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Family Income Benefit

Family income benefit is a type of life insurance that provides your loved ones with a fixed tax-free income in the event of your death. Such a policy is a way of providing financial security for your family in the event that you lose your life or become terminally ill.

Family income benefit provides an income for the family after the death of the insured person.
Family income benefit provides an income for the family after the death of the insured person.

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How does family income benefit work?

A standard life insurance policy pays a lump sum when the insured person dies or is diagnosed with a terminal illness. In practice, this may not be the optimal solution. There is a risk that the money will be spent on the wrong things and the loved ones will find themselves in a difficult financial situation.

Family insurance protects against such a situation. As with a life insurance policy, a payout will be made in the event of death or the diagnosis of a serious illness ending in death. Importantly, however, instead of a one-off payment of a large sum, your loved ones can receive the money in smaller monthly instalments over a set period of time – this is defined in the contract you sign.

How long should I take out family income benefit insurance for?

Family income benefit insurance can be taken out for a few as well as several decades and, in this case, the choice of insurance period is of great importance. This is because the length of time for which funds will be paid out is calculated as follows:

  • If you have taken out a family policy for 30 years and you redeem in the third year of its term, the funds will be paid out for 27 years;
  • If you have taken out insurance for 20 years and you redeem after 18 years of the contract, your family will only be supported for 2 years

The length of the policy should be tailored to the life and financial situation of the person taking out the insurance. Our insurance advisors will help you choose the right policy, taking into account your age, current earnings, financial commitments, age of children and other relevant factors. With our service, you will be confident that you are adequately protecting your family’s future. With our service, you will be confident that you are adequately protecting your family’s future.

So, as you can easily see, the longer the period of insurance cover, the better, because in the event of a misfortune, your family will receive the necessary support for longer. On the other hand, probably no company will insure a person who is 85 years old (the upper age limit is usually 70). In addition, the longer the insurance period, the higher the premium as a rule; after all, the risk of death increases with age.

family income benefit insurance
Family income benefit

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When is it worth taking out family insurance in the UK?

Contrary to appearances, it is not always worth it. Family income benefit, as the name suggests, makes sense especially if you have a family, especially children. Of course, the death of your wife or husband always has a negative impact on your personal finances, but it is families with children who are in the worst situations – simply because you suddenly have to support 2, 3 or even 4 people on one salary.

In our opinion, it would be a very good idea to insure yourself in such a way that the end of the policy is when the youngest of your children reaches around 21-23 years of age. This is the time when the young person already has the necessary education and is slowly becoming financially independent. However, the first years of life are particularly crucial, so if you can’t afford a policy that lasts for 30 years, at least buy one that lasts for a decade.

How much does family income benefit insurance cost?

The amount of family insurance premiums (like any other policy) is derived from a number of factors. It depends on your age, your health and even where you live. We are unable to give you a precise amount, but many insurance companies offer such policies for as little as a few tens of pounds per month. If you’d like to find out what your premium will be, feel free to get in touch – a conversation is no obligation and we can see if you’re definitely not overpaying for your current insurance.

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Think carefully about securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services and some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts
secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services are not regulated by the Financial Conduct Authority.

Extend Finance nor The Right Mortgage Limited can’t provide advice regarding Personal Pensions, Pension planning or investment planning advice. You must seek independent financial advice from a suitably qualified professional financial adviser who may charge you for advice.

Wills, Will writing, Trusts and Trust planning are not regulated by the Financial Conduct Authority.

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