Selection rules: availability for selection
Even if the terms of a policy restricts a policyholders ability to selectproperty and indices to those in the permitted categories, there are certain selectionrules on the availability and marketing of investment opportunities that have to besatisfied in order for the policy to escape being a PPB.
Property and indices available for selection
For a policy to escape classification as a PPB, the policyholder should only be able toselect property or an index for linking that is available for selection at that time bypolicyholders at large. This rule applies and has to be satisfied in relation to allproperty and indices that may be selected by the policyholder or a person acting on his orher behalf.
The PPB legislation recognises that not all of an insurers policyholders may havethe ability to select in all cases or that the ability to select may change as new typesof policies are introduced. Accordingly the generality of the rule is narrowed to permitits application to a class or classes of policyholder rather than to the policyholder baseas a whole - see IPTM7785.
Time period when property and indices are available for selection
The PPB legislation does not require the opportunity to select property or an index tobe available continuously. The requirement that the opportunity to select a particularproperty or set of properties or index should be available to all relevant policyholdersapplies at the time that it is available for selection, not for the whole life of allrelevant policies.
Where property has already been selected for a policy and the opportunity to select thatparticular property subsequently becomes no longer available, for instance because a salespromotion has expired, that would not of itself make the a policy a PPB.
Limitations on investment
Limitations on investment are quite common. For instance, the management of acollective investment scheme might impose its own limitations on who may invest in thescheme, whether or not through a policy of life insurance. These could limit the number ofpeople who may invest, set a high minimum investment or prescribe how the product is to bemarketed.
So long as the limitations are objective and are not based on personal or individualcriteria, the insurer should be able to meet the property selection conditions in IPTM3640 or index selection conditions in IPTM3630when making the property or index available for selection by policyholders.
If a policyholder had any say in the limiting conditions, set either by the manager of theinvestment or the insurer, that would make the policy a PPB.
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