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, as chosen at the outset by the policyholder.
Family Protection can be well suited to new parents with young children, wanting an affordable way to ensure their dependants are adequately provisioned for.
Regular payments could replace a lost income and help with long-term budgeting.
Before you buy Family Protection you need to consider the future living costs.
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.
Normally this tax-free income is paid monthly, although it can be paid quarterly. This can help with the long-term budgeting of day-to-day living expenses.
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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