Benefits & Life Insurance

whambam

Hi,

Does life insurance effect DWP benefits? They say if you have over £16K in savings you don't get any benefits and over £6K you get a percentage reduction think its 25% of the full amount.

I read this DWP capital disregards seem to contradict what they say about Savings does it include investment unit linked insurance policies?

Unable to post link as new user see DWP site under capital disregards.

[Deleted User]

Is this money that you have access to at any time?if so then i would assume thats its classed as savings
best bet would be to speak to bdc at dwp

whambam

No, its an insurance policy in-case of sudden death then there will be a payout.

[Deleted User]

if its only policy that pays out on death then its nothing to do with claiming benefits,only savings you can access on demand are their concern

rogerblack

Read the policy carefully.
Can you - even with penalty - withdraw it.
Even if that penalty is 90% - then it counts as capital to the value of 10%.

On a more problematic note - can you sell the policy?
For example - I might be willing to buy (this is not a firm offer) the right to the insurance payout for 1% of the payout.

whambam

I have been told that the DWP has several capital income disregards when taking benefits into account life insurance is one of them. I believe you cannot get any social funding for emergencies if you have life insurance.

http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/pc10s-guide-to-pension-credit/capital-disregards/#lifeinsurance

sorry incorrect link previously updated

rogerblack

whambam wrote: »

I have been told that the DWP has several capital income disregards when taking benefits into account life insurance is one of them. I believe you cannot get any social funding for emergencies if you have life insurance.

The link you mention specifically fails to address this - it's about income for one thing, not capital.

I've closely read the capital rules several times, and would - unless I have missed something - say you're wrong, unless you can point to a specific bit of legislation, or guidance.

Never mind that what 'social funding for emergencies' means is somewhat questionable.

The notion that you can't get financial help for emergencies because you have money you can only access on the event of your death goes against all of the capital rules that I've read.
It's only capital that you have the legal right to access - or had the legal right to access at one time and gave up to get more benefit - that counts.

whambam

Isn't it always been the case with benefits that its soley based on your income level not your capital?

rogerblack

whambam wrote: »

Isn't it always been the case with benefits that its soley based on your income level not your capital?

For means tested benefits no, that is rarely the case.
There are exceptions - carers allowance - for example.
But ESA/JSA/IS and more (if not contributions based) all have capital limits.

whambam

Just to all let you know my mother got social funding for my father despite having life insurance policies.