ABI director general Stephen Haddrill says by revisiting the rule book life offices can issue part-payments to family members who are waiting for their claim to be paid. He says doing so will prevent families falling into financial difficulty.
At present, when someone with a life insurance policy dies it can take months for any payment to be made to their family due to a lengthy legal process.
But Haddrill says if the HMRC changes its rules, insurance companies could then allow life insurance customers to nominate one or more beneficiaries in the policy.
He says it could work in a similar way to the current rules for group life assurance offered by many companies to their employees, where beneficiaries are nominated to receive a death in service payment.