D7.613 Qualifying policies—general rules
For qualifying policies taxable chargeable events only arise in the case of early termination, or discontinuance of premiums. (For non-qualifying policies, taxable chargeable events can arise at any time.)
Non-qualification does not prevent application of the exemption enjoyed by a society unless the loss of qualification arises from a breach of limits through aggregation of policies with the particular society (see D7.614)1.
The qualification status of taxable friendly society policies is determined by the same rules that apply to life office policies. Different rules, as set out below, apply to tax exempt policies.
The conditions described below are those which must be satisfied if an exempt policy issued or varied after 18 March 1985 is to be a qualifying policy2.
Policies for the assurance of a gross sum or annuity
A policy for the assurance of a gross sum or an annuity must satisfy the following conditions in order to be a qualifying policy:
(a) The 'term' of the policy must not be less than ten years. For this purpose the term of the policy ends when the gross sum assured or, in the case of an annuity, the first instalment of the annuity, becomes payable. The term begins on the date provided in the contract if this is not more than three months before the insurance was made; otherwise it begins on the date the insurance was made. The term must not become less than ten years on any contingency other than the