Redundancy insurance, tax and benefits

Sterlingtimes

What exactly is the position of redundancy insurance in respect of (i) taxation and (ii) benefits?

The following appears at the British Insurance FAQ

http://www.britishinsurance.com/faq.html

"If you make a successful claim under British Insurance Protection, benefits will be paid directly to you and not to a mortgage or loan provider. Accordingly, please be aware that this will mean that as you are in receipt of an income you may not be eligible to receive State ‘means tested’ Benefits such as Income Support."

It would appear that the "income" is tax free, but for benefits "means testing" it counts as income. Is this correct? Sorry I have Googled this one and have not found an advised answer.

DaisyFlower

Yes thats it. Its not taxable as its an insurance payout but it will be classed as income by the benefits office if you apply for any means tested benefits like income based JSA etc.

Sterlingtimes

DaisyFlower wrote: »

Yes thats it. Its not taxable as its an insurance payout but it will be classed as income by the benefits office if you apply for any means tested benefits like income based JSA etc.

Thank you. That is what I needed to know for planning purposes. I appreciate you response.