Critical illness lump sum

Client on UC expecting to receive a large lump sum from an insurance policy due to having contracted a critical illness. No provision for ongoing payments.

I anticipated that this would be treated as capital.

However I note that UC regulation 66 (1) h (1j says
“A person’s unearned income is any of their income, including income the person is treated as having by virtue of regulation 74 (notional unearned income), falling within the following descriptions—
(h)a payment received under an insurance policy to insure against—
(i)the risk of losing income due to illness, accident or redundancy, “

Does this mean that the payment will be treated as unearned income for the assessment period in which it is received and only fall to be treated as capital in subsequent periods? I think not but would be grateful for opinion from others.