IPTM7380 - Assignments: separations of married couples, civil partners and unmarried couples

Where there is an assignment of a policy or contract between spouses, civil partners or unmarried partners in a couple who have separated, similar principles apply as to transfers between divorcing spouses. It is not possible to give comprehensive advice to insurers, as the circumstances in each case will need to be considered, but it is possible to give some pointers. An insurer will not be penalised for failing to issue a certificate or issuing an incorrect certificate if its action was reasonable based on the information in its possession at the time.

Separated spouses and civil partners

If a policy or contract is assigned between separated spouses or civil partners under a court order then, as with transfers on divorce, the assignment will not be for money or money’s worth. In the absence of a court order, the assignment will be for money or money’s worth if it is on separation.

In contrast to the position under transfers on divorce, an insurer should not assume that a policy or contract has been assigned under a court order simply because it knows that a couple have separated. If there is no mention of divorce or formal dissolution, or evidence of a pre-nuptial agreement, the insurer should treat the assignment as giving rise to a chargeable event unless it has information to suggest that the assignment was under a court order or an agreement ratified by a court order.

An insurer may not even be aware that a couple have separated and are living apart, in which case it will believe that no chargeable event arises on assignment because of the exemption for assignment between spouses and civil partners - see IPTM7365.

Unmarried couples, other than civil partners

If an insurer knows that a previously co-habiting unmarried couple are now living apart then it is reasonable to assume that an assignment between them is on separation and unlikely to be under a court order and so is for money or money’s worth. Such an assumption cannot be made if the parties are still living together, but it will depend on what information the insurer holds. In the absence of firm information, an insurer may assume that there is no passing of money or money’s worth.