Policy | CLIK

Assessing Life Insurance Policies

Definition of life insurance policies

The following are assessed as life insurance policies:

conventional life insurance policies,
whole of life insurance policies,
endowment insurance policies, and
pure endowment insurance policies.

These products have an investment component and may have a surrender value. Whereas, products such as term insurance, trauma insurance, total and permanent disablement insurance, income protection insurance and business insurance cover do not have an investment component or surrender value.

Constructive Trust and Implied Trust

Constructive trust

A constructive trust arises where an individual can establish that in spite of being the legal owner of an asset, that they only hold this asset on behalf of someone else. Constructive trusts are not common and in most cases a legal opinion will need to be sought to confirm the existence of such a trust. A constructive trust is imposed on a person by a court whenever the court considers that it would be unconscionable to deny another person's claimed interest in that property.

Exempt Lump Sums

Exempted lump sums

Lump sums can be exempted from the Income Test under VEA. An amount received by a person is an exempt lump sum if it is:

not a periodic payment (within the meaning of subsection 5K(1A),
not income from remunerative work undertaken by the person, and
is an amount, or one of a class of payments that the [glossary:Commission:545] determines to be an exempt lump sum.

Assets Value of Fixed Deposits, Bonds, Debentures and Securities

Fixed term deposits, bonds, debentures and securities

The following table explains how to assess the value of fixed term deposits, unlisted bonds, debentures and securities. An alternative value is accepted if a person provides supporting information.

General Provisions for Sole Traders and Partnerships

VEA →

Section 5H VEA

VEA → (go back)

Last amended 25 August 2008

This topic provides information on the following:

Excluded Trust

What are excluded trusts

Specified classes of trusts that are excluded from the attribution process in Part IIIB, Division 11A of the VEA are:

community trusts,
some court ordered (statutory) trusts, and
indigenous trusts.
More →

Assets Value of Bank, Building Society and Credit Union Accounts

Bank, building society and credit union accounts

The credit balance held in any account with a bank, building society or credit union is an asset for pension purposes and is assessed at full face value.

For assessment purposes, a person's assertion as to the balance of an account is generally accepted. Account balances may also be verified by:

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/07/83 to 31/08/88

Last amended: 13 May 2008

How to use life expectancy tables

The following table shows how to select and use the appropriate [glossary:life expectancy:348] table in the assessment of an [glossary:income stream:406].

Step	Action
1	Determine the [glossary:commencement day:334] of the income stream to be assessed and ensure that the correct table is used.

Testamentary Trust

Fixed testamentary trust activated on or before 31 March 2001

The [glossary:assets:296] and [glossary:income:31] generated by fixed trusts, including fixed [glossary:testamentary trusts:506], are fully assessed against the trust beneficiaries in the fixed proportions laid down by the trust deed. The practice of assessing the asset value based on the fixed entitlements of the beneficiaries and the income on actual distributions to beneficiaries will continue only for fixed trusts established before 7.30pm 9 May 2000.