Family Income Benefit Insurance - Red Sky Insurance

Family Income Benefit Insurance

Family Income Benefit Insurance

Family income benefit is a type of term insurance that will give regular financial support to the family of a policyholder if they die or are diagnosed with a terminal illness.

Family income benefit helps people secure an on-going income for their families. With monthly payouts, it eases the burden of bills, making budgeting more manageable.

The policy only pays out if you die during the length of the policy, known as the ‘term’. For example, if you took out a 20-year policy and died after 5 years, your provider would pay an income for the remaining 15 years. If on the other hand you died after 18 years, the pay-outs would only last for 2 years. Family income benefit is different than other life insurance policies which pay out an agreed lump sum when the policyholder dies.

Before you take out family income benefit insurance, you’ll need to think about how much income your loved ones will need. Think about future family members and their living costs as well as current ones. In addition, how long do you want the cover to last, when people take out family income benefit they want it to run until their children are financially independent. 

Things To Consider

  • Pays out a regular monthly sum tax free if you die
  • Helps your family pay ongoing living costs
  • Protects your dependants when they are most vulnerable until it is no longer required

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    You may want to consider life insurance if you have a mortgage and you want to leave a debt free estate, or if there are people who rely on you financially, like your partner or children. Life insurance can also help cover the cost of funerals, or even if you want to leave your children something when you pass away.
    Life insurance can be set up to cover a specific length of time or even for the whole of your life. Various factors will determine the cost, such as age, health and level of cover. You can control who the money will be paid to and for how long you want the policy to be in place.
    Under current tax rules, pay-outs for critical illness, terminal illness and death claims are usually free of personal liability to pay income tax and capital gains tax. However, in some circumstances your pay-out may be subject to inheritance tax. You can normally help avoid this by putting your plan in trust. Bear in mind that the law relating to tax may change in the future. (For tax planning, we act as introducers only)
    When you choose to take out a life insurance policy with one of our providers, they pay us a commission. Our service is always fee-free.
    This depends on your individual circumstances as the amount of cover required is often different for each family. If you are married, have a large mortgage and four children then you are likely to need more cover than a single parent living in a rented flat with one child.
    Yes, you can have more than one life insurance policy.
    Many couples take out joint life insurance policies, due to the convenience and in order to save money, as it is cheaper than taking out policies on an individual basis. However, joint life insurance usually only pays out once, on the first death, leaving the surviving partner without cover.

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