Family Protection is a type of life insurance. Unlike traditional policies that pay out a lump sum, family protection insurance provides beneficiaries with a regular, tax free income.
Regular income payments run from the date of death, until the end of the policy term. Or as chosen at the outset by the policyholder. Family Protection can be well suited to new parents with young children, who want an affordable way to ensure their dependants are looked after in case the worst happens.
The benefit of regular payments, instead of a lump sum, is that it can comfortably replace a lost income.
Before you buy Family Protection you need to consider the future living costs of your family. Don’t worry, we know that this is a daunting task; our specialists can help you with this. Ideally, this would cover all family living costs, not just now but in the future too.
Then, you need to decide how long you require the cover to last, (known as the ‘term‘). Often policyholders ensure the term lasts until their children are financially independent.
Generally, this tax-free income is paid monthly Although it can be paid quarterly, or in a lump sum if you prefer. This can help with the long-term budgeting of day-to-day living expenses in case you’re not around.
To ensure your family protection payments meet your dependant’s needs, both now and in the future, it may be a good idea to link it to indexation.
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