Should I get family income benefit? | #AD

Have you ever thought about what would happen if you or your partner became seriously ill or worse, passed away? It’s not something anyone ever wants to think about but when you have a young family, it’s a harsh reality that needs to be considered.

In the majority of family households, at least one regular salary is relied on to cover the bills, mortgage repayments and household spending. Family income benefit is designed to relieve the burden if one of the breadwinners passes away or gets diagnosed with a serious illness.

How does family income benefit work?
Family income benefit is different to many other life insurance policies in that it doesn’t pay out a lump sum to the beneficiaries upon a claim. Instead, it provides a regular tax-free income, either monthly or quarterly, to cover household and living costs. When you take out the policy, you decide how long the policy term will last. For young families, this could be until the children are financially dependent and would no longer need the income payments, or until the mortgage is paid off and the family finances are somewhat relieved.

Family income benefit is a little different to other products in that the risk to the insurer decreases with every year that there isn’t a claim. For example, if you choose to have a 23 year term and you died a month into this term, the payments would begin from the date of death all the way through to the end of the term. If you died 20 years into the term, the payments would begin from the date of your death but only pay out for 2 years, because this is what is left of the term.

Is family income benefit expensive?
I get it - having a family isn’t cheap. There’s always something to pay for - do you really need another insurance product to throw into the mix? The good news is that family income benefit is cheaper than life insurance, although monthly premiums differ from person to person. This could be down to age, the annual income chosen as a payout and if a person has ever smoked or had health issues. Understandably, anything that will decrease life expectancy will increase the monthly insurance premiums.

You could always look at taking out a joint policy between you and your partner. If there are two main earners in the family, such as you and your partner, it might be a good idea to take out two single policies if you can afford to. Having two single policies would result in two seperate payouts if mum and dad were to both pass away or be diagnosed with a serious illness during each term.

And of course, there’s also the issue of the rise in living costs to combat. The amount of money that a family may comfortably live on at one time is probably not going to be enough 20 years later. Make sure you factor in inflation or link your policy to indexation, which means it’ll be increased automatically.

Life insurance is so important. What better way to protect your family from all eventualities and make sure your children can retain a sense of normality in hard times? The last thing you need is money worries and not being able to keep up with bills if something was to happen to you or your partner.

If you’re looking for that extra peace of mind and protection, look at family income benefit. The regular payments as opposed to a lump sum payout means that no one is left to deal with a large, overwhelming sum of money, such as with traditional life insurance policies. Don’t put it off any longer and protect the life you love!

Karl Young

Part-time daddy and lifestyle blogger. Father of 2 boys under 2. Golfer, scare-fan, tea-lover, traveller, squash and poker player. I write on the @HuffPostUK

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