Have you ever heard of family income benefit? As one of the lesser-known life insurance products on the market, this one has likely passed you by. But as a safety net specifically designed for families, every parent must be aware of family income benefit and what it can do for you.
In the majority of households, it’s fair to say that bills, mortgage repayments/rent, and household spending is reliant on at least one regular salary coming in. But what if something happens to that main breadwinner and they were no longer around to provide? What would your family do then? This is where family income benefit can help.
What is family income benefit?
Family income benefit is designed to protect you against death or serious illness. When you claim upon a family income benefit policy, your family will be provided with a regular tax-free income on either a monthly or quarterly basis to cover household and living costs. Family income benefit is a little different from other insurance products, in that the risk to the insurer decreases with every year that you don’t make a claim. For every year that you don’t claim, that’s less money overall that an insurer will be required to payout if you were to claim.
For example, let’s say you choose a 25-year term and you pass away a year into that term. The payments would begin from the date of your passing until the end of the term – so for 24 years. If you pass away 20 years into the term, the payments would begin from the date of passing but would only be paid for five years. Make sense?
You decide how long your policy lasts. This could be up until your children are financially independent and no longer needing to rely on your income payments, or until your mortgage is paid off and you’ve got some more free cash.
Do I need family income benefit?
If you are a parent – or if you have any dependents or financial responsibilities – then you should have some kind of life insurance in place. It’s the most you can do to protect your family against the worst eventualities.
If you are new parents and feeling slightly terrified at the weight of responsibility and what would happen to your little ones if you weren’t around anymore, family income benefit is the perfect product to put your mind at ease. It’s generally cheaper than life insurance, although of course your premiums are calculated by your personal circumstances, so prices differ from person to person. To keep things even cheaper, you could look at getting a joint policy with your partner, but two individual policies would give you more protection, especially if both you and your partner are household earners.
I hope I’ve convinced you to look into this handy insurance product. Who doesn’t want the peace of mind that you can still put food on the table, pay for driving lessons, buy school uniforms, and pay for school trips when times are hard? Life is difficult enough when we lose a loved one, so get some cover and make sure you can continue in some sort of reality if your world is turned upside down. It’s not something we ever want to consider, but we must protect our families no matter what.
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