One type of insurance policy that you may be considering is a family income benefit plan. A family income benefit insurance policy can provide a pay out when one of the wage earning parents dies or is unable to work and earn an income. A family income benefit insurance policy will pay out in monthly increments rather than a single lump sum payment. Many parents with dependant children are adding a family income benefit insurance policy to their family’s financial portfolio. The family income benefit option has several pluses for policy holders. The payout is made in monthly increment payments rather than as one lump sum. This is helpful for those who want to receive a steady continuous series of payments. Many choose a family income benefit insurance plan because they do not want to have to deal with a lump sum payment. Usually if you receive the benefit in one sum you have to worry about how you will invest the money so that it will last a long time. While these may be easy for those with investment experience, or a regular financial advisor, many others do not want to take the risk of investing this payout benefit. They prefer that their family income benefit insurance policy be structured to pay out in regular monthly payments.

Another plus for the family income benefit is that the monthly payments are tax free. This ensures that your spouse and dependent children will receive all of the funds from the family income benefit insurance plan and not lose any of it to taxes. When looking to purchase a family income benefit insurance policy there are several factors to consider. First the payments will continue only for the term of the insurance policy or plan, and this is takes into effect the time in the term when the claim is made.  For example, if the family income benefit plan is a twenty year term plan, and the claim is made in year sixteen, then the beneficiaries will receive monthly payments for four years. The payout for the family income benefit insurance is only for the years left on the policy when the claim is made. On a twenty year term plan, a claim made in year five will payout benefits for fifteen years. This is an important factor to consider when setting up a family income benefit insurance policy, especially if the purpose of the plan is to care for dependent children.

Because of this payout structure, and the fact that these are term plans, family income benefit plans are generally less expensive than other whole life insurance policies. This is because there is no guarantee payout, the funds are only paid if the insured person dies or becomes too ill to work. In addition a family income benefit insurance policy does not accrue value over the live of the plan. When the term is over the plan is done, there is no value to cash out. If you would like to set up your policy to have a family income benefit you may want to talk with your insurance broker or financial advisor. There are also very good insurance providers online who can answer you questions and provide quotes on these policies.

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