Family Income Protection

Family income protection is insurance that is put in place to protect your family in the event that they lose the main income winner in the family and are left without a reliable source of income to pay the bills. How it works is your family is provided with a regular monthly income if they experience the death of the principle provider. These payments can be used to fund any of the necessities that are needed each month for basic living requirements. The payments are continually sent out at the set policy amount until the expiry date of the policy is met. The payments can usually be set to rise along with the inflation rate or can be set at a fixed rate that does not change according to the market. You can often choose the type of policy you want, such as a single or joint policy. A single policy is only paid out when the policy holder dies, while a joint policy is paid out when one of the partners dies, although it is not paid out twice if both policy holders die. Even though family income protection can be extremely beneficial for a family if the main income provider passes away, you should realise that the monthly payments only continue to be made until the expiry of the policy. After that time period the dependants will no longer receive payments and must find another source of income. Polices tend to not have a surrender value, so you must be aware that your dependants cannot receive benefits for an unlimited amount of time. Family income protection insurance can often be paired up with other insurance products, so you can apply for a well-rounded insurance policy.

What to consider

When you go shopping for family income protection you ought to determine how much your family will need each month in tax-free cash if the principle provider passes away. Also, depending on how many people are in your family and how old they are, you must figure out how long the policy will continue to be paid out after the death of the income provider. You don’t want all the payments to cease after a short amount of time. Try to decide what time period would be most beneficial to your family and their needs. Then you must decide whether or not to go for an index-linked policy, which rises with inflation, or a fixed rate. The first is more expensive because it will provide your family with more money over the period of the policy than would a fixed rate payment. If all these considerations are made you will have a protection plan that will work well for you.

Other Useful Sites
Family Income Benefit