|
A
term life insurance policy can provide
a payout in one of two ways; either a
single lump sum, or a series of smaller
payments which aim to go some way to replacing
the income of the deceased. A family income
benefit scheme is a term life insurance
policy that provides a steady income,
as opposed to a lump sum, for the deceased
policy holder’s dependents. Because
a term life insurance policy is only valid
for a specific period of time (the “term”
of the policy), the income is only payable
for the remaining period of the policy's
term, after the death of the policy-holder.
When
considering your options with regards
to a family income insurance policy, a
number of things need to be given careful
consideration:
•
In the event of the death of a family’s
primary earner, how much money will be
required to replace his or her income?
• Careful consideration should be
given to the term of the insurance policy
i.e. for how long after the death of the
policy-holder are payments required? Note
that an income is only paid to the dependents
up until the expiry date of the policy.
At the end of the specified period all
payments will cease.
• It is possible to specify the
insurance payments to be index linked
to rise at the same rate as inflation
if desired. Otherwise a flat rate will
be paid. Generally, an index-linked policy
will cost more than a flat rate policy.
• Is a joint policy required (one
that protects more than one household
earner)? This may be useful for families
where both parents are working.
• It is also possible to combine
family income insurance policies with
other insurance policies, such as critical
illness insurance (providing a lump sum
upon diagnosis of a serious illness) or
permanent health insurance (to provide
income in the event of a long absence
from work due to a long term illness or
accident). These other policies should
be given consideration also, in order
to provide the best possible security
for you and your family.
|
LIfe
Insurance 
Family Income Benefit