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Supplementary Benefit

Volume 35: debated on Monday 17 January 1983

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asked the Secretary of State for Social Services what evidence he has received from the Life Offices' Association of the number of enquiries about the surrender value of life assurance policies and of the number of such policies surrendered as a result of the rules introduced in 1980 making such surrender values count towards capital resources in determining the eligibility for supplementary benefit; what request has been received from the Association for a review of this rule; and what steps he plans to take.

I should first make it clear that the surrender value of a life assurance policy has always been treated as a capital resource for supplementary benefit purposes, although before November 1980 policies with a value of less than £800 were disregarded.The Life Offices' Association has recently written to my hon. Friend the Minister of State for Social Security stating that in the past year the offices covered in a survey which it conducted reported around 13,000 inquiries about life insurance policy surrender values which were known to have arisen from the supplementary benefit rules. The association says that the number of policies known to have actually been surrendered is very much lower and my hon. Friend is writing further to the association asking whether it can provide further information about the number of actual surrenders which are attributable to the supplementary benefit rules. The report last year by the social security policy inspectorate concluded that neither the number of claimants involved nor the values of the policies concerned was likely to be significant.The Government will continue to keep this aspect of the capital rule particularly in mind.