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November 21, 2019

Family Income Benefit

Everything you need to know about Family Income Benefit all in one place

By Heron Financial

So what is it? 

Generally, with life insurance, your nearest and dearest will receive a lump sum pay out from your policy. But with Family Income Benefit the tax-free dosh lands in their account on a monthly basis. If you were the main breadwinner before you died, the policy could provide a supplementary income in your absence (and it also ensures your family don’t blow the lot in one go). 

How does it work? 

First up, you need to work out the monthly amount your family needs to be financially stable in the event of you passing. Remember to factor in the rising cost of living aka inflation. Then you’ll seek out a professional, reliable insurer (that’s us), who’ll do the sums to work out the monthly premium you need to pay to secure your chosen cover. 

What’s the catch?

This type of insurance is called term insurance as it only lasts for a set amount of time (known as the term). The deal is the policy pays out until the end of the term, as long as you die during the term. Say, for example, you’d like to leave your family with £3,000 per month for the next 20 years. Passing away in the first year of the policy means the insurer pays the full amount for the full 20 years. Dying in the 15th year means the insurer only pays out for the remaining five years. If you die after the term of the policy has finished, there will be zero monthly payout. 

Is it right for me?

This kind of set up is ideal if you and your family want to budget your finances for ongoing expenses such as household bills and childcare. However, if you’d rather leave your family in the green to pay off something like a mortgage you should look into a term life insurance or whole-of-life insurance policy.

If you’d like to chat about this or any other life insurance policy, just give us a call on +44 (0)203 195 1982, drop us an email on info@heronfinancial.co.uk, or book an appointment online by clicking here.

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