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Income Protection

Family Income Benefit

Family income benefit is a form of insurance that is primarily used to ensure that a family’s income is maintained at an acceptable level following the death of the main income provider or providers.

How is it different from conventional Life Cover?

Family Income Benefit differs slightly from a standard life insurance policy as it pays a monthly tax-free income to your dependants if you fall terminally ill or die, instead of cash lump sum. These payments, which can either be index-linked or fixed, will continue at the level specified until the policy's termination date. If you live to the end of the policy’s term, no benefit is payable.

Important things to remember

  • Family income benefit insurance does not involve any investment and the policy has no cash-in value at any stage.
  • A family income benefit policy can be taken out on its own or alongside other insurance policies such as mortgage protection insurance and critical illness cover, and can be held by more than one policyholder (a joint policy).
  • Family income benefit is a relatively inexpensive form of life insurance. Premiums are generally lower than level term life insurance policies as the sum assured is paid in regular monthly intervals, meaning the risk to the insurance company declines throughout the policy term.
  • Although it is mainly used to provide a substitute for the main family earner’s income, this type of insurance can also be used within divorce settlements to ensure that agreed monthly maintenance support payments continue up to a specific date.

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