Family Income Benefit
Family income benefit policies are there to offer you cover should you die during the length of the policy. This can be incredibly important if you have children or other dependents that rely on your income to survive.
How does it work?
The main difference between this and other types of insurance is that instead of a lump sum payment it can provide you with a form of regular income for the remaining length of the policy. However, in some case you may be able to take a cash sum rather then opting for an income.
With a family income benefit policy your premiums remain the same throughout and you will not receive any money should you outlive the policy. It is important that you maintain regular payments since not doing so can mean the policy will end and you will not receive any cover.
Working out the level of cover
If you do decide to opt for this kind of policy then you will find that it is simple to work out exactly how much insurance to take out. All you really need to do is work out what your existing take-home wage is and arrange the cover to this level.
All types of life insurance premiums are based on a number of different factors. These include the sum to be insured, the term, your age and gender, if you smoke, and your general health. In the case of insurance, a person has to have not smoked for at least 12 months to be classified as a non smoker.
It is worth nothing that when you die your assets, such as your car and property and your life insurance will be calculated as your estate. Any transfers that are made on death are subject to Inheritance Tax, the threshold of which is £325,000 (tax year 2009/2010).
There are a number of different options that are available with this type of policy. These include index linking in which your policy will be linked to the retail price index, allowing for a greater sum assured should the cost of living increase. Many insurers now also offer another option whereby if you, for some reason, cannot work due to an accident or illness then your contributions will be paid for you.