What is Family Income Benefit?
After you’re gone, Life Insurance may ensure your mortgage is paid off, but what about the additional monthly bills that keep coming?
It’s easy to think that the worst will never happen… until it does. Having Life Insurance is a no-brainer, as it means that large-scale costs, like your mortgage, are paid off. But that isn’t where financial anxiety can end.
With the loss of a second income, your family could struggle to pay the other bills, even without having to worry about the mortgage repayments.
So making sure your family has all they need is key. Mashroom Mortgages’ Kirsty Primmer joins us to share how you can protect your family over the long-term.
What does Family Income Benefit do?
Family Income Benefit generally plays out after somebody has passed away.
The Life Insurance has cleared the mortgage, but there are still other household bills to consider. There are also other outgoings to think about – if you have children, there are additional costs you might not even really think about. Family Income Benefit steps in to cover these outgoings and allow your family to continue to live their current lifestyle.
Can you select the amount of cover that you have?
You absolutely can, and you can select how long you want it for. A lot of people will take it until their dependents reach adulthood, so it’s sort of an add-on to Income Protection.
Income Protection would pay while you are still around and the Family Income Benefit will do the same thing after you’ve gone, so it’s really worth considering having both of them. It’s generally recommended that you budget 10-15% of what your mortgage payment is on protection.
How long does Family Income Benefit pay out for?
This is something that is entirely up to you. As an example, you could set it until your youngest child is 23, which would cover them going to university and up to doing a Masters, before it comes to an end. But, in truth, the benefit can be as long or as short as you need it to be.
The longer you want the policy to run for, to be the higher the premiums would be. As always, this is something that is useful to discuss with an advisor, so they can understand what it is that you want and need and work with you to tailor the policy so that you are happy.
Mashroom Mortgages’ advisors also always recommend that you review your policies regularly. When you come to do your remortgage, this is a good time to take a look at your protection as well.
How do you claim your Family Income Benefit?
It’s a very out-of-date myth that insurers don’t want to pay out. These days, insurers are pay out more than 90% of their claims.
In the last few years, insurers have gotten much better in terms of claims. There are insurers out there that are justifiably proud of their claims process, including insurers who offer counsellor trained people on the end of the phone, so that you get the best possible experience when you come to make a claim.
Not only that, some insurers also offer services for young children in order to manage their grief, including counselling, memory boxes or bears. So it’s actually not all just about the payout, it’s actually about the all round service you receive.
If you’re worried that you don’t have the full suite of cover that your family needs, it’s never too late to get that sorted, book a call with Kirsty today.