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Family Income Benefit
Family Income Benefit is a type of Life Insurance where the payments are made tax-free on a monthly or annual basis to provide an income to your loved ones if you pass away. This policy is often taken out in conjunction with a life insurance policy paying out a tax-free lump sum because the benefits of it will be used for different purposes as your beneficiaries will often have immediate financial responsibilities such as funeral costs or an outstanding mortgage to clear.
Family Income Benefit Insurance can continue to provide regular financial support long after you have gone to cover the essential costs of living. You just need to stipulate the amount of income and over what time period it should be paid. Your family may need £2,000 a month for the next twenty years. If you died in the first year then the policy will pay that amount for the next twenty years. If you died in the fifteenth year then the policy would pay out for the remaining five years. Policies are often arranged to end once your children are expected to be financially independent.
How does it work
The cost of Family Income Benefit Insurance is often comparatively low in comparison to Life Insurance. Policies will pay out the agreed monthly sum for the length of the policy, so should a claim be paid close to the start date of the policy the total pay-out will be considerably higher than if a claim is made towards the end of the term.