An often-overlooked type of cover, Family Income Benefit protects a level of income for a fixed term. In the event of death the amount of income chosen at the outset will be paid for the remainder of the term of the plan. Often the term is set to protect you until your youngest child is 18 or 21. This protection is not as expensive as you may think.
Indexation is recommended for this type of plan to protect the purchasing power, although the benefit can be level. If indexation is elected at the outset, the premiums and benefit would rise annually, normally by Retail Price Index. Family Income Benefit is one of the least expensive forms of life insurance and differs from most other types in that it is designed to pay the benefit, in the event of death, as an income rather than a lump sum. Regular Tax Free Income Payments
In the event of a claim, income can be paid monthly, quarterly or annually and under current rules the income is tax-free. This makes it ideal for Family Protection where a family are looking to insure the main breadwinner over a specific term, for example to his or her retirement age.
Extra Cover Options
Family Income Benefit can also include Critical Illness Insurance which is designed to pay the selected income if the policyholder is diagnosed with a critical illness within the chosen term. Critical illness conditions vary from insurer to insurer but in general include such conditions as some forms of cancer, some forms of heart attack, and stroke etc. In addition to these "core conditions" applicants can also select comprehensive cover which usually includes 25 to 30 additional conditions.
Family Income Benefit therefore should be considered when looking to effect insurance for Family Protection. Family Income Benefit is a low cost, tax efficient solution to Family Protection.
The plan has no cash-in value at any time.