Critical Illness policy capital disregards

Hi All,

I have a client who received a two lump sum payments from a critical illness policy in 2013 for 16k and 10k and this has now led to an ESA overpayment decision. The payments were made due to a cancer diagnosis.

Am I correct in thinking that the first payment of £16k should have been disregarded for 52 weeks as its a payment made in respect of a personal injury? This would be per Para 17(2)(a) Sch 9 ESA Regs 2008.  I’m aware that R(SB) 2/89 defined ‘personal injury’ to also include disease.

Does anyone have any UT decisions that have maybe helped to determine this issue? I’m sure my client isn’t the first one to have had a critical illness lump sum payment cause a benefit overpayment.

Thanks.