Family Income Benefit
Family Income Benefit is a life insurance policy that pays an income to dependants on the death of the insured. The income is payable for the remainder of the policy term.
These policies are suitable for people with young families who wish to protect against the loss of income provided by either or both parents. Critical illness cover can be added to the policy, this would produce an income in the event of certain serious illnesses being diagnosed. The insured would not have to die for a claim to be made.
Family Income benefit plans can used for various reasons, for example they can form part of divorce settlements. Whilst divorcing couples can often agree on monthly maintenance payments, the consequences of death of either parent whilst their children are still dependant is often overlooked.
By effecting a family income benefit policy the recipient of the maintenance payments is protected should the insured die before the children become financially independent.
It is important to note that it is sometimes only slightly more expensive to own individual plans rather than a joint life policy and is therefore much better value for money as potentially two separate policies can offer double the pay out should both parties die during the policy term.
The premiums can be either fixed and guaranteed from outset throughout the life of the policy or reviewable.
Family Income Benefit – how it works
If you choose a Family Income Benefit Life Insurance policy your dependants will receive an annual income from the time you die to the end of the policy term.
The income is normally tax free and the money from your life insurance pay out can be used for whatever purpose your dependants require. Premiums can be paid monthly or annually by direct debit from your bank account.