I8.375 Life policies and annuities
A minimum value is placed on a policy on a person's life or an annuity which becomes payable on a person's death, if the beneficial interest in the policy or annuity contract is the subject of a lifetime assignment for less than full consideration1.
This minimum value is the total of the premiums or other consideration paid before the transfer of value under the existing policy or contract (or one for which it was directly or indirectly substituted), less any sums previously paid to the policyholder in consideration for the surrender of any rights2. The open market value (usually, but not necessarily3, the surrender value) will apply if it is higher4.
A has paid 10 premiums of £500 each on a policy on his own life. The open market value of the policy is £4,000 and the surrender value is £3,000.
If A assigns the benefit of the policy to B gratuitously, the