Hello new member so please be gentle. This is a long post and I may repeat myself so apologies.
For over the past six years we have had a monthly payment going into our account to cover our mortgage from the mortgage insurance (it is actually a critical Illness cover) we took out with it. This was because I was diagnosed with ME/Fibromyalgia.
The amount the insurance pays in doesn't pay the full amount but it does help towards the monthly mortage payment.
This morning we recieved a letter to say that the inusrance company would like to pay us a large one off lump sum which would then mean they would then stop paying any more monthly payments.
Our mortage is about £70K and they are offerinng just over half that amount.
If we took the lump sum we would then pay part of the mortage meaning our payments would drop considerably lower per month.
The problem we have (yes there is some) is that I claim ESA and DLA. I know DLA is not means tested but with ESA or JSA would this lump sum be classed as an income even if it went straight from our account to pay the mortgage off? Also would WTC and Child tax credit be penalised because of this?
I know that if we decided not to take the lump sum they would still pay the monthy figure but the lump sum does seem the better option.
Having spoken to a few people they have said that the benefits people could turn around to us and say that do we have proof we were going to use it for the mortgage (we would and I am sure we could get a letter from our mortgage provider to prove this).
Another person said that we should not accept the offer show prove it wouldn't help us out and try to see about increasing it, although I'd rather wait until we wouldn't be penalised before going down that route.
It was also pointed out that technically it isn't an income as such because we took the insurance on the mortgage for a situation like
Thank you for any advice.
The company we have the policy with have said that if I took the offer and IF I ended up having to go back to work (I've been refused ESA but that's a different story) I wouldn't have to pay anything back but the policy wouldn't payout for my current illness which is fair enough.
They have also said they can't see a problem with them paying the money direct to the mortgage company meaning it wouldn't go into our bank account.