When the terms of a qualifying life insurance policy are improved because the insurer discovers after it has sold the policy that it is not appropriate to charge for an exceptional risk of disability, the change in the policy's terms can cause it to lose its qualifying status. This has never been the case where there is a charge for an exceptional risk of death.
Fully retrospective provisions are to be introduced which will ensure that a policy will not lose its qualifying status when the insurer removes either a charge on the disability benefits or a premium loading that was imposed because the insured person has an exceptional risk of suffering a disability or critical illness.
The proposed revision ensures that any extra cost, or charge on the disability benefits payable under the policy, is disregarded when determining whether a life insurance policy is a qualifying policy. This means that removing the cost or charge will not cause any policy to lose its qualifying status.