lump sum settlement from loss of income insurance taxable?

[philv]

Loss o income policy due to long term illness.....not taxable..pays monthly.

If it were taken entirely as a lump sum settlement or a partial lump sum settlement, would the lump sum be tax free as well?

Thanks if anyone knows.

[philv]

can anyone help?

[chml]

Is it critical illness cover?

[And then she]

Who paid the premiums? If it's the individual, it's not taxable; if it's their employer, it's considered taxable as employment income.

[philv]

Thanks.

It is loss of income through illness. Not critical illness.

Private policy, nothing to do with an employer.
I paid the premiums.

The payments are non taxable.
I just wanted to make sure a lump sum settlement was as well.

[JulianPH]

philv said:

Thanks.

It is loss of income through illness. Not critical illness.

Private policy, nothing to do with an employer.
I paid the premiums.

The payments are non taxable.
I just wanted to make sure a lump sum settlement was as well.

I think the question was about the type of insurance policy (Critical Illness or Income Protection).

The general principle with protection insurance is that if you have paid the premiums yourself (from net income) then tax has already been paid. Any benefits subsequently paid out are free of any further tax.

This does not apply to insured pensions (where the premiums are paid gross/tax free), not to employer contributions (where the premiums are tax deductible).

So in your circumstances any payout (whether a monthly amount or a capital lump sum) should be tax free.

[philv]

Thanks again.
Much appreciated.

[Sarnie]

It's tax free...........

[chml]

JulianPH said:

I think the question was about the type of insurance policy (Critical Illness or Income Protection).

The general principle with protection insurance is that if you have paid the premiums yourself (from net income) then tax has already been paid. Any benefits subsequently paid out are free of any further tax.

This does not apply to insured pensions (where the premiums are paid gross/tax free), not to employer contributions (where the premiums are tax deductible).

So in your circumstances any payout (whether a monthly amount or a capital lump sum) should be tax free.

That was my line of questioning/thinking

[JulianPH]

Sarnie said:

It's tax free...........

And you never called me back last week, as if being on holiday with your family was a decent excuse!