Family Income Benefit Insurance: Should You Opt for One?

Family income benefit insurance is a bit different from a conventional life insurance policy. While insurers providing a traditional life insurance plan pay out a lump sum to the family of the policyholder in the event of his death, the families of individuals who have secured the family income benefit cover will get the payouts in the form of a fixed monthly income instead of a hefty sum of money.

The absence of a hefty amount of money might be a matter of concern for you.

However, it has its own advantages. If you are interested to know more about them, then please go through the points mentioned below.

This kind of policy is particularly suited for young families

People with very young families should opt for family income benefit insurance.

In case your family members are very young with no senior member to guide them, you should invest in this policy. It will be quite difficult for the young members of your family to monitor their expenses in case of a sudden misfortune (here, it means your death).

The general inexperience of handling money coupled with the emotional grief can make it tough for your family to adhere to a strict budget. A huge sum of money in the form of an insurance payout can trigger chances of overspending. Therefore, it will be better to ensure a fixed monthly tax-free income for them so that they have absolutely no chances of going overboard with their expenses.

If the policyholder is a divorced person and is paying up for his or her children, then the insurance carrier will ensure that their needs are duly met, in case their client dies. This insurance will also prove useful when the policyholder is bearing the expenses of an older relative. If the insured passes away, the company will make sure that the monthly expenses of the relative in question are taken care of.

How to choose this cover?

Learning about the features of the family income benefit cover remains crucial. Know about its workings in detail. If you opt for a cover that lasts for 10 years and you die within that term, then only will your family be able to obtain the payouts. In case you outlive the term of 10 years, your family will not be receiving any money. You can also add a critical illness cover as and when (and if) the need arises. Please make sure that you are considering several factors while choosing a cover.

Your present debts, the kind of lifestyle you want your family to enjoy after your death and the age of your children will play a crucial role in determining your choice of the cover. If you have two children aged 13 and 15, then you should choose a cover that provides protection for at least 10-15 years so that both your children are able to find a job and provide for themselves. Talk to your insurer about the other factors that should be kept in view while choosing a plan.

Family income benefit cover is very cost-effective as it is cheaper than a conventional life insurance policy. Therefore, if both you and your spouse are thinking of securing this policy, then it would be better if you opt for two single policies instead of one joint policy. If both you and your spouse die then your children will receive much more money from two single plans than from one joint policy. There is no doubt that a joint policy will be a little more cost effective than two single policies, but two single plans will be more worthwhile for your beneficiaries.

Please shop around a bit to know more about who the reliable insurance providers in the market are before settling for one of them.