Family income benefit: An essential guide

Mortgage Insurance: The Essentials

Have you considered what would happen with your home and mortgage should you or the main breadwinner in your family became critically ill or even die? Although it is not a nice subject to talk about, it is vital that you give mortgage insurance, such as life insurance some serious thought and then take action to ensure that you have the right mortgage protection insurance in place, should the worst happen. Mortgage insurance gives you peace of mind, knowing that your mortgage and home will be protected for your family in your absence.

When looking into life insurance, you might have come across family income benefit (sometimes referred to as FIB) and wondered what it is and how it differs to life insurance.

This guide will tell you all about family income benefit, define FIB and answer key questions you might have about this cover.

Family Income Benefit is a less well known type of life insurance but it is a actually a cost-effective way of ensuring your family's requirements are covered in the event of your death.

Family income benefit differs to standard life insurance as it pays out a regular income until a specified date rather than a lump sum of money. It helps ensure your dependants can maintain their required lifestyle in your absence by receiving a regular, tax-free payment for a specified period of time.

If you have family income benefit and your dependants need to claim on it, they will be covered for as long as the policy runs. Once the policy term ends, then the payments will end. So for example, if you had taken out a 20 year policy and passed away 10 years into the policy, the policy would pay out a regular income to your dependants for the remaining 10 years.

Family income benefit is popular with people with young families to ensure children are covered until they are finished with education and financially independent. The monthly payments can be used for anything required - school, university, medical and of course mortgage payments and household bills.

As with other insurance options, an insurer will work out your family income benefit quote by considering a range of factors including:

  • Your age - the younger you are, the cheaper your quote will usually be.

  • Your job - some jobs are considered more dangerous than others.

  • The deferment period - the longer you have to be sick before the policy begins to pay out, the cheaper the premiums will usually be.

  • Smoking - if you smoke, your quote will be higher.

  • Existing health problems - if you have existing health issues, insurers may be less inclined to offer cover.

  • Alcohol consumption - if you drink more than the weekly recommended amount, you could be seen as higher risk.

Family income benefit can be a cost effective life insurance solution and are a good way of ensuring enough money is available to cover family living costs if you were to pass away. They are not really designed to cover large debts such as mortgages so if that is your concern then a standard life insurance policy might be more suitable.

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