My Dad recently passed and has left me a life insurance policy worth $10,000. will it affect my SSI benefits

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Asked April 30, 2019

1 Answer


The payout of an insurance policy is considered unearned income by the Social Security service and it has no bearing on your SSI. Your SSI is only affected if you continue to earn wages after you reach retirement age. The wage one receives from a job is considered earned income.

Once you access your SSI you are considered to be retired. If you continue to earn a wage from a job it is considered an earned income and is therefore subject to reductions. Extra income that arrives from other means is not considered an earned income and therefore will not carry reductions.

Winning the lottery, cashing out a 401K, or receiving a payout are all considered unearned income. They are sources of cash flow that are not related to an actual job. As such the Social Security administration will not require a reduction for any such sources.

Pensions are also considered unearned income. They will not cause reductions either. The only type of income that qualifies for reductions is an earned income. So once you begin collecting SSI you need to stop working.

Answered May 2, 2019 by truss

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