IHTM20244 - Life Policies: policy on the deceased’s life not connected with any other transaction (except a trust): policy effected by the deceased for their own benefit but gifted later: special rule: modification of the special rule for unit-linked policie

For unit-linked policies (IHTM20106), IHTA84/S167 (4) provides for a reduction of the artificial value if the value of the units at the date of transfer is less than their value at the date they were allocated.

Example

Alan takes out a unit-linked policy and pays premiums of £1,000 per year for fifteen years. Alan then gives the policy to Bianca.

At the date of transfer the value of the units is £9,000. At the date of allocation the value of the units was £12,000.

So the artificial value is reduced by £3,000 (from £15,000 to £12,000).