Family income benefit

You can enhance your family income benefit policy by including critical illness cover for an extra fee. This feature enables you to make an early claim if you are diagnosed with a severe illness.

Once the claim is approved, you and your family will receive regular payments until the policy term ends.

These funds are designed to replace lost income due to your inability to work, maintain your family’s standard of living, or cover expenses for private medical treatments.

It’s important to note that once a critical illness claim is made, no further claims can be submitted upon your passing.

Family income benefit pays out monthly instalments, whereas term life insurance provides a lump sum payment.

Both are an affordable way to protect your loved ones financially – allowing them to keep up with essential daily living costs after your passing.

Family income benefit

• A term-based policy – it could provide cover for up to 40 years
• You will need to pay a monthly premium for your cover
• Payment will be in monthly instalments
• This could pay out up to £5,000 per month, depending on the provider…
• Pay-out sum can be fixed or ‘increasing’ so it keeps up with inflation
• Payments can help cover shortfalls in your regular mortgage or rental payments, household bills and any day to day living costs
• As payments are monthly, they are not subject to inheritance tax

Term life insurance

• Term life insurance is a policy that spans a specific term, offering coverage for up to 40 years. Monthly premiums are required for coverage, payable in the form of a lump sum.
• The sum assured, or pay-out amount can reach up to £1,000,000, tailored to your individual needs. Payout sums can either remain level or decrease over time.
• A substantial payout can help cover expenses such as mortgages, family living costs, and funeral expenses. It’s important to note that term life insurance can be subject to an inheritance tax of 40%.
• If your budget allows, you don’t always have to make a binary decision. It is feasible to simultaneously hold multiple life insurance policies. Consider a term life insurance policy to cover significant expenses like your mortgage and funeral costs, coupled with a family income benefit policy safeguarding your family’s day-to-day expenses.

Family income benefit and income protection may seem similar initially, but they serve distinct purposes.

Family income benefit ensures that your loved ones receive a monthly income after your passing, whereas income protection offers monthly payments to sustain your income during periods when you are unable to work.

Family income benefit

• Providing cover for a specified period, which could be up to 40 years
• This could pay out up to £5,000 per month, depending on the provider…
• Payments will be made to your loved ones after your passing
• Payments are not subject to inheritance tax or income tax

Income protection

• Providing cover for a specified period, policies typically end by the age of 70
• This can cover up to 70% of your usual earnings
• Payments will be made to you if you cannot work due to illness or injury
• Payments can help cover shortfalls in your regular mortgage or rental payments, household bills and any day to day living costs
• Payments are not subject to inheritance tax or income tax

If it fits within your financial plan, you can consider taking out both policies concurrently: an income protection policy to safeguard your income during your working years and a family income benefit to ensure your loved ones receive a steady income in the event of your passing. Having both policies in force provides peace of mind and ensures that you and your family are secure regardless of the circumstances.

Certainly, you can opt for a joint family income benefit policy. This choice could save costs since just one premium covers both policyholders.

However, it’s crucial to note that benefits are typically triggered only after the first partner’s passing, and upon policy conclusion, coverage ends for the surviving partner. Consequently, the surviving partner may need to secure a new policy at an older age, possibly incurring higher premiums.

Alternatively, individual policies, though slightly pricier, offer distinct sets of monthly payments in the unfortunate event of both parents passing away.