paying mortgage with insurance.

oldhand

Hi all,a question for anyone in the know.You get DLA and ESA,and have no savings.Your condition worsens and you can claim on a critical illness policy which will pay you £50,000.Now obviously you cannot "spend away your savings" on a new car,kitchen etc but would it be in order to use the £50k to pay a large lump off your mortgage or would DWP class that also as "spending away savings"?

kingstreet

A payout from a critical illness policy isn't savings, so it's unlikely to be classed as such. If it was taken out for the express purpose of mortgage repayment and that's what you use it for, I can't see how the DWP could have a problem with it.

I suggest you call them and ask them.

Have you been claiming mortgage interest relief during your disability? If you have, you can legitimately claim reducing your mortgage balance is reducing your dependence on state benefits.

dunstonh

Typically, it depends on the purpose of the insurance and how it is documented and how you use it. If it was taken out to cover a mortgage and paperwork shows that and you use it to clear the mortgage then it will not be included in a means test. If you stick it in your account and do not use it to repay the mortgage, it will be included.