Family income benefit insurance is a popular choice in the
UK. Never heard of it?
So how is family income benefit used and why is it
so popular.
Because family income benefit has no investment part - unlike a whole of life
policy or endowment - it is often one of the most cost effective way of getting
life insurance cover - Note, however that because of this, if the policy holder
dies beyond the policies expiration date, no benefits will be availalbe and the
policy will never acquire a surrender value.
Family income benefit is the choice of many families that are just starting
out - possibly income is relatively low and outgoing high but when the death of
a bread-winner would cripple the family for life.
How does Family Income Benefit work?
If the policy holder dies, family income benefit will pay out a monthly
income and that income is paid out tax-free! This is different from other
life insurance policies that pay out a lump sum instead. Often there is a
choice that allows the benefit to also be index linked.
The monthly benefit contines until the predefined date that the policy holder
specified originally in the policy.
Ready to get your family income benefit
quote?
Why choose a monthly not a lump sum?
By providing a monthly benefit rather than a lump sum, the family can plan
with certainty what will be coming in each month - if a lump some is invested,
the interest on the lump sum is subject to the ups and downs of the interest
rates - thus cannot guarantee the money available to the family at the start of
each month.
On the flip side, from the date the policy is taken out, the total benefits
start to decrease e.g. if you have a family income benefit policy and the policy
holder dies one month before the end of the policy, then the policy will pay one
month's' benefit only - but with ordinarly life insurance - the full sum insured
would still be paid out - however, family income benefit can be combined
with other life insurance policies to gain comprehensive family insurance
coverage.
Policies can be taken out in joint or single name - joint policies pay out on
the death of the first policy holder.
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Saving YOU money on Family Income Benefit Insurance