Family Income Benefit Policy

With most types of Life Insurance cover, the insurer pays out a lump sum of cash upon the policyholder's death. However, some feel that this is not the best way of providing for their family in the event of their death, and therefore opt of a Family Income Benefit Policy instead. This type of cover provides a regular, tax-free monthly income for your dependents from the time that the claim is made up until the end of the policy term. A Family Income Benefit Policy is therefore a type of Term Life Insurance, where you specify the period of time within which you want to receive cover. An example of a Family Income Benefit Policy would be as follows; a family takes out a plan lasting 25 years, and after 20 years the policyholder dies. The insurer would pay an income to the remaining family members for the last 5 years of the policy term, after which time the cover would cease.

A Family Income Benefit policy alone may not be sufficient cover for a family in the event of the death of the main earner if there would be substantial debts, such as a mortgage, to pay off. Therefore in order to ensure that a family can both manage financially on a day-to-day basis and easily pay off outstanding larger debts, it may be worth considering a Family Income Benefit Policy in conjunction with another type of Life Insurance cover, such as Decreasing Term Life Insurance (also known as Mortgage Payment Protection). If you would like to speak to an experienced financial adviser to talk through your options and receive a no-obligation insurance quote, please fill out the short form on the next page.

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Important Tips for Buying Life Insurance

• Life 'Insurance' is different from Life 'Assurance' because it is not a certainty.  You would insure yourself against something unexpected happening, but would take out Assurance to minimise your financial exposure to something inevitable.

• If you take out any type of 'Term' insurance product, this means that you are choosing a set period of time when your cover will be active.  Beyond this period, your cover is no longer valid.

• The policy will be cheaper the less 'risky' you are to an insurer.  If you smoke, are in poor health or enjoy high-risk sports, statistically you are more likely to die, and therefore the cost of your premium will be higher.

• Joint policies for couples should be approached with a certain amount of caution.  The average joint policy pays out only after the first person dies, but for a relatively small amount more you could get separate policies with two payouts, which would have a greater benefit for your family (especially when you consider the expense of inheritance tax).