Family Income Benefit Insurance

Family Income Benefit is a life insurance policy that pays an income to dependants on the death of the insured. The income is payable for the remainder of the policy term.

These policies are suitable for those with young families who wish to protect against the loss of income provided by either or both parents.

Family Income Benefit is one of the least expensive forms of Life Insurance and differs from most other types in that it is designed to pay the benefit as an income rather than a lump sum. The fact that the benefit is paid in regular installments means that the risk to the Insurer is decreasing over the term of the plan.

In the unfortunate event of a claim, the benefit can be paid monthly, quarterly or annually and under current rules the income is tax-free. This makes it ideal for Family Protection where a family is looking to insure the main bread winner over a specific term.

Although Level Term Life Insurance (please refer to the Life Insurance section of Essential Life) is perhaps the most popular choice for Family Protection, the difficulty with this type of life insurance is how to generate an income from the cash lump sum which is paid out on death within the term of the policy. For simplicity most people tend to place the proceeds of the policy in a Bank or Building Society deposit account from which they take a regular amount of interest as income. One of the problems with this is that the interest generated may be subject to tax.

Family Income Benefit therefore should be considered when looking to effect insurance for Family Protection. Family Income Benefit is a low cost, tax efficient solution to Family Protection.