Family Income Benefit

Family income benefit life insurance is a type of decreasing term policy. Instead of a lump sum, though, it pays out a regular income to your beneficiaries until the policy’s expiry date if you die.

The upside of family income benefit is that it’s easier to work out how much you need. For example, if you take home £2,500 a month, you can arrange for the same amount to be paid out to your family if you die.

However, there is a downside, too. If you die two years into a 20-year family income benefit policy, your family could get £2,500 a month for 18 years. But if you die a year before the policy ends, your family gets £2,500 a month for just one year.

These policies do tend to be a very cost-effective way of protecting the living standards of an insured individual’s family.

Whole-of-life Policies

As the name suggests, whole-of-life policies are ongoing policies that pay out when you die, whenever that is. Because it’s guaranteed that you’ll die at some point (and therefore that the policy will have to pay out), these policies are more expensive than term assurance policies, which only pay out if you die within a certain timeframe.

Whole-of-life policies can be a useful way to cover a future inheritance tax bill.

Critical Illness

Critical illness policies can be set up on exactly the same basis as the life policies detailed above i.e. level-term, decreasing term or whole of life. However, rather than paying out in the event of death, they will pay out upon diagnosis of a pre-specified serious illness.

As a serious illness is more likely than death, this type of cover tends to be more costly than life-only cover. It is also important to note that not all providers offer the same level of cover i.e. they don’t all cover the same conditions. This is something that we will discuss with you during the advice process.

Trusts

It is often wise to consider placing certain types of personal protection policies in to trust. The area of trust planning is very wide and can be complicated. However, trusts can often be used to protect the proceeds of a life insurance policy from Inheritance Tax and/or to ensure that the correct people receive the money in the event of the insured person’s death. We will discuss this with you, again, as part of the advice process and, if appropriate, we will recommend the right type of trust for your policy.