Updated: Jan 17
Let's start with what Family Income Benefit actually is. It pays out a monthly benefit when the
person covered dies or is diagnosed with a terminal illness (where life expectancy is less than 12 months).
If you have Family Income Benefit, it means that your family can be provided with
financial protection. It helps to ease the financial pressure on family members and allow them to focus on grieving and supporting each other.
So, how does it work?
When you take out Family Income Benefit, you first decide how much cover you want. The amount you decide is payable as a monthly benefit, and is the amount you/your family will receive should you die or be diagnosed with a terminal illness.
You also choose the term of the cover which can be any number of years between 3 and 70. It's worth noting that the policy must end before the person covered reaches their 90th birthday.
There are also different types of cover to choose from. Firstly, 'Level' which covers you for a fixed monthly benefit, and 'Increasing' which means that your monthly benefit will increase every year by 5%.
Family Income Benefit will provide your dependents with a monthly income from the time you die/become terminally ill until the end of the policy term. The income is typically tax free and can be used for any purpose.
Why should you choose Family Income Benefit?
This type of insurance is designed to replace lost income should a person die/ receive a terminal diagnosis. Whereas some types of cover will provide a lump sum in the event of either of these circumstances, Family Income Benefit pays a monthly income instead. Many people prefer this type of cover as monthly payments eases the burden of bills and makes budgeting more manageable.
Who would benefit from it?
There are many people who would benefit from Family Income Benefit. For example, a family with young children. If a parent dies or is diagnosed with a terminal illness, the cover could help to pay for things such as childcare and bills.
Single parents should also consider this type of cover. If a single parent was to die or receive a terminal diagnosis, Family Income Benefit will help to secure their children's financial future. It will give their guardian regular monthly income which can go towards expenses such as food, clothing, and school supplies.
It is also a great way to ensure that your nominated guardians have enough income if you were to die whilst you’re children where minors. Therefore there is no financial impact on them also.
If you would like to discuss this cover, or other insurance options then get in touch with Kindred Estate Planning today.