Axa has reopened an old master trust in an effort to stop its eligible group life insurance beneficiaries having to pay the top marginal tax rate on any benefits received after July 1, 2007.
Axa Australia national group insurance solutions manager Stephen Rosengren said the group reopened its Tailored Super master trust to new investors to take advantage of a loophole in the tax law through superannuation.
"We tried everything to keep it outside super. We've searched every other avenue," Rosengren said.
Under changes to eligible termination payment rules, which came into effect on July 1, most insurance payments made under an employer-owned, non-super group life policy are subject to tax of 46.5 per cent for the portion of a death or total and permanent disability insurance payment in excess of $140,000.
However, upon advice, the only way Axa was able to get around the new law was to put the benefits back into superannuation, Rosengren said. Axa's Tailored Super master trust was closed to new plans, although it was reopened to become an alternative for group life insurance.
The group had gone through the compliance of the old trust to see if it still had the capabilities, which it did, Rosengren said.
Axa general manager of financial protection Michael Rogers said employers would now have the ability to maintain separate group insurance.
"Axa is extremely pleased to announce a solution to the challenges imposed by the impending tax changes," Rogers said. "Axa can now offer a standalone group life insurance solution through Axa's own Employer Superannuation product."
He said brokers could access the offer immediately.
