A Qualifying Policy is a life insurance policy whose terms meet a complex set of conditions. These include rules about the policy term, regularity and level of premiums paid and the minimum sum assured. Also a policy cannot be qualifying unless it is certified as such by HMRC, although this is no longer required for products launched from 6 April 2013. Where a policy does not meet these conditions it is commonly referred to as a ‘non-qualifying policy’.

It is tax-favoured, since it does not normally give rise to chargeable event gains. In addition, where the policy was taken out on or before 13 March 1984 and has not varied since then, life assurance premium relief continues to be due on the premiums paid.

• Term of at least 10 years
• Annual premium must be:
  < 1/8 x total premiums payable
  < 2 x premium payable in any other 12-month period
  Payable annually or more frequently
• From 6 April 2013 the maximum premium an individual can pay into qualifying policies to remain fully qualifying is £3,600 a year
• Minimum sum assured test
  ENDOWMENTS
  - The sum assured must be no less than 75% of the premiums payable throughout the term.
  - Where the life assured is age 55 or over the minimum sum assured is reduced by 2% for each complete year the life assured is aged over 55. For joint life policies, this age test applies to the elder life on joint life first death cases and the youngest life on last death cases.
  WHOLE OF LIFE
  - Where the policy is a whole of life cover, the minimum sum assured only needs to be calculated to age 75 of the life assured.

The following Skandia policies are qualifying policies but are not available to new business:

• Endowments – Maximum Investment Plan (MIP), Skandia Endowment Plan (SEP), Capital Accumulation Plan (CAP)
• Whole of Life – The Skandia Plan (TSP) , Permanent Protection Plan (PPP)

If within 10 years, or three-quarters of the term if less, there is:

An assignment (in full or in part) for consideration
Surrender of the policy (in full or in part)

If within 10 years, or three-quarters of the term if less, the policy has been converted to paid-up and there is subsequently at any time:

Assignment (in full or in part) for consideration
Surrender (full or part)
Death of life assured
Maturity

Also:

Premiums paid to qualifying policies under the new rules that are in excess of the premium cap will be subject to the chargeable event rules.

Any change must be made on a plan anniversary and must be in accordance with the Terms and Conditions to retain the qualifying status of the policy.

If a change was made that was outside the Terms and Conditions it would almost certainly render the policy non-qualifying. Skandia will not allow any change that will do this.