The little known Family Income Benefit Policy, a lifeline for those loved ones left behind! Ok so you have a lovely family home, a growing family and a mortgage. Being prudent financial planners, you put some mortgage protection in place to pay off the family mortgage if either of you passed away. Surely that is job done and that will be enough to look after and secure your family’s future right? Have you ever stopped and really thought about this question: Will paying off the mortgage really be enough to ensure your family keeps their home, secure your family’s future and guarantee your children have the upbringing you lovingly wanted for them? I know nobody likes to, but have you ever thought what else is left behind to deal with outside of the mortgage? Your surviving spouse will still have the rest of the ongoing household running costs to deal with like council tax, water, gas, electricity, car insurance, road tax, servicing, TV license, broadband, telephone, mobiles, general food and toiletries etc. On top of this, they will also have the additional financial burden of looking after your children by themselves. This could mean anything from having to give up hours at work to look after the children, especially if they are very young, to possibly having to put them into extra care whilst they continue to work, or even increase their hours at work to try generate extra income into the home. The above can be said if both parent pass away at the same time, and the impact this will have on your childrens guardians and trustees! With the above all said, there is a relatively inexpensive and commonly overlooked solution to prevent this from ever happening, and its called a Family Income Benefit policy. Needless to say it can be priceless to the loved ones left behind! A Family Income Benefit policy is primarily used to ensure that a family’s income is maintained at an acceptable level if one or both of the breadwinners passed away. It will then pay a monthly income into the home, at the level specified in the policy, until the policys termination date. There is no minimum or maximum cover required. Each plan is individually tailored and the benefit level can be adjusted to accommodate most budgets. These monthly income payments can either be index linked or paid at a set flat rate, however we strongly recommend index linking these plans. The main reason is £1.00 today will certainly not be worth £1.00 in 5 or 10 years time for instance, and by index linking your plan, it ensures the income received from the plan keeps up with the rate of inflation. This will mean the monthly premiums will increase periodically as the plan sum assured increases, but this will be in small manageable amounts over the plan term. Family Income Benefit policies can be held by one policyholder (a single policy) or by two policyholders (a joint policy). In the case of a joint policy, the policy will commence paying out on the passing of first policyholder and will only pay out for one parent not for both. A single parent can also take out one of these plans to secure their childrens future in their absence. I hope this article will encourage more of you to take a good look at your current protection arrangements and assess if they really will be sufficient to look after your family? More importantly I hope you will take a proper look at the aftermath you may leave behind if they dont! With over 12 years’ experience working with and supporting one of the countrys largest debt advice charities, we certainly have a track record of being ethical and honest! Therefore if you would like an honest appraisal of your current protection arrangement, requirements or needs, just drop us a line and we will gladly offer you a free review. Also, if you know of a family member, a friend or a colleague who could benefit from this article or a free review, please do share this with them. You never know the impact you could have on their and their family’s life later on. Call Justin on 0845 50 88 588 for a free review!
Posted on: Sun, 02 Nov 2014 08:00:01 +0000
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