IPTM7525 - Full surrender, maturity, death or whole assignment: total benefit value: previous sums, benefits and parts assigned

Previous sums and benefits paid

Total benefit value includes sums and benefits of a capital nature, other than on disability including critical illness, paid under the policy or contract and all related policies before the chargeable event. It includes any sums or benefits paid when the policyholder was not resident in the UK.

Where there is an earlier related policy, the value of that policy must be included as a previous sum or benefit.

Where a qualifying policy is replaced by another qualifying policy on the change of a life assured and no consideration is paid - see IPTM7340 - the value transferred into the new policy (the ‘retained replacement policy premium’) is not included as a previous sum or benefit paid.

Value of parts previously assigned

For whole assignments only, total benefit value also includes the total value of any previous part assignments of the policy or contract, but not of any related policies.

Although UK insurers are not required to calculate the gain on whole assignments, they are required to report on chargeable event certificates the value of any previous part assignments. This value is defined to be the surrender value of the part of the policy or contract that has been assigned, on the assumption that it had instead been surrendered.

This includes part assignments not for money or money’s worth made before 6 April 2001, which were chargeable events, but not part assignments by way of gift made on or after that date – these are not chargeable events.

Trivial inducement benefits not exceeding £30

Any benefits such as gifts that are provided by an insurer as an inducement for a person to enter into a policy or contract are disregarded in total benefit value if the total cost to the insurer does not exceed £30. See IPTM3535.