Family Income Benefit Insurance 101

Many people have taken advantage of family income benefit insurance because of the advantages that it has to offer. Unfortunately, a larger group of people have never even considered this type of coverage because they are unaware of what it offers, how it works, and who should be purchasing it. There are many key differences between family income benefit and regular life insurance. It is important to be aware of the benefits of both so that you can make the right purchasing decision.

With this type of insurance, the beneficiary, in this case a dependent, receives a monthly tax free payment, rather than a lump sum. The payments will be in effect from the time that the claim is made, until the end of the plan. So, if you have family income benefit insurance that runs 15 years and a claim is made after 10, payments continue for 5 years.

Who Should Buy Family Income Benefit Insurance?

This type of policy is good for you if you do not want to worry about the investment needed in order to receive a particular return. Additionally, those who feel that a monthly payment would better benefit their beneficiary should consider the family income benefit option.

Just like any type of insurance, there are downsides. A family income benefit policy may not be enough to cover all of the monthly bills that are left behind. A lump sum payment, on the other hand, could be used to pay off a mortgage, car loan or other debt. Many people have more than one type of coverage to fill all of their needs.

What about Tax?

One of the biggest benefits of family income benefit is that the payments are tax free. This means that your beneficiary will be able to receive the money, and not have to worry about being taxed on it. This is one of the most common reasons why many people decide on family income benefit insurance as opposed to a term, whole or universal policy.

What should I Consider?

Before you purchase this insurance, you need to think about several key details. Most importantly, how long do you want your coverage to last? If you have young children, it is important that payments stay in effect until they are old enough to care for themselves. Also, you must determine how much of a monthly payment you want to leave to your beneficiary.

Family income benefit insurance is popular in the United Kingdom but not many other parts of the world. Those who are interested in buying a policy should check with several life insurance providers to get a better idea of the financial implications, as well as how to start the buying process. You can visit with an insurance agent to get more information about the benefits of family income benefit insurance, as well as whether or not it is right for you and your family needs.

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