IPTM2010 - Qualifying policies and life assurance premium relief: introduction
Significance of a qualifying policy
Qualifying policies are important for 2 reasons:
- in relation to life assurance premium relief (‘LAPR’) available to policyholders on policies running off. Running off’ in this context means the continuation of policies issued at a time when relief was available. This is of less importance with the abolition of LAPR with effect from 6 April 2015 – see IPTM2100.
- in determining what events are ‘chargeable events’ giving rise to gains treated as income chargeable, as a rule, on persons beneficially interested in the policy rights, see IPTM1550.
Life contracts frequently run for a very long time. Contracts made on or before 19 March 1968 and not subsequently varied so as to increase the benefits or extend the term will continue to attract relief irrespective of their qualifying status as that concept did not exist at that time.
Both qualifying and non-qualifying policies can give rise to chargeable event gains, but in practice most gains arise on non-qualifying policies. This is because qualifying policies are usually retained for long enough to avoid giving rise to a chargeable event. The relevant rules are considered in detail in IPTM3000 onwards.