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Everyone wants to protect their loved ones after they die. But if you think your family could benefit more from a regular income rather than a single large payout, then a family income benefit policy could be an option. Read our guide to help you decide if family income benefit is suitable for you and how to go about finding the best deal.
Family income benefit is a kind of life insurance policy. But rather than pay out a big lump sum of money to your family when you die, family income benefit offers a regular income to your family for the duration of the policy.
These monthly payments would also be tax-free.
The first step is to decide on an income that would be suitable to cover the needs of your family as well as the time frame that the income will be paid over. Based on this information, the insurer calculates the premiums you would need to pay in order to ensure it covers the desired income.
The higher the income and the longer the policy term, the higher the premiums.
Since you can set the income and the policy duration, a family income benefit policy might be suited to families with young children. For example, this policy could offer financial protection to your family until your youngest child is expected to complete their education and begin supporting themselves.
Family income benefit is a type of life insurance policy, and some people may prefer their family receives a single lump-sum payout. For example, a lump-sum payment may be more helpful if your family needs to pay off a mortgage on the family home.
If you were to choose a family income benefit policy and die with only a few years left on the policy term, your family would only receive a regular income for those last few years.
How much family income benefit cover you should get really depends on your own situation since what might work for you, might not work for someone else.
Think about what your family is expected to spend every month. Factor in mortgage repayments, bills, university fees etc into these outgoings. You might also want to consider how inflation will affect the amount your family needs to be financially comfortable.
It’s best to do your research early on and carefully consider a number of policies that might be suitable before selecting one.
The key factors that affect your premiums are how much the income will be and how long you want the income to be paid for.
Personal factors such as your age, your lifestyle and your health will also affect premiums.
You might also have the option to choose a regular income that would stay the same throughout the duration of the policy or choose a regular income that increases with inflation. But with this option, the premiums will also rise.
Finding the best family income benefit policy will very much depend on your own circumstances.
The premiums you pay for a family income benefit policy will also differ depending on how much you choose the regular income to be and the duration you would like the regular income to be paid.
It’s worth remembering to do some research and compare policies to find cover that matches your and your family’s needs.
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