Funeral benefits and spouses' life insurance

The tax treatment of these benefits is as follows:

  • The premiums which the Employer pays for these insured benefits is regarded as a fringe benefit in your hands, so you will be taxed on the amount of the premium each month.  This means that in effect the premium will be paid out of your after-tax income.
  • However, should a benefit become payable, the benefit will be paid free of tax.