Income Protection Insurance - Which state benefits would be effected?

Tunstallstoven

Hi all

i am in the process of applying for IP Insurance. One of my quotes is from Legal and General, where the policy "Key Facts" documents states:

"The benefit we pay may affect your claim to some means tested state benefits. Your entitlement to ESA allowance won't be affected."

I'm curious to know which state benefits might be affected should I become ill/injured and be unable to work?

Many thanks

Max

ACG

You would still need to register as sick for your NI contributions.

But you wouldnt actually receive any sick pay. Which isnt too much of an issue as its only between £65-100 per week...depending on which group the government decide to put you in - this is "usually" in realtion to how sick you actually are.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Illorinjured/DG_171896

I put usually in brackets are there are plenty of stories where people with cancer and other major illnesses who have been passed as capable of working by the government and have had to appeal the decision.

Tunstallstoven

Thanks for the response ACG.

ACG wrote: »

But you wouldnt actually receive any sick pay.

Would you mind clarifying? Are you saying I would not get the ESA under any circumstances or are you saying I might get it and it depends on the nature of the illness?

Aside from that, I was also interested to know about other benefits, things like DLA and anything else that could apply. I guess whether I would be entitled or not depends on the nature of my illness again. But what I'd like to know more specifically is the effect such benefits might have on any income protection received (will less IP be received on account of it)? And/or flipping things over - would the fact that I was in receipt of IP effect a claim for such benefits?

Cheers

Max

ACG

If your getting income protection for the highest percentage against your income - lets say its 60%.

So you earn £1000 per month, you take out IP for £600 a month.
You go off sick L&G pay you £600 per month.

You then go and claim - as your in receipt of income...L&G would reduce their payment down accordingly. So if you were to get £100 per week from the government, L&G would then only pay you £200 per month benefit.

As far as i know thats the case no matter what benefits you claim. So in effect it makes no sense claiming other than for your NI.

Thats presuming your on £12k a year as its easier to do the math.

Tunstallstoven

That's very interesting. It's making me wonder how worth it the IP insurance really is....

Along the lines of what you are saying (and using those figures), in reality the IP insurance would only really be paying me £200 per month. Even if I receive £600 p/mth from the IP, if I would have received £400 p/mth in benefits without it, then the IP insurance only makes £200 worth of difference - which seems quite small a amount considering the premium is likely to be over £20 per month.

Thanks for the insights. I'm going to look into it all a bit more and will report back with any findings.

Any other contributions or thoughts inthe meantime would be gratefully received!

Cheers

Max

ACG

Thats on the basis you earn £12k a year. And it could be as low as £240 a month benefit...not £400.
So if you were to be on £24k a year, thats £1200 a month on Income Protection as opposed to £240-400 a month on state benefits.

Rachiblui

I have severe anxiety and depression due to CFS and have just been told that I am to be migrated to ESA. I have been on ICB since the end of April 2001. I have an Income Protection Policy which has never affected the ICB payments.

My partner cannot work due to an inoperable brain tumour and so we have come to rely on our benefits and IPP as we have no other option.

From looking at the regs it would seem that even if I fight to get into the support group due the risk of relapse and the risk of my depression becoming dangerous as it has in the past when I have pushed myself too far, I will not receive any esa payment due to my IPP.

I am alarmed at this prospect as I now feel I am trapped in a system where the goal posts have changed and it has nothing to do with the state of my health.

Is this the case?

MX5huggy

Rachiblui wrote: »

I have severe anxiety and depression due to CFS and have just been told that I am to be migrated to ESA. I have been on ICB since the end of April 2001. I have an Income Protection Policy which has never affected the ICB payments.

My partner cannot work due to an inoperable brain tumour and so we have come to rely on our benefits and IPP as we have no other option.

From looking at the regs it would seem that even if I fight to get into the support group due the risk of relapse and the risk of my depression becoming dangerous as it has in the past when I have pushed myself too far, I will not receive any esa payment due to my IPP.

I am alarmed at this prospect as I now feel I am trapped in a system where the goal posts have changed and it has nothing to do with the state of my health.

Is this the case?

Welcome to MSE.

This is a benefits question, start a new thread in the benefits and tax credit forum.

siennauk

Your income protection policy might not be affected. It depends if it is a group policy or not. For example if it is a group policy and you pay tax on the money you get then it might be affected by benefits you receive.

However if you don't pay tax on the money you get from the PHI and you never got tax relief on the premiums and it is a purely private policy then I don't think it is affected by state benefits. I think the insurer just pays out and ignores any IB payments. I'm not saying this for def but am sure that is the case.