Significant variations: examples
Examples of changes to a policy that are significant variations falling short of a reconstruction are
- an extension or shortening of the term or premium spreading term
- an increase or decrease in the premium
- an increase or decrease in the amount of death benefit assured
the addition or removal of critical illnesses from the list of illnesses covered under the policy where the insured person is charged in any way for that benefit: but note that
- the addition, removal or significant alteration of an extra benefit for death by accident or of any other permitted benefit
- the addition or removal of a waiver of premium condition
- permitting the policyholder to take a premium holiday
- permitting the policyholder to make a part surrender of rights under the policy
- the addition or removal of an option to the policy, the exercise of which would itself be a significant variation in the terms of the policy.
A change in the way the benefits secured under the policy are determined, as for example between with-profits, without profits and unit-linked (or ‘investment linked’) was a significant variation before 7 October 2005. However, since that date, such a change is no longer treated as a significant variation - see IPTM8155.
Note that switches between different unit-linked funds are regarded in any event as insignificant variations - see IPTM8160. IPTM1400 and IPTM1410 explain what is meant by ‘unit-linked’, ‘with-profits’ and ‘without-profits’ policies.
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