secures a capital sum payable only on death or payable either on death or on earlier disability shall not be a qualifying policy if the capital sum is payable only if the event in question happens before the expiry of a specified term ending less than one year after the making of the insurance.
(ii) Personal accident insurance
11
1
A policy which evidences a contract of insurance to which sub-paragraph (3) below applies shall not be a qualifying policy unless it also evidences F1—
a
a contract of insurance on human life; or
b
a contract to pay annuities on human life.
2
A policy which evidences a contract of insurance to which sub-paragraph (4) below applies shall not be a qualifying policy unless it also evidences a contract falling within section 83(2)(a) of the M2Insurance Companies Act 1974.
3
This sub-paragraph applies to contracts of insurance issued in respect of insurances made on or after 25th March 1982 against risks of persons dying as a result of an accident or an accident of a specified class, not being contracts which—
a
are expressed to be in effect for a period of not less than five years or without limit of time; and
b
either are not expressed to be terminable by the insurer before the expiration of five years from their taking effect or are expressed to be so terminable before the expiration of that period only in special circumstances therein mentioned.
4
This sub-paragraph applies to contracts of insurance issued in respect of insurances made before 25th March 1982 against risks of persons dying as a result of an accident or an accident of a specified class, not being contracts falling within section 83(2)(b) of the Insurance Companies Act 1974.
(iii) Exceptional F3risk of death or disability
Words in Sch. 15 para. 12 heading substituted (retrospectively with effect in accordance with s. 172(6) of the amending Act) by Finance Act 2003 (c. 14), s. 172(2)
12
M3 For the purpose of determining whether any policy is a qualifying policy, there shall be disregarded—
a
so much of any premium thereunder as is charged on the grounds that an exceptional risk of death F2or disability is involved; and
b
any provision under which, on those grounds, any sum may become chargeable as a debt against the capital sum guaranteed by the policy on death F2or disability.
(iv) Connected policies
13
M4 Subject to paragraph 14 below, where the terms of any policy provide that it is to continue in force only so long as another policy does so, neither policy is a qualifying policy unless, if they had constituted together a single policy issued in respect of an insurance made at the time of the insurance in respect of which the first-mentioned policy was issued, that single policy would have been a qualifying policy.
14
1
A policy shall not be a qualifying policy if the policy is connected with another policy and the terms of either policy provide benefits which are greater than would reasonably be expected if any policy connected with it were disregarded.
2
For the purposes of this paragraph a policy is connected with another policy if they are at any time simultaneously in force and either of them is issued with reference to the other, or with a view to enabling the other to be issued on particular terms or facilitating its being issued on those terms.
3
In this paragraph “policy” means a policy F4evidencing a contract of long-term insurance, and includes any such policy issued outside the United Kingdom.
F53A
In sub-paragraph (3) “contract of long-term insurance” means a contract which falls within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
4
Where any person issues a policy—
a
which by virtue of this paragraph is not a qualifying policy, or
b
the issue of which causes another policy to cease by virtue of this paragraph to be a qualifying policy,
he shall within three months of issuing the policy give notice of that fact to the Board.
C35
The Board may, by notice, require any person who is, or appears to them to be, concerned in the issue of any such policy as is mentioned in sub-paragraph (4) above, to furnish them within such time (not being less than 30 days) as may be specified in the notice with such particulars as they think necessary for the purposes of this paragraph and as the person to whom the notice is addressed has or can reasonably obtain; but no solicitor shall be deemed for the purposes of this sub-paragraph to have been concerned in the issue of a policy by reason only that he has given professional advice to a client in connection with that policy.
6
This paragraph shall apply to policies issued in respect of insurances made before 23rd August 1983 in accordance with sub-paragraphs (7) and (8) below.
7
Where—
a
a policy is issued in respect of an insurance made before 23rd August 1983, and
b
a policy is issued in respect of an insurance made on or after that date which is connected with it within the meaning of this paragraph,
sub-paragraphs (1) to (6) above shall apply to the policy issued in respect of an insurance made before that date.
