Substitution of a qualifying policy: test of whether the new policy also qualifies
Where a new policy is issued
- in substitution for an old qualifying policy, or
- on the maturity of an old qualifying policy in consequence of an option in that policy
there are various tests in ICTA88/SCH15/PARA17 (2) to determinewhether the new policy also qualifies.
Does the new policy qualify under the normal rules?
First, the new policy must be tested to see whether it would be a qualifying policy inits own right as a stand-alone policy. In doing this, the normal qualifying policy testsmust be applied in the same way as for any new policy except that any transfer of valuefrom the old policy that is treated as premium of the new policy must be disregarded inapplying the normal tests.
- If the new policy would be a qualifying policy in its own right then it is a qualifying policy unless it was made within ten years of the old policy being made, in which case it will not qualify unless it meets the premium comparison test explained in IPTM8125.
- If the new policy would not be a qualifying policy in its own right then it may still qualify if it is in substitution for an old policy that has run for more than ten years and it meets the conditions described in IPTM8130.
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