Family Income Benefit Insurance: It’s how and why

family-income-benefitAs a potential insurance seeker, you must be aware of the existence of the family income benefit insurance in the market. It is a kind of a policy which pays out the benefits in the form of fixed monthly incomes instead of a lump sum.

More on how it works

In the event of the death of the insured, the insurance company pays out a percentage of the income that was received by the insured, to his family every month. The absence of a lump sum might get you worrying.

If you are aware of certain things, you will understand why this policy should be given preference over a traditional life insurance promising a lump sum. The premiums to be paid you will depend on several factors including your sex, age, and health.

Why should you choose a Family Income Benefit Cover?

If you have a young family, it will be quite unlikely that they will have the experience of handling a big amount in the form of a lump sum if anything happens to you unfortunately. There will always be chances of over spending where they will find themselves completely without any money after some time.

The monthly payouts in the form of the fixed salary will help them control their expenses even in the face of adversities. They will know that they will only get a certain amount of money every month, just as they did while the bread earner of the family was alive, and can prepare a monthly budget accordingly, paying off mortgage, electricity and other bills effectively. What more? In the wake of a serious disease the insured can also add the critical illness cover here. In that case the family will be paid both when the insured is ill and after (or if) he passes away. Divorced couples can also settle for monthly payments. Additionally you can choose whether the plan will be fixed throughout or reviewable

Ways to handle this kind of cover

If as a couple, you are looking at a joint policy, then think again. Two individual policies will prove a little more expensive than a joint policy. But in case both of you die; your children will be entitled to much more money if there are two individual plans at place rather than a single joint policy. Another thing to consider, while choosing this policy would be to keep the age of your child or children in view. Choose a cover that will take care of both of your kids till both of them become old enough to fend for themselves. For instance if you have two children aged 10 and 12, you should choose a cover spanning at least 13-15 years till both your children are grown up and find jobs for themselves. Consider consulting a number of insurance providers before zeroing in on one of them. Go through the features minutely and get a family income benefit quote in order to ensure the ideal deals for yourself.

Conclusion

Since your family members will be the ultimate beneficiaries of the family benefit income cover availed by you, it will be your duty to make them understand the benefits that can be reaped from this policy.

 

If they are afraid due the fact that they will not get a lump sum in the event of a misfortune, you can explain to them in detail about the basic advantages of the family income benefit insurance for instance how they will aid them to put everything in to perspective and check unnecessary spending etc.

Author Bio: ST is a passionate blogger, writing mainly on different insurance related issues.

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Category: Personal Finance