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Family income benefit insurance is essential for anyone that wants to protect their family in the unfortunate event that you die. If you were to pass away unexpectedly, then your family loses out on a regular source of income. This type of life insurance kicks in to help your family manage financially following your death.
Read on to find out if this is the right insurance option for you:
What is family income benefit insurance?
With a standard life insurance policy, your family will get a lump sum when you die. The amount they get depends on how much money is in your policy, but they get it all in one go.
This sounds beneficial, but it can be hard for your family to handle all of this money - particularly during such a dark and stressful time. With family income benefit insurance, the way your money gets distributed is different.
Instead of getting a lump sum, your family receives regular payments over a period of time. In essence, it mimics the idea of having a regular source of income every month.
How does it work?
We’ve established that family income benefit insurance pays out in instalments, but how does this work?
Well, when you apply for this insurance, you decide how much money your family should receive, and for how long. This means that you have control over the situation, allowing you to almost create a plan that you think will benefit them the most. From here, the insurance provider will figure out how much this will cost you every month to get the specific coverage you’re after.
The two key things are the money your family needs each month, and how long they will require the payments for. Let’s say that you think your family needs £3,000 a month for the next 40 years to be financially stable if you died. Now, imagine you died within the first year of the policy. Your insurance provider would pay your family £3,000 a month for the remaining 40 years. But, if you died after 20 years, then they get £3,000 a month for the next 20 years of the policy.
Characters of an extended family with healthcare illustration
What happens if you die after the term of the policy has ended?
With a standard life insurance policy, your family will get a lump sum when you die. The amount they get depends on how much money is in your policy, but they get it all in one go.
This sounds beneficial, but it can be hard for your family to handle all of this money - particularly during such a dark and stressful time. With family income benefit insurance, the way your money gets distributed is different.
Instead of getting a lump sum, your family receives regular payments over a period of time. In essence, it mimics the idea of having a regular source of income every month.
How much does it cost?
The cost of family income benefit insurance will obviously vary depending on a few factors. The main ones are the provider you’re choosing and your personal situation. For example, someone in perfect health will be able to find a more affordable policy than someone with pre-existing health conditions. As such, it’s important that you compare policies before you settle on the right one for you and your family. We can help you do this, so feel free to check out our comparison tool on our website.
It’s well worth stating that family income benefit insurance is a lot more affordable than traditional life insurance policies.
Why?
Because the provider isn’t paying out a lump sum. With a regular policy, they will have to pay out the full sum no matter when you die. With this type of insurance, they pay monthly - making it easier for them to manage - and they only pay for the years remaining on your policy term. Effectively, it’s a cheaper option for insurers, so it’s a cheaper option for you.
Is family income benefit insurance suitable for you?
Generally speaking, this insurance is suitable for most people. If you want your family to be set up with monthly payments after you die, then this is the best approach. It really helps to lessen the financial burden on your family without giving them too much money in one go. Many families don’t know what to do when an insurance provider pays out, meaning much of the money can be wasted or spent. This allows for better budgeting!
However, if you want to leave your family a big sum of money - perhaps to pay off a mortgage or another big loan - then this isn’t the best option for you.
Compare family income benefit insurance quotes today
We can help you find the best quote for you and your family. Use our website to compare prices from all the best life insurance providers in the UK. We’re also on-hand to offer expert advice, helping you make the right decision.
Discount Life Insurance…Why Use Us
We are an online advice service and as such have little overheads which enables us to give away more commission enabling us to me extremely competitive on price.
Having said all this, life insurance is not always about price and there are differences in the types of cover offered by providers. So we also provide an “advised sale” which means that we take on responsibility to make sure the policy you take is the right one and the most suitable for your circumstances.