8
Sub-paragraphs (1) to (7) above shall apply to policies issued in respect of insurances made before 23rd August 1983 (other than policies which, disregarding this paragraph, fall within sub-paragraph (7)) with the substitution—
a
in sub-paragraph (1) for the words “and the terms of either policy” of the words “
the terms of which
”
;
b
in sub-paragraph (3) for the words from “long term business” to “1982” of the words “
ordinary long-term insurance business within the meaning of section 83(2) of the Insurance Companies Act 1974 (as enacted) or, in relation to a policy made after 25th March 1982, section 96(1) of the Insurance Companies Act 1982
”
; and
c
in sub-paragraphs (6) and (7) for the words “23rd August 1983” of the words “
26th March 1980
”
.
9
In any case where payments made—
a
after 22nd August 1983, and
b
by way of premium or other consideration in respect of a policy issued in respect of an insurance made before that date,
exceed £5 in any period of 12 months, the policy shall be treated for the purposes of this paragraph as if it were issued in respect of an insurance made after 22nd August 1983; but nothing in this paragraph shall apply with respect to any premium paid in respect of it before that date.
10
Sub-paragraphs (8) and (9) above do not apply in relation to policies issued in the course of industrial assurance business.
(viii) Substituitions and variations
17
1
M7 Subject to paragraph 19 below, where one policy (“the new policy”) is issued in substitution for, or on the maturity of and in consequence of an option conferred by, another policy (“the old policy”), the question whether the new policy is a qualifying policy shall, to the extent provided by the rules in sub-paragraph (2) below, be determined by reference to both policies.
2
The rules (for the purposes of which, the question whether the old policy was a qualifying policy shall be determined in accordance with this Part of this Schedule, whatever the date of the insurance in respect of which it was issued), are as follows—
a
if the new policy would apart from this paragraph be a qualifying policy but the old policy was F6not, the new policy is not a qualifying policy unless the person making the insurance in respect of which it is issued was an infant when the old policy was issued, and the old policy was one securing a capital sum payable either on a specified date falling not later than one month after his attaining 25 or on the anniversary of the policy immediately following his attainment of that age;
b
if the new policy would apart from this paragraph be a qualifying policy, and the old policy was also a qualifying policy, the new policy is a qualifying policy unless—
i
it takes effect before the expiry of ten years from the making of the insurance in respect of which the old policy was issued, and
ii
subject to sub-paragraph (4) below, the highest total of premiums payable thereunder for any period of 12 months expiring before that time is less than one half of the highest total paid for any period of 12 months under the old policy, or under any related policy issued less than ten years before the issue of the new policy (“related policy” meaning any policy in relation to which the old policy was a new policy within the meaning of this paragraph, any policy in relation to which that policy was such a policy, and so on);
c
if the new policy would not apart from this paragraph be a qualifying policy, and would fail to be so by reason only of paragraph 1(2) or (3) or 2(1)(a), (b) or (c) above, it is nevertheless a qualifying policy if the old policy was a qualifying policy and—
i
the old policy was issued in respect of an insurance made more than ten years before the taking effect of the new policy, and, subject to sub-paragraph (4) below, the premiums payable for any period of 12 months under the new policy do not exceed the smallest total paid for any such period under the old policy; or
ii
the old policy was issued outside the United Kingdom, and the circumstances are as specified in sub-paragraph (3) below.
3
M8 The circumstances are—
a
where the new policy referred to in sub-paragraph (2)(c) above is issued after 22nd February 1984, that the policy holder under the new policy became resident in the United Kingdom during the 12 months ending with the date of its issue;
b
where paragraph (a) above does not apply, that the person in respect of whom the new insurance is made became resident in the United Kingdom during the 12 months ending with the date of its issue;
c
that the issuing company certify that the new policy is in substitution for the old, and that the old was issued either by a F7permanent establishment of theirs outside the United Kingdom or by a company outside the United Kingdom with whom they have arrangements for the issue of policies in substitution for ones held by persons coming to the United Kingdom; and
d
that the new policy confers on the holder benefits which are substantially equivalent to those which he would have enjoyed if the old policy had continued in force.
4
M9 Where the new policy is one issued on or after 1st April 1976 then, in determining under sub-paragraph (2) above whether that policy would or would not (apart from sub-paragraphs (1) to (3) above) be a qualifying policy, there shall be left out of account so much of the first premium payable thereunder as is accounted for by the value of the old policy.
18
1
M10 Subject to paragraph 19 below and to the provisions of this paragraph, where the terms of a policy are varied, the question whether the policy after the variation is a qualifying policy shall be determined in accordance with the rules in paragraph 17 above, with references in those rules to the new policy and the old policy construed for that purpose as references respectively to the policy after the variation and the policy before the variation, and with any other necessary modifications.
