Will I still be able to claim State Benefits?

Yes. An insurance payout should not affect your claim for State Benefits because state benefits for sick pay etc are not currently means tested.

There are a number of State Benefits obtainable to help you if you become sick or disabled and if you are off work as a result. The allowances that may apply are: Statutory Sick Pay, Incapacity Benefit, Disability Living Allowance or Severe Disablement Allowance. (The names of these policies can change so it would be a good idea to double-check this information with your local Benefits Office.)

Because these benefits are not currently means tested, they will not be affected by a large insurance payout.

An added point is that if your partner is a carer (or becomes a carer because of your illness) they may be eligible for a Carer's allowance. This allowance is means tested and can only be paid if their income is no more than £77 per week (2003/04).