Taxation of insurance proceeds upon member’s death

Taxation of insurance proceeds on the death of a member can be fairly complicated and can have adverse tax consequences if not structured properly.

The flowchart below seeks to clarify the tax consequence of the benefit payment which is dependent on the age of a surviving member and whether the payment is made via a Reversionary or Non-Reversionary Pension or lump sum.

 

Flowchart insurance proceeds

 

* Beneficiary in the aforesaid flowchart is assumed to be the surviving spouse.

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DISCLAIMER: This information is an interpretation of rules, regulations and standards. It should not be considered as general or specific advice and neither purports, nor is intended to be advice on any particular matter. No responsibility can be accepted for those who act on the contents of this publication without first obtaining specific advice. Liability limited by a scheme approved under Professional Standards Legislation.