Term and premium paying term: date on which policy is made and backdating of policies
Date on which a policy is made
The date on which a life policy is made is a contractual matter determined by generalcontract law. The insurance contract is made when both parties have communicated to eachother that they accept the proposed terms of the contract. If the offer of contract isaccepted in writing then the date of posting is regarded as the date that the contract ismade, not the date of signing or date of receipt.
Backdating of policies
The qualifying policy rules specifically allow for the start date of the life coverprovided by the policy to be backdated for up to three months before the policy wasactually made. Then the earlier date is treated as the day that the policy was made forthe purposes of the rules on policy term and premium paying term, and on premiumspreading - see IPTM8055.
Circumstances in which backdating may apply are where temporary cover is given, andpremiums are paid, while the full insurance contract is being arranged.
If, however, the policy is backdated by more than three months from the date it was madethen the qualifying policy tests must apply from the later date of execution. Any premiumspaid under the policy for the period of backdating count for the premium spreading tests -see IPTM8055, and for the test of the minimum sum assured - seeIPTM8030.
Backdating of policy - examples
Suppose an endowment policy was made on 15 November 2005, with a backdated start dateof 10 September 2005. This is within three months of the date the policy was made so forthe purpose of the qualifying policy rules the term of the policy is measured from thisearlier date. This means that the policy would only need to run until 10 September 2015 tosatisfy the minimum ten-year term test.
If, however, the policy had been backdated to 10 June 2005 then the term of the policymust be measured from 15 November 2005, because the backdated start date is more thanthree months from the date the policy was made. This means that for the qualifying policyrules, the policy must run until at least 15 November 2015.
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