What is family income insurance?
Mint Fs: Family income insurance is a special type of life insurance policy. Generally, with life insurance, your loved ones will receive a lump sum payout from your policy when you die. It’s then up to them to handle that money as they wish. With family income benefit, your loved ones will instead be paid a regular income for a set period.
Family Income FAQs
How does family income insurance work?
When you take out a family income benefit policy, you stipulate what income you would need your loved ones to receive, and over what time period.
The insurer will work out what monthly premium you would need to pay in order to secure that cover. At the outset, figure out what sort of income would be needed your family to be financially stable should you pass away.
Let’s say that your family would need £2,000 a month for the next 30 years in order to be secure were you to die. If you died in the first year of the policy, the insurer would pay out that sum for the full 30 years of the policy, while if you died in year 25, they’d receive £2,000 a month for the final five years.
If you die after the term of the policy has finished, there will be no monthly payout to your loved ones.
How much will family income insurance cost?
Family income benefit is generally seen as the most budget-friendly form of life insurance available.
This is because the insurer is less likely to have to pay out a significant sum, and even if they do they won’t need to pay it all in one go.
In comparison, a term life insurance policy pays out entire sum agreed should you die during your term, no matter whether that’s during the first year or the last, while a whole-of-life insurance policy guarantees that there will be a payout at some point.
However, the actual cost of a policy will vary based on issues including your health and lifestyle, your age and what size income you would want the policy to pay out
Who is family income insurance suitable for?
Managing a large lump sum can prove a real challenge for families who have just lost a loved one. If they want to make the money last for a lengthy period, this will involve a lot of budgeting and most likely investing in the stock market.
Furthermore, the loss of a parent can create additional costs, such as a greater need for childcare. Dealing with all of this can be a complex process at the best of times, let alone when you are grieving. As a result, family income benefit will appeal to those who want to ensure that should they pass away their loved ones enjoy a simple, regular income.
This should make it much easier to handle the budgets and keep on top of paying the household bills. And as you determine the term of the policy, you can make sure that the income lasts for the most appropriate length of time.
This might be up until you plan to retire, or when you expect the children to be financially independent. Getting professional financial advice can help you figure out what type of cover is right for you and your family.
Mint Protection Services
Mortgage Protection or Decreasing Term life insurance is a policy where your cover amount goes down or ‘decreases’ over time. This means that the monthly premium is lower than that of a level cover policy.
Critical Illness Cover
What would happen to your family if you were unable to work? Would they be able to cope financially if you were so ill that you couldn’t pay towards the bills or your mortgage? Critical Illness Cover exists to safeguard your family if this scenario was to unfortunately arise. We don’t know what life will bring us from one day to the next, but critical illness cover is a way to prepare against the worst happening.
Formerly known as permanent health insurance, this is an insurance policy that pays out if you’re unable to work because of injury or illness.
Family income insurance is a special type of life insurance policy. Generally, with life insurance, your loved ones will receive a lump sum payout from your policy when you die. It’s then up to them to handle that money as they wish. With family income benefit, your loved ones will instead be paid a regular income for a set period.
A relevant life plan is insurance for an employee in case of death in service. It’s a plan paid into by the employer, which is designed to pay a lump sum if the employee dies or is diagnosed with a terminal illness.