Family Income Benefit
Most life insurance policies will pay out a fixed lump sum in the event of the death of the policyholder. However, for some families it may be more beneficial to have a regular monthly income after the loss of a breadwinner than to have a large sum all in one go, and that’s why many people choose family income benefit.
What is it?
Family income benefit provides a fixed income, tax free, if the insured party dies within the term of the policy. This can replace the loss of their earnings to the family ‘pot’, and will continue to be paid until the end of the fixed term of the policy. These types of policies are particularly good for parents with young children, who want to ensure that their dependents are cared for even if they are no longer around.
The policy can be extended to cover critical illness too, which means the insured person would not have to pass away for the family to benefit from the cover.
How does it work?
You decide how much you want your family to be covered for in the event of your death. If you die during the term of your policy, your dependents will receive a fixed income, usually paid annually, from the time you die until the policy ends. This money is tax free and can be used for whatever purpose your dependents see fit.
Family income benefit is usually the cheapest way to buy life insurance, and can be an affordable method of providing for your family, even if you are on a tight budget. As an example, if you are just 30 years old and have just had a baby, you might want to buy insurance to replace your income until your child is an adult. To set up a policy that covers your family for around £3,000 per month can cost less than £20 per month, which is an affordable amount for the majority of families.
If you die during the term of the policy, your dependents will receive the equivalent of £3,000 per month (£36,000 per year) until the policy comes to an end. This means that if you die soon after you take out the policy, your family will receive significantly more than if you were to die just a year or two from the end. This might seem unfair, but you have to remember that the very low premiums associated with this type of policy can mean the difference between having insurance and not having any at all.
How long does it last?
You choose how long you want your policy to run for. Because many people who take out this type of insurance are young families, the typical length of a policy is between 18 and 25 years, just long enough to see the children through school and possibly university too. But in essence, it is up to you. You can choose to have a policy for just 5 or 10 years, or for as long as 30 or more.
As a general rule, you will pay more for your policy the longer you wish it to run, and if you want a very long running policy you might be better off looking at a term life insurance policy or even whole of life cover. Feeling confused? Contact us to discuss your life insurance needs.
Things to consider
This is not a savings policy & If you cancel your policy there is no cash-in value.
Cover will end if you don’t make monthly payments.
What is it?
Family income benefit provides a fixed income, tax free, if the insured party dies within the term of the policy. This can replace the loss of their earnings to the family ‘pot’, and will continue to be paid until the end of the fixed term of the policy. These types of policies are particularly good for parents with young children, who want to ensure that their dependents are cared for even if they are no longer around.
The policy can be extended to cover critical illness too, which means the insured person would not have to pass away for the family to benefit from the cover.
How does it work?
You decide how much you want your family to be covered for in the event of your death. If you die during the term of your policy, your dependents will receive a fixed income, usually paid annually, from the time you die until the policy ends. This money is tax free and can be used for whatever purpose your dependents see fit.
Family income benefit is usually the cheapest way to buy life insurance, and can be an affordable method of providing for your family, even if you are on a tight budget. As an example, if you are just 30 years old and have just had a baby, you might want to buy insurance to replace your income until your child is an adult. To set up a policy that covers your family for around £3,000 per month can cost less than £20 per month, which is an affordable amount for the majority of families.
If you die during the term of the policy, your dependents will receive the equivalent of £3,000 per month (£36,000 per year) until the policy comes to an end. This means that if you die soon after you take out the policy, your family will receive significantly more than if you were to die just a year or two from the end. This might seem unfair, but you have to remember that the very low premiums associated with this type of policy can mean the difference between having insurance and not having any at all.
How long does it last?
You choose how long you want your policy to run for. Because many people who take out this type of insurance are young families, the typical length of a policy is between 18 and 25 years, just long enough to see the children through school and possibly university too. But in essence, it is up to you. You can choose to have a policy for just 5 or 10 years, or for as long as 30 or more.
As a general rule, you will pay more for your policy the longer you wish it to run, and if you want a very long running policy you might be better off looking at a term life insurance policy or even whole of life cover. Feeling confused? Contact us to discuss your life insurance needs.
Things to consider
This is not a savings policy & If you cancel your policy there is no cash-in value.
Cover will end if you don’t make monthly payments.