PART 2Insurance companies carrying on long-term business
CHAPTER 1Introductory
Meaning of “basic life assurance and general annuity business”
62Section 57: meaning of “protection business”
1
This section defines for the purposes of the definition of “basic life assurance and general annuity business” given by section 57 what is meant by “protection business”.
2
Life assurance business is “protection business” if it consists of the effecting or carrying out of any contract of long-term insurance in relation to which the following conditions are met—
a
the benefits payable cannot exceed the amount of premiums paid except on death or in respect of incapacity due to injury, sickness or other infirmity, and
b
the contract is made on or after 1 January 2013.
3
For the purposes of subsection (2)(a) ignore—
a
any benefit (other than a payment of money) that, when the contract is entered into, is provided as an inducement for entering into the contract and that is not repayable (to any extent) in any circumstances,
b
any case where the amount by which the benefits can exceed the amount of premiums paid is an insignificant proportion of those premiums, and
c
any case which a reasonable person, as the policyholder under the policy effected by the contract, can reasonably regard as highly unlikely to arise.
4
If at any time—
a
a contract is varied otherwise than as a result of the operation of, or the exercise of rights conferred by, provisions forming part of the contract or a connected arrangement, and
b
as a result of the variation the contract becomes, or ceases to be, one in respect of which the condition in subsection (2)(a) is met,
the contract is to be treated for the purposes of this section as ending at that time and a new contract (on the varied terms) is to be treated for those purposes as being made immediately after that time.
5
For this purpose a “connected arrangement”, in relation to a contract, means any agreement or other arrangement entered into in connection with the making of the contract.
6
If—
a
a contract (“the new contract”) is made on or after 1 January 2013 as a result of the operation of, or the exercise of rights conferred by, provisions of a contract (“the old contract”) made before that date, and
b
the provisions of the new contract were (or could have been) determined by reference to provisions of the old contract when the old contract was made,
the new contract is to be regarded for the purposes of this section as if it were made before 1 January 2013.