Rather than providing a lump sum in the event of death within the specified term of the plan, a family income benefit plan would provide enough per annum to cover the income that you identify as being required in the event of the assured persons death over the term of the policy as regular, tax- free income.
However, you should be aware that payments are only made from the time of the claim to the end of the plan. For example: If the original term of the plan was 20 years and a claim on death was made in year 17, only 3 years of payments would be made.
In comparison, if you were to put in place a level term assurance plan as discussed above, the full sum assured would still be payable, even in year 19.
Family income benefit is beneficial to those who would rather receive a regular income than have to worry about investing a large lump sum. As the total amount payable over the term of the plan decreases throughout the plan term, family income benefit can often be slightly cheaper than level term assurance.
This plan has a number of options available, which include waiver of premium and critical illness cover.
Waiver of premium benefit can be added so that if you were unable to pay your premiums due to an accident or long-term illness, the company in effect waives premiums after a specific period. This is an option that you can choose to include when obtaining initial quotes for the plan that you require.
Critical illness cover is available as an ‘add on’ benefit to many basic life insurance plans. This extra cover is provided so that the plan will pay out a lump sum in the event of being diagnosed with a specified critical illness covered within the policy conditions.