Family Income Benefit

Family Income Benefit is similar to life insurance in the sense that it is paid out on death.

However the benefit is paid on a monthly basis instead of as a lump sum.

The purpose of this is to provide an income to the survivor for the remainder of the term of the policy.

For example, a family income benefit policy is taken out for 25 years to protect a 25 year mortgage.

If the policy holder dies in year 5 the policy will pay the benefit for the remaining 20 years allowing the survivor to repay the mortgage.

Because the cost of living can change and usually increases over time this type of benefit can be ‘index linked’ which means the benefit will go up if the cost of living goes up.

The monthly payments for index linked policies will also track the cost of living so will also change throughout the term of the policy and could go up or down.

This option increases the chances of the protection being able to serve its purpose more effectively.

The amount of cover available is determined by how much a person wishes to spend on the cover.

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