Life Insurance Fund Redemption and transfer

BACKGROUND

Life insurance in the name of mother.
Premiums used to build up a fund that is then used to pay the mortality charge.
On death the payout is into trust that benefits children.
Children have paid all the premiums.
Total premiums paid exceed current fund value

If the policy is now surrendered before death the current balance of the fund has to be paid to the mother.The mother then transfers the money to the children.

QUESTION:

How should this be treated? Is the cash transfer from the mother to the children a PET or would HMRC accept it as a repayment of a debt to the children who have paid all the premiums?

Any guidance much appreciated.