Ellie, who is 57, is taking out a non-qualifying policy. What percentage must her sum assured be at outset for tax purposes?

When taking out a non-qualifying policy, the key to understanding the tax implications lies in the nature of the policy and the rules governing it. For tax purposes, a non-qualifying policy is one that does not meet specific HMRC requirements to be classified as a tax-efficient investment, typically related to life insurance.

In the case of a non-qualifying policy, the sum assured does not have a statutory minimum percentage that must be set at the outset. This means that the policyholder has the flexibility to determine the sum assured without having to meet predefined limits that would trigger tax responsibilities or benefits. Therefore, the correct answer reflects that there is no minimum required percentage for the sum assured in such policies. This lack of restriction gives policyholders room to tailor their policies to their individual financial situations, unlike qualifying policies, which might have stringent guidelines.

This context is important to understand, as it clarifies how non-qualifying policies operate within the framework of tax regulations, illustrating the freedom policyholders have in managing their life insurance coverage without the constraints that might apply to other policy types.