Estate duty on matured endowment policy proceeds excluded where payment arose during the assured's lifetime under section 14.

Section 14 of the Estate Duty Act, 1953 applies only where policy money remains payable under a subsisting life policy on the assured's death, and the beneficiary or assignee is beneficially entitled to that money. An endowment policy that matures and becomes payable during the assured's lifetime ceases to be a policy effected on life for this purpose; the matured amount is only a debt under the contract and is not chargeable to estate duty. On that construction, the policy proceeds received on maturity during the deceased's lifetime were excluded from the dutiable estate.

---

---

Issues: Whether money received on maturity of an endowment insurance policy, assigned absolutely to the wife but kept up by the deceased by payment of premiums, was chargeable to estate duty under section 14 of the Estate Duty Act, 1953.

Analysis: Section 14 applies to money received under a policy of insurance effected on a person's life where the policy is kept up by him for the benefit of a donee, nominee or assignee. The word "donee" is controlling, and the nominee or assignee must be beneficially entitled to the policy money for the provision to operate. A life insurance policy includes an endowment policy, but only so long as the policy continues to be one effected on the life of the assured. If an endowment policy matures during the assured's lifetime, the policy has worked itself out and what remains is merely a debt payable under the matured contract, not a subsisting policy effected on the life of the deceased at the time of death. Section 14 is therefore confined to cases where the policy money is payable on death, or where death is one of the contingencies governing payment, and does not extend to money payable on maturity during the assured's lifetime. The absence of any time-limit in section 14, unlike section 9, also supports that limited construction.

Conclusion: Section 14 did not apply to the policy amount received on maturity during the deceased's lifetime, and the amount was not chargeable to estate duty.

Final Conclusion: The reference was answered in favour of the accountable person, and the inclusion of the policy proceeds in the dutiable estate was disallowed.

Ratio Decidendi: Section 14 of the Estate Duty Act, 1953 applies only where the policy money remains payable under a subsisting policy on the death of the assured, and does not cover an endowment policy that matures and becomes payable during the assured's lifetime.

---