Critical Illness Pay Out - Universal Credit

Heidi_Jane

Please let me know if a critical illness payout has any impact on the universal credit that my husband claims.

I just phoned universal credit to let them know that my husband received the claim. They were unable to answer my question.
I stated that this money is not from earnings, it is not capital and it is not savings.

Also, any interest earned from the payout - will the interest on that be assessed as income? We plan to save the interest (I think the max savings for universal credit is £16 000).

Thank you

DullGreyGuy

Its a bit old but for example there is:

https://www.cii.co.uk/news-index/articles/impact-of-insurance-payments-on-universal-credit/68004 

It certainly isnt earnings, if its used to pay off a mortgage or such then there isnt detriment but if you keep it as savings then, depending on the amount, it may impact your benefits.

Alice_Holt

My understanding is that it will be assessed as savings by UC.

How much does that take your savings total to?

tomtom256

If it's taxable it will be classed as unearned income. If it isn't taxable then it should in theory be treated as capital/savings.

peteuk

Heidi_Jane said:

I stated that this money is not from earnings, it is not capital and it is not savings.

Thank you

Im no expert, you may get a period of grace for the initial payment, but surely if your planning to save the interest, then the amount being paid interest on is “savings” or “capital” 

If you claimed on critical illness then the does the insurance money need to be spent on something spific (for example if tied to a mortgage).  Work out how much interest your going to achieve, Im guessing the payout is north of 16K hence your statement above.