Insurance 'income'

SLC57

I took out MPPI insurance 6 years ago. When sold the policy I was asked if I wanted an amount over and above my mortgage element to meet things like loan repayments or credit cards and was advised this was more cost effective than credit card insurance. I agreed. They call this income protection.

When I got made redundant I told the BA I was on MPPI but they did nothing immediately. After 6 months I went on to JSA (IB) and after 10 months they suspended my benefit whilst they sorted my mortgage out. It was only then they said “but under some policies if the PPI pays out more than your mortgage we class that as income but you can offset buildings cover and service charges.” Great, absolutely great. Apparently had I ignored the MPPI and taken separate loan cover for credit cards that would be ok, but not the way I have done it. I have invoices that prove that the credit cards were frozen and the money has been used just to reduce the loan not purchase items then pay them off.

I detect an element of further hypocrisy since when the BA start paying the interest on my mortgage it will be slightly higher than the interest element and according to a benefits advisor will be able to use it in any way I want? Find that very strange.

I always thought insurance was insurance. So if I receive money for a claim that is income is it?

Any help please as I feel totally frustrated at doing what I think most sensible people would have done.

dmg24

If you receive MPPI over the amount of your mortgage (I assume as part of an income protection element) then it will be counted as income whilst on IB JSA.

The additional amount received by your lender through SMI is not for your own use. I would also be very surprised if your lender allowed you to 'withdraw' the amount.