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What is Family Income Benefit Insurance?

Family Income Benefit typically pays a series of regular annual lump sums if you die. Family Income Benefit is a form of non-investment life insurance (‘term insurance’ or ‘term assurance’). Life insurance offers financial protection in the event of your early death, if family or others, are dependent on your earnings. A policy usually covers just one person, but in some cases a spouse or partner can be covered under the same policy.

Why would you want Family Income Benefit insurance?

Other forms of term insurance pay a lump sum on death. If you decide that a regular income on death would be more useful than a lump sum then you might consider a Family Income Benefit insurance policy. If you die during the term of the policy a regular income is paid to your dependants for the remainder of the term. Different policies provide an income that either remains the same, or increases each year (for example based on inflation).

Assessing your demands & needs

A loss of life can result in a reduction of income for your family or other dependants which could lead to problems paying debts or meeting tax liabilities.
In the event of your death, you may want to provide for family or others dependent on your earnings.

On your death your estate might be liable to pay inheritance tax. Inheritance tax is payable if the value of your estate is above a certain limit. Life insurance can be written under trust so that on your death the sum insured does not form part of your estate and depending on the circumstances and the nature of the trust may not be liable to inheritance tax. Trusts can also avoid the need for probate so that claims may be paid more quickly.

Additional options

Most policies have additional options (these will increase the premium):

• Waiver of premium – typically if you are unable to work due to illness or injury, the insurance company will pay your premiums to keep up the policy;
• Critical Illness – This provides cover against specific serious illnesses. Depending on the policy, a claim for critical illness may mean that the policy will not also pay out under the life insurance element.

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