Which is the best family income benefit insurance?
Looking for the cheapest family income benefit insurance can be a minefield; we listen to your needs and present the right family income benefit insurance policy for you. Without family income benefit insurance in place how quickly would this affect your family if a parent was to die while the children are still financial dependent. Family income benefit insurance is one of the cheapest policies and something that should be considered. This can also be put in place for a loved one, if the spouses pension benefits would be insufficient on your death?
What is family income benefit?
Family income benefit is a type of term life insurance policy. Unlike most other life insurance policies, it pays out a regular tax-free monthly income rather than lump sum if you die during the term of the policy. It is designed to replace the policy holders lost earnings or the income needed by the family.
How does family income benefit work?
The policy holder will pay a monthly premium and their cover will be in place for a specific length of time, such as ten years for example. If the policy holder dies during the term of the policy, their family will receive the monthly income until the end of the term.
If, for example, you took out family income benefit of £1,500 per month for a ten-year term and died in the second year, your family would receive £1,500 per month for the remaining eight years. If you died in the eighth year of the policy, your family would receive £1,500 per month for the remining two years. If you die once the term has ended, or you do not pay your monthly premiums, your family will not receive any monthly income.
How much will family income benefit cost?
Some of the things that can impact the price you pay for family income benefit are as follows:
Your age: in general, the younger you are when you take out the policy, the cheaper the premiums will be
Your medical history: lifestyle factors such as smoking can make your premiums more expensive as well as any existing health conditions
The amount of cover you would like: the more cover you want, the more expensive it is going to be
When you take out family income benefit, you can usually choose whether to take guaranteed premiums or reviewable premiums.
Guaranteed premium will remain the same throughout the term of the policy and so you will know exactly what your payments will be. Reviewable premiums will be reviewed by the provider on a regular basis and whilst they may be lower initially, there is a risk that they may become unaffordable at some point. It is therefore important to consider this when taking out family income benefit.
Do I need family income benefit?
Having family income benefit insurance in place is a good idea if you have people who are financially dependent on you such as a partner or children. If these people would be worse off financially in the event of your death, then it is something that you should consider. If you have children and you are the main earner in the family, it is worth considering whether your loved ones would be able to meet the monthly household bills in the event of your death.
Families may struggle to budget with a lump sum payment from a traditional life insurance policy and so a guaranteed, regular monthly income may be easier to manage or more beneficial for them. As family income benefit is a term insurance, you can decide on the most appropriate length of time to have the cover in place so that you have the peace of mind that your family are covered for the right amount of time.
Things to consider before taking out family income benefit
Some of the things to consider before taking out family income benefit are as follows:
How long you would like the cover to last. There are many ways to measure this, however, some people choose to cover their families until they know their children will be financially independent.
How much your family would need each month. This can be difficult but thinking about your current outgoings is a great place to start and then factoring in future family costs can help to build on this.
The frequency of pay outs to your family. If you would like your family to receive monthly income payments, then family income benefit could be a great option. If, however, you would prefer your family to receive a lump sum, then life insurance may be a better option.
Woodward Financials were awarded best wealth management firm in 2021 and have a team of advisers ready to help you answer these questions and guide you through the right insurance policy for you and your family.
Other than protection advice you may also need investment advice? click here to get started