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Family income benefit insurance pays a monthly income if the policyholder dies whilst the policy is in force. The monthly income will continue at the level specified in the policy until the policy's termination date. These payments can either be index linked or flat rate. If the policyholder lives to the end of the policy´s term, no benefit is payable.
Family income benefit insurance policies can be held by one policyholder (a single policy) or by two policyholders (a joint policy). In the case of a joint policy, the policy will commence paying out at the death of either policyholder. If both policyholders die whilst the policy is in force, the policy will still only pay out once per month.
Family income benefit is particularly attractive to those who like to know they have a regular monthly income and would rather not have to worry about complex investment decisions to make the most of a lump sum payout. The advantages of this to someone living off the payout , perhaps a young widow or widower, are very significant. This is because if they invested a normal lump sum they would have to pay fees, commissions and tax. Even if a net return of 4% a year is achieved. That is just £4000 of income for every £100,000 of insurance paid out on a death. Few people can afford enough lump sum cover to properly provide for their dependents income needs, particularly when young children hamper earnings levels and increase the amounts protection it would be sensible to have in place.
The structure of the plan means that the total amount that could be paid out decreases each month, as the payments are only made until the end of the policy. But it is also fair to say that most families need for cover reduces to just about zero over a period of (many) years.
Family income benefit insurance does not involve any investment and the policy has no surrender value at any stage.
Family income benefit insurance can also be combined with life insurance, mortgage life insurance and critical illness insurance as part of a package of insurances to provide financial protection for the family.
To discuss your requirements call us on 0800 3893796 or 01483 419288. Alternatively request a call from us by completing our contact form.