2
In applying any of those rules by virtue of this paragraph, the question whether a policy after a variation would be a qualifying policy apart from the rule shall be determined as if any reference in paragraphs F81, 2, 3(5) to (11), 4 to 9, 12 and 13 above to the making of an insurance, or to a policy’s term, were a reference to the taking effect of the variation or, as the case may be, to the term of the policy as from the variation.
3
This paragraph does not apply by reason of—
a
any variation which, whether or not of a purely formal character, does not affect the terms of a policy in any significant respect, or
b
any variation effected before the end of the year 1968 for the sole purpose of converting into a qualifying policy any policy issued (but not one treated, by virtue of paragraph 8(1) and (2) of Schedule 14, as issued) in respect of an insurance made after 19th March 1968,F9 or
c
any variation so as to increase the benefits secured or reduce the premiums payable which is effected—
P1i
on or after such day as the Board may by order appoint, and
ii
in consideration of a change in the method of payment of premiums from collection by a person collecting premiums from house to house to payment by a different methodF10, or
d
any variation which alters the method for calculating the benefits secured by the policy.
F114
For the purposes of this paragraph there is no variation in the terms of a policy where—
a
an amount of premium chargeable on the grounds that an exceptional risk of death or disability is involved becomes or ceases to be payable, or
b
the policy is amended by the insertion, variation or removal of a provision under which, on those grounds, any sum may become chargeable as a debt against the capital sum guaranteed by the policy on death or disability.
19
1
M11 The following provisions of this paragraph shall have effect for determining for the purposes of this Schedule whether a policy has been varied or whether a policy which confers on the person to whom it is issued an option to have another policy substituted for it or to have any of its terms changed is a qualifying policy.
2
If the policy is one issued in respect of an insurance made before 1st April 1976—
a
any such option shall, until it is exercised, be disregarded in determining whether the policy is a qualifying policy; and
b
any change in the terms of the policy which is made in pursuance of such an option shall be deemed to be a variation of the policy.
3
If the policy is one issued in respect of an insurance made on or after 1st April 1976, the policy shall not be a qualifying policy unless it satisfies the conditions applicable to it under this Schedule before any such option is exercised and—
a
each policy that might be substituted for it in pursuance of such an option would satisfy those conditions under the rules of paragraph 17 above; and
b
the policy would continue to satisfy those conditions under the rules of that paragraph as applied by paragraph 18 above if each or any of the changes capable of being made in pursuance of such an option had been made and were treated as a variation;
and it shall not be treated as being varied by reason only of any change made in pursuance of such an option.
20
1
M12 Where, as a result of a variation in the life or lives for the time being assured, a qualifying policy (“the earlier policy”) is replaced by a new policy (“the later policy”) which in accordance with the rules in paragraph 17 above is also a qualifying policy, then, subject to sub-paragraph (2) below, for the purposes of—
a
sections 268 to 270 and 540 and 541; and
b
any second or subsequent application of this paragraph;
the later policy and the earlier policy shall be treated as a single policy issued in respect of an insurance made at the time of the making of the insurance in respect of which the earlier policy was issued; and, accordingly, so long as the later policy continues to be a qualifying policy, the single policy shall also be treated as a qualifying policy for those purposes.
2
Sub-paragraph (1) above does not apply unless—
a
any sum which would otherwise become payable by the insurer on or in connection with the coming to an end of the earlier policy is retained by the insurer and applied in the discharge of some or all of the liability for any premium becoming due under the later policy; and
b
no consideration in money or money’s worth (other than the benefits for which provision is made by the later policy) is receivable by any person on or in connection with the coming to an end of the earlier policy or the coming into existence of the later policy.
3
Any sum which is applied as mentioned in sub-paragraph (2)(a) above—
a
shall be left out of account in determining, for the purposes of sections 268 to 270 and 540 and 541, the total amount which at any time has been paid by way of premiums under the single policy referred to in sub-paragraph (1) above; and
b
shall not be regarded, in relation to that single policy, as a relevant capital payment, within the meaning of section 541.
4
This paragraph applies where the later policy comes into existence on or after 25th March 1982.
Sch. 15 modified by Finance Act 1991 (c. 31, SIF 63:1), s. 50, Sch. 9 para. 5 (2)