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EY 9: Meaning of life insurance policy
or “What a life insurance policy means and covers”
You could also call this:

“Definition of who is considered a life insurer under tax law”

A life insurer is someone who runs a business that provides life insurance. However, if you have full reinsurance in a specific year, you’re not considered to be running a life insurance business during that time.

There’s a special rule for Lloyd’s of London. They’re usually not treated as a life insurer for their life insurance business, except in one specific part of the law (section EY 8).

Groups of people, organisations, or trustees can also be life insurers if they provide life insurance and get paid for it with something other than love and affection. When these groups provide life insurance, it’s treated as if they’re dealing with someone they’re not related to, even if the insurer and the person getting insured are connected in some way.

If you’re a group, organisation, or trustee providing life insurance, a different part of the law about mutual associations (Subpart HE) doesn’t apply to your life insurance business.

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Next up: EY 11: Superannuation schemes providing life insurance

or “Rules for superannuation schemes that offer life insurance-like benefits”
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Part E Timing and quantifying rules
Life insurance rules

EY 10Meaning of life insurer

  1. Life insurer means a person carrying on a business of providing life insurance.

  2. A person carrying on a business of providing life insurance in an income year is treated as not carrying on a business of providing life insurance while the person has full reinsurance.

  3. Except for the reference to life insurer in section EY 8 where Lloyd’s of London is treated as a life insurer, Lloyd’s of London is treated as not being a life insurer in relation to its business of providing life insurance, the premium from which is income of Lloyd’s of London under section CR 3B (Lloyd’s of London: income from life insurance premiums).

  4. An association of persons, a body of persons, or a trustee is treated as carrying on a business of providing life insurance to the extent to which—

  5. the association, body, or trustee provides life insurance; and
    1. the consideration for the provision is something other than natural love and affection.

      1. Every life insurance policy entered into by the association, body, or trustee as insurer is treated as entered into with an unrelated party, even if the life insurer and the policyholder are, for example,—

      2. an association and a member of the association; or
        1. a trustee and a beneficiary of the trust.

          1. Subpart HE (Mutual associations) does not apply to the business of providing life insurance of the association, body, or trustee.

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          Notes
          • Section EY 10(2B) heading: inserted, on (with effect on 1 April 2017 and applying in relation to a life insurance premium that is derived on or after that date by Lloyd’s of London), by section 91(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section EY 10(2B): inserted, on (with effect on 1 April 2017 and applying in relation to a life insurance premium that is derived on or after that date by Lloyd’s of London), by section 91(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section EY 10 list of defined terms Lloyd’s of London: inserted, on (with effect on 1 April 2017), by section 91(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
          • Section EY 10 list of defined terms premium: inserted, on (with effect on 1 April 2017), by section 91(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).