CARE: Assessable assets.

There has been discussion for some considerable time as to whether the definition of life assurance for the purpose of the local authority means test includes an investment bond.

Indeed, in the past, some local authorities have sought to take investment bonds into account as assessable assets despite the fact that, strictly speaking, most investment bonds (other than capital redemption policies) are policies of life assurance.

The latest version of the Charging for Residential Accomodation Guide or CRAG as it is more commonly known (issued on 04/07/2008) confirms the clarification of the treatment of investment bonds which was first issued over four years ago. The guidelines are quite clear that where an investment bond is written as a policy (or policies) of life assurance, the value should not be brought into account as an assessable asset.

The key points are as follows:

• Investment bonds issued as life assurance policies should normally be disregarded as a capital asset, although capital redemption policies will be taken into account.
• “Income” from investment bonds will be taken into account when making assessments.
• Care should be taken to ensure that the deliberate deprivation rules are not invoked.

Investment Bonds are clearly a worthy consideration when conducting CARE financial planning exercises.