Family Income Benefit
The economic times can be, at best, difficult. Many of us have been hit hard by recent global events. On top of that, there can be so much uncertainty when a family suffers a loss of a time of hardship. In those times, we often require a crutch to help us out. That crutch can come in the form of insurance designed to help you and your family get back on your feet. It is designed so that if there is a death in the family and they are insured, a steady income will be provided for a good length of time after. It is an alternative to level term insurance and is there primarily to replace lost net income for a family. Let’s have a closer look at some of the key points surrounding family income benefit.
Family Income Benefit data file:
- That it is a form of insurance designed to cover loved ones if you pass away.
- Provides gradual cover for beneficiaries.
- Must be paid consistently to maintain the cover.
- The cover will last for the remainder of it’s term no matter when someone passes.
- The cover is partially based upon income.
- The terms of the cover are flexible depending on circumstances.
How Does Family Income Benefit Work?
First you need to pick an insurer of your choice. The next step is to agree a term of the policy. The idea is that payment will begin only at the point there is a death. For a 25 year policy, if the person recipient dies 20 years in, the cover lasts the remaining 5 years. If the policy lasts for 20 years and the death is 3 years in there will be 17 years of cover. This means that you need to be very selective about the term of cover you desire.
With this model, it’s possible that some policies will never end up paying out. It also means that the policy is considered more low-risk for an insurer as even when it does pay out, it’s not one big lump sum so more manageable. For these reasons, it’s very possible that you can secure very reasonable terms and payouts with family income benefit.
The premiums of the policy will depend on a small number of variables. These are your age, your health history and what annual income you desire as a payout. Using these factors, the underwriter will be able to determine a fixed sum and term to use as a payout.
What can Family Income Benefit do for me?
Family Income Benefit is an effective way of ensuring that your family is provided for when you’ve gone. It is often preferable for your family where a lump sum doesn’t fit. The consistent payment is a less risky alternative if you can’t guarantee to make the money last. This makes it a better alternative for low-income families.
Trying to handle a lump sum payment is highly risky. The terms of the payments are also highly flexible, allowing for difficult situations such as children growing up or the drive to gain financial security.