Is an insurance payout an asset?

Following on from our insurance issue on Friday, we have received a question from YOURLifeChoices subscriber Paul on how an insurance payout will affect his mother’s Age Pension?

Q. Paul

My dad had a life insurance policy and when he passed away, Mum received $23,000. She is on an Age Pension and I would like to know if the payout is considered as an assessable asset?

A. Provided by Centrelink
The amount received is not income. However, Centrelink may assess the amount under the income and assets tests depending on what your mother does with the amounts received. e.g. if the amounts are placed into a bank account, then deeming will apply to the value of the bank account. You have 14 days to advise Centrelink of what your mother has done with the funds.