Income Tax (Trading and Other Income) Act 2005 section 737

Period for which payments may be made

Section 737 sets out the first of four conditions that a health or employment insurance policy must meet for its annual payments to qualify for exemption from income tax, by restricting the periods during which benefits may be paid.

• Payments must only be made during periods when the insured person is suffering from an illness, disability, infirmity or defect covered by the policy, including any related convalescence or rehabilitation.
• Payments may also be made during periods when the insured person is unemployed, does not hold an office, or is not carrying on a trade, profession or vocation, in circumstances covered by the policy.
• Payments are permitted during periods when the insured person's income is lower than it would otherwise have been, in circumstances covered by the policy — and any income from the policy itself is ignored when making this comparison.
• Where any of the above periods ends with the death of the insured person, payments may continue for a period immediately following that death.