Family Income Benefit

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It is widely regarded as the cheapest way of buying life insurance and will pay out a lump sum payment which is tax efficient. If you have a young family and perhaps are after more cover than is affordable right now you should consider a family income benefit policy.

What is Family Income Benefit Insurance?

Family income benefit cover or insurance is slightly different from the conventional life insurance policy in terms of the pay-out it provides when the policy is claimed or the term expires. This insurance scheme instead of providing a large amount to the members of the family of the insured person offers the pay-outs in form of regular monthly installments that can be conceived to be a sort of regular income. The monthly payments will continue until the termination of the policy.

The primary motive of this insurance policy is to maintain a constant monthly income of the family when the earning member ides so that the financial void that is created can be filled to some extent.

Main Benefits

This insurance is highly beneficial fo families that are more concerned about their regular expenses than the lump sum investments they could make with the money other schemes may provide. It is the lowest cost method of purchasing life insurance, and well worth considering. The income it provides is tax free. It is an ideal investment for young families and also for those who want their cover to be more than what they can simply afford now.

Main Drawbacks

Like most things in life, it is not all positive. If the policyholder lives beyond the end of the policy period, no pay out is given. There are no surrender values as the contract explicitly mentions the payouts to be provided in the event of death only. In case of non-payment of premiums at any point of time, the cover will instantly stop with no further return of money despite what has already been paid by the policyholder.

Alternatives

There are a number of other good options that you can choose if not interested in this kind of policy. Simple life insurance can be chosen, and you can look at our guides to see the different types of policies available. Also mortgage protection can be chosen, if that is the main concern. The choice solely depends on you and your family's particular circumstances. Many investment schemes also turn out to be very beneficial investments and it is well worth taking the time to speak to an expert to make sure that your loved ones have sufficient cover.

Buy cheap family income benefit cover

We work with brokers to provide the best value family income benefit available in the market. Click on 'Get a free life quote' and we will help you find the best value cover. Our service is 100% free and you are under no obligation to take the quote.

Guest article: Written by Susan Walters-Smith.