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Family Income Benefit

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Why should you consider family income benefit?

Family income benefit is one of the lesser known types of life insurance but could be the most affordable way for you to get the cover you need to protect your family, home or business. The only difference between family income benefit and traditional life insurance is the way that your benefit amount reduces over the term of the policy.

The main difference between standard life insurance and family income benefit is in the event of a claim, you would receive a tax-free monthly income rather than a tax-free lump sum. Family income benefit can be a surprisingly affordable way to provide your family with financial security and give you the peace of mind you are looking for.

Family income benefit appears to be quite similar to decreasing term life insurance (mortgage protection) however it is completely different so should be considered separately. As it says in the name, family income benefit is designed to pay out a tax-free income rather than a lump sum.

Why should you consider family income benefit?

Family income benefit is one of the lesser known types of life insurance but could be the most affordable way for you to get the cover you need to protect your family, home or business. The only difference between family income benefit and traditional life insurance is the way that your benefit amount reduces over the term of the policy.

The main difference between standard life insurance and family income benefit is in the event of a claim, you would receive a tax-free monthly income rather than a tax-free lump sum. Family income benefit can be a surprisingly affordable way to provide your family with financial security and give you the peace of mind you are looking for.

Family income benefit appears to be quite similar to decreasing term life insurance (mortgage protection) however it is completely different so should be considered separately. As it says in the name, family income benefit is designed to pay out a tax-free income rather than a lump sum.

The simple reason why not many insurance companies talk about family income benefit is pure and simply that not everyone is aware of it and knows how it works. Most advisers will try to offer life insurance on a level or decreasing basis but not many know when to talk about family income benefit as a good alternative. Family income benefit is especially useful for people with a medical condition or hazardous occupation where it can make cover more affordable if premiums are loaded or a rating is applied.

Unlike income protection, a family income benefit policy does not directly relate to your actual monthly earnings so you don’t need to prove anything. You can calculate the amount of cover required based on your outgoings rather than looking at family income benefit as a replacement for your income.

The simple way to explain this is that, other types of life insurance will either pay out a level cash lump sum or a cash lump sum on a decreasing basis to cover your mortgage. Family income benefit pays out a monthly income from the point of claim to the end of the policy term. This means that potentially a claim in the latter years of the policy will pay out less than either of the other two main types of life insurance policy.

Family income benefit can be set up with critical illness cover included so you can therefore cover both death and serious illness as part of this plan.

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