IHTM10272 - Payment Protection Insurance (PPI)
An individual may have several claims against different financial institutions relating either to the mis-selling of a PPI policy in which the claimant is entitled to the return of the premiums paid or a ‘Plevin’ claim.
PPI claims normally fall within one of the following scenarios, and the IHT consequences are as identified under each scenario:
- The PPI Claim was settled on or before the claimant’s death: the value of the claim will already be reflected in the claimant’s estate, whether in their bank account or as an uncashed cheque, and so no further disclosure will be required.
- The PPI Claim is submitted before the claimant’s death, but there is no indication by the time of death of whether it might be successful: personal representatives should return a nil value on the form IHT400 on the basis that as at the date of death there was no indication from the relevant financial institution as to whether or not the claim was admitted.
- The PPI Claim is admitted by the financial institution at the date of death, but the compensation payment is not received by date of death: In these circumstances applying a 5 per cent discount to the proceeds would not be deemed unreasonable.
- No PPI claim had been submitted at the date of death, but a claim is made by personal representatives after the date of death. In these circumstances there is no value to the right to pursue the PPI claim at the date of death.
As an individual may have been sold PPI by more than one financial institution, each claim must be considered separately when applying the above criteria.
It can be seen that whether there is any the value at the date of death of the right to pursue compensation, or whether any discount should be applied to the amount received, depends on the particular facts of the case.