What is family income benefit and how does it work?
Family income benefit is a type of life insurance for that is aimed at parents and families. The key difference between Family Income Benefit and term life insurance is that rather than your loved ones receiving a lump sum of money, they’ll get monthly payments instead– hence it is called an income.
If you die, the policy will pay out a regular, tax-free income up until a specified date to replace your lost income. Because it works in this way, it helps to make budgeting more straight forward, replacing the income of the lost relative.
For example, if you take out a 20-year term policy and a claim is made 10 years into it, it’ll continue to pay out for another 10 years. If the claim was made 15 years in, payouts would only continue for five years.
You get to decide how much of your income you’d like to be covered, but the larger the monthly payout, the higher your premiums.
It could suit families with young children as it provides a regular income to cover the cost of living expenses, with potentially cheaper premiums than other life insurance policies.
It is often used in conjunction with a Term Life Policy: For example – you might cover your mortgage with a lump sum Life Policy and replace the lost regular income with Family Income Benefit, guaranteeing you a fixed payment each month.
If you would like advice on the most appropriate type of policy to suit your particular needs, and want to learn about the ‘totally protected mortgage’ contact Aspire Financial Services and book your free 30 minute consultation.