I did work for the DHSS, what used to happen was that when a will went through probate the local office was notified that the estate was worth a figure between x and y.
The local office checked to see what benefits were in payment, if any means-tested benefits were in payment and if any savings were less than the estate then a letter was issued to the executor asking for details of how the estate figure was calculated and asking for a delay in payment of the estate.
The life assurance can not be included in savings and investments as it was not available to him.
Do you have a letter showing how this overpayment has been calculated, if so see if the figures used are correct.
Go to the Citizens Advice Bureau, they will calculate any overpayment and contact the Department on your behalf, unfortunately as executor you are responsible for repaying any debts due to the estate.
It looks like the overpayment is now calculated without having a breakdown of the estate, probably hoping right or wrong it will be paid without question.