What are Family Income Benefits? 

Family Income Benefit is particularly attractive to those who like to know they have a regular monthly income and would rather not have to worry about complex investment decisions to make the most of a lump sum payout. Family Income Benefit is a type of term assurance in which, following the death of the life assured, installments, rather than a lump sum, are paid to the beneficiary for the remainder of the policy term. If the life assured lives to the end of the term, no benefit is payable. 

What is the Benefits in Family Income Benefits

Benefit is paid as an income benefit rather than as a lump sum or payment can be paid either on the death of the life assured or an earlier critical illness if that option has been selected. It is possible to arrange for an increasing level of benefit to maintain the real value of the arranged protection or to keep pace with average earnings. The benefit offered is for payment to the life assured’s dependants of an agreed income until the expiry date of cover.  It is, in fact, a type of decreasing term assurance where the benefit is payable over a period rather than as a lump sum. 

How does a Family Income Benefit plan works? 

Family Income Benefit plan guarantee's to pay, on the death of the insured person, a regular monthly income for the remaining term of the contract. Family Income Benefit plan is particularly useful for parents with young families, where the regular income can be used to meet the ongoing bills such as mortgage payments, child care, loan payments and general household expenses. A common feature of this type of policy is that if a policy holder does not exercise the right to increase the cover, the sum assured is frozen at that level and future index linking is not allowed. 

Define in brief the term Family Income Benefits

Family income benefit is a type of term assurance in which, following the death of the life assured, installments, rather than a lump sum, are paid to the beneficiary for the remainder of the policy term. The policy is designed for those with young families.  If the life assured lives to the end of the term, no benefit is payable. Once the policy is arranged you pay regular premiums for a specified period of time. The benefits are guaranteed during this time. If you want to leave £10,000 pa for the next 20 years, you set your Family Income Plan up for a 20-year term with a sum assured of £10,000 pa. This then means if you die in the next 20 years your dependents will receive the equivalent of £10,000pa as an income up to that 20 year point.  

Tax and Family Income Benefits

Each benefit and tax credit has its own set of eligibility criteria. Family Income Benefits are also tax under rules and regulations as pre defined such as if  a family's actual annual family income for this financial year is $40 000 or less, then payment will not be affected by the income test. But If actual annual family income is more than $40 000 for this financial year, then payment will reduce by 20 cents for each dollar above $40 000.