Pre-owned assets: insurance based products: gift and loan trust
You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.
A gift and loan trust is where the settlor makes a small gift into trust, possibly by way of an insurance policy and settles it on trusts for the benefit of others and from which the settlor is entirely excluded. They then make a substantial interest free loan to the trustees, repayable on demand. The trustees use the loan to purchase more policies, and make partial surrenders each year to pay off part of the loan.
This arrangement is not a gift with reservation for inheritance tax. The settlor is not a beneficiary of the trust itself and the making of the loan does not constitute a settlement for the purposes of Inheritance Tax. No POA charge arises as the benefit to the settlor arises as a creditor and not under the trust.