Bringing peace of mind with Family Income Benefit
Research shows that most families in the UK would have to cut their living costs in order to survive financially in the event of the main income earner dying prematurely.
Unless you have a large amount of savings or inherited wealth, death of the main income earner can come as a shock for many. Have you thought about whether you be able to cope financially, support your family and maintain your lifestyle if your partner died suddenly?
Although it’s not something many of us like to think about, it’s important to get things in order and plan well ahead for every eventuality. By putting an insurance plan in place, you will have peace of mind and know that your family will be taken care of if the worst happens.
There are a few insurances policies which you could choose. Many of you will be familiar with a Life Insurance policy, it might be something you already have in place, or have considered?
Simply put, a Life Insurance policy pays out a lump sum of money to your loved ones in the event of your death. The money can be used to pay off outstanding debts, including your mortgage, cover funeral expenses or provide financial support to your family. The pay-out is designed to help your family maintain their lifestyle and ease the financial burden during a difficult time.
Yet there is another benefit for families which can help in the event of your or your partners death and that’s Family Income Benefit.
Family Income Benefit, is a type of life insurance policy that pays out a tax free regular income to your loved ones for a specified period of time after you or your partners death.
This type of policy can really help if you have young children, and particularly if one of you is the main income provider. It’s also considered the most affordable type of life insurance available.
When you take out a Family Income Benefit policy, you do so for a set term, your advisor will help you decide what that should be. A family income benefit policy will then pay out if you are diagnosed with a terminal illness or die during the length of that ‘term’. For example, if you took out a 20-year policy and died after five years, your provider would pay an income for the remaining 15 years. Your insurance advisor will discuss what’s right for you, taking into consideration your circumstances, and age of your children.
So what are the benefits?
Having a family often means you will have a family home and a lifestyle to pay for and maintain. You may have school fees, or activity and entertainment costs, childcare costs, holidays and a car.
When times are challenging, it’s good to know one thing you don’t have to worry about is your finances. Some of you may have savings, but even then, you may find they don’t last long and could mean you have to downsize and give up your lifestyle. A family income benefit plan can provide an additional steady source of income to help your family cover the daily living expenses such as mortgage or rent payments, utility bills, food and travel.
So which one is right for you – life insurance or family income benefit?
Neither are exclusive, and an advisor will help you to choose what is right for you, taking into consideration your specific circumstances and finances. You may see the benefit of a lump sum pay-out as this could enable you to pay off your mortgage therefore easing your monthly outgoings, or it could pay the school fees giving stability and security to your children.
You may decide that a monthly pay-out until your children have grown up will ease the burden of having one income.
Or you could decide that both policies would benefit you and mean you can keep your lifestyle going as it is.
If you are on a budget then Family Income Benefit is generally cheaper than life insurance and you can always add in a Life Insurance Policy at a later stage.
Whichever you decide, the main benefit of both these insurance policies is the peace of mind they bring. Knowing your loved ones will be financially protected in the event of your death can be a huge weight off your mind. It can also provide reassurance that your family will be able to stay in the family home, and maintain their lifestyle and way of living and avoid any financial difficulties that may arise.
While these policies are similar in some ways, they differ in how they provide financial support to your family. By talking to a qualified insurance advisor, you can work out what’s right for you and your family. They will take into account your lifestyle, costs and circumstances and find a plan which suits you and your budget.
At Kingsbridge all our advisors are experienced in offering insurance advice and will be happy to meet you at a time and place which works for you. Get in touch to book in an appointment today.