If you have children, then you are probably no stranger to the world of worry. We think it comes with the territory! Of course, one of the biggest things that parents worry about is what would happen to their children should they sadly pass away and, if there is a surviving partner in the picture, how they would cope with bearing alone a weight that was once shared.
What is family income benefit?
Family income benefit is very similar to standard life insurance, but the big difference is the way that it pays out; life insurance offers a one-off lump sum of money, whereas, family income benefit cover would provide your family with monthly, tax-free, payments if you died or, in many cases, if you were diagnosed with a terminal illness. These payments could be used to support the family finances over a period of time, basically replacing your lost income.
You choose how much you’d like your family income benefit plan to pay out at the start of the policy, and then you’d be paid that amount each month from the point when you passed away, until the end of your policy. For instance, if you were to pass away five years into a fifteen year policy, your family would benefit from a regular monthly payment for the remaining ten years. And just like standard life insurance, if you go on to live a long and healthy life, beyond the end of your family income policy, you wouldn’t receive a payout.
Parents often opt for this type of insurance in order to cover them while their living costs and family expenses are high, for example, while their children are still financially dependent on them. During this time, many families rely on two incomes, so a family income benefit plan can provide security and replace a lost income should the worst ever happen.
Family income benefit or family life insurance - which is better?
While we wish we could give a simple answer to this question, it really does depend on your family’s individual circumstances and insurance needs. Here are some things to consider, however:
Family income benefit is really designed to cover regular expenses, ranging from rent to bills and utilities. If you have a mortgage that you’d prefer to be paid off in one lump sum, pursuing family life insurance may be a more suitable alternative.
Family income benefit can sometimes be a little cheaper than life insurance, as the overall size of your payout depends on when in the term of the policy you pass away. With life insurance, whether you pass away on day one of the policy or the day before your cover ends, you will receive the same lump sum amount of money
If your budget allows it, then you may want to consider taking out both a family income benefit policy, to cover your monthly outgoings while your children are still dependent on you, and a standard life insurance policy, to clear your mortgage (and any other debt) and/or cover your funeral costs. The combination of both would leave you with little room for worry over your family’s financial situation.
For help understanding which type of insurance is best suited to you and your family, give one of our insurance specialists a call on 01392 241 850. They will give you all the information you need to make the right choice.
Can I buy family income benefit if I’m divorced?
Regardless of what happens in your relationship, most parents want to know that their children never face any financial worries. Family income benefit cover can protect the financial contribution you make to your child’s care, for example, continuing monthly maintenance payments, should you pass away and your income be lost. Knowing that you could provide for your child even if you were no longer here, could be a huge weight off your shoulders.
How can I buy family income benefit?
Protecting those who mean the most to us is one of the most important things we’ll ever do, which is why it’s essential to get it right.
At Cavendish Online, we help you work out exactly what type of insurance you need, how much cover would be best, and which insurer is the ideal fit. Call 01392 241 850 to speak to one of our insurance specialists, who can guide you through the process and support you in choosing the best cover for you and your family.