Income tax: is a trauma insurance policy issued by a life company an accident or disability policy for the purposes of Division 8 of the Income Tax Assessment Act 1936 (the Act)?

Yes, a trauma insurance policy is an accident or disability policy for the purposes of Division 8 of the Act. It is not a life assurance policy.

A trauma insurance policy pays an amount to the insured if the insured suffers a condition specified in the particular policy such as a heart attack, cancer, stroke, etc.

Those conditions may constitute disabilities, and therefore the premiums are properly characterised as accident or disability premiums which are to be included in the assessable income of the AD/RLA class for the purposes of Division 8 of the Act (paragraph 116 CE(3)(c)).