Family Income Benefit is another form of term life insurance. However, when the policy holder dies, instead of a lump sum being paid out beneficiaries will receive a regular income for the rest of the mortgage term. This type of option, which is sometimes referred to as family income assurance, is often ignored by those seeking life cover or mortgage protection policy, but can be a cheaper, if not the cheapest, option and still ensures your beneficiaries can meet mortgage repayments and receive further regular income.
Family Income Benefit: Key Facts
- Low premiums: Family Income Benefit is one of the least expensive forms of Life Insurance premiums. As with a decreasing term insurance policy, money the insurer pays out decreases over time and is therefore less risky for the insurer.
- Flexibility: money can be paid monthly, quarterly or annually, depending on your beneficiaries' needs. Some insurers can also offer this option for critical illness cover, whereby money is paid out in the event of the policy holder contracting a critical illness from a set list.
- Tax savings: under current regulations Family Income Benefit is tax-free. This can make it a potentially more attractive option than a life insurance policy that pays out a lump sum, which if deposited can be subject to tax.
See also: Home Insurance
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