Temporary high balance - would lump sum settlement from insurers count?

lassfarfromhome

Hi all,
Hope this is the right place to post this rather than the insurance forum.
I've accepted a lump sum settlement from my income protection insurers and trying to work out where to put the money temporarily.  Am I right in thinking the FSCS would cover it as they list "benefits payable under an insurance policy" as an example of things they would cover.  However, the lump sum is not strictly payable under the policy, it's a discretionary payment by the insurer, so perhaps not.
Does anyone know?  
Thanks

eskbanker

Although FSCS do publish a list of life events considered to fit the temporary high balances provision, they also make it clear that they'll only decide on eligibility on a case by case basis rather than offering any meaningful commitment

FSCS cannot confirm the eligibility of a particular temporary high balance unless/until a bank or building society actually fails. This is because we’d need to review all of the available evidence to check that there was a sufficient connection between the relevant life event and the sums in the depositor’s account.

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

How many £85K chunks would you need to split the money into, and what would happen to it after the six months were up if you didn't?  Have you considered using NS&I instead?

lassfarfromhome

Hi eskbanker, thanks for the comment.  I'm planning to use NS&I for most of it and to put at least 85k into my Marcus account.  The only thing I'm wondering is whether to put more into the Marcus account eg £200k.  Seems like there's no way to get certainty on whether it would be covered and so it's probably better for peace of mind to put only £85k in the marcus a/c and the rest in NS&I

DullGreyGuy

So you've exchanged periodic future claims payments in exchange for a present value lump sum?

If so then that is a benefit paid from a policy. 

If its compensation for a complaint because they made a major mistake etc that may be different

lassfarfromhome

DullGreyGuy said:

So you've exchanged periodic future claims payments in exchange for a present value lump sum?

If so then that is a benefit paid from a policy. 

If its compensation for a complaint because they made a major mistake etc that may be different

Thanks DullGreyGuy!  Yes, it's a payment made instead of future payments under the policy.

Albermarle

lassfarfromhome said:

Hi eskbanker, thanks for the comment.  I'm planning to use NS&I for most of it and to put at least 85k into my Marcus account.  The only thing I'm wondering is whether to put more into the Marcus account eg £200k.  Seems like there's no way to get certainty on whether it would be covered and so it's probably better for peace of mind to put only £85k in the marcus a/c and the rest in NS&I

Nothing to stop you having £85K with each of numerous different savings providers, as well as Marcus.
Although better to have a bit less than £85K as the interest will build up.

mark55man

Sorry OP for slight tangent but I hope you are interested.  @Albermarle - if you went over £85K would £85K still be protected or would you lose protection on the lot.

DullGreyGuy

mark55man said:

Sorry OP for slight tangent but I hope you are interested.  @Albermarle - if you went over £85K would £85K still be protected or would you lose protection on the lot.

You are protected up to the limit, if you are in excess of the limit its only the excess that is unprotected

GeoffTF

Marcus should be one of the safest accounts, but why would you need to keep more than £85K in there?

Bigwheels1111

I never put more than 80k per account.
FSCS covers 85k, great.
At 5% £4250of interest would not be covered and could be lost.
Why NS&I, their rates are not very good.
Are you working, or on benefits etc. ie any income at all.
If no income you can get £18,570 of interest tax free as such.
Any income you get would need to be deducted from total above.

I went for 5 year fixed rate accounts to provide me with an income.
Every year.
It has bit me on the bum as it turns out.
Lost my partner, place to live, income etc.
Not able to access the funds for 3 years.

So be careful what you do.

lassfarfromhome

GeoffTF said:

Marcus should be one of the safest accounts, but why would you need to keep more than £85K in there?

Yes, that's what I thought , it should be pretty safe.  I don't need to keep more than £85k in there but my I'm not as energetic as I'd like and can't open lots of savings accounts.  So, it'll probably be a mixture of NSANDI and Marcus, and maybe I'll open another savings account