Family Income Benefit with Critical Illness Cover
Posted on February 5th, 2011 in All Posts, Critical Illness Cover, Life Insurance for Families. For many having a lump sum in the event of a critical illness is a good and also a bad thing. The problem is that the critical illness cover payout should be used to either pay off a mortgage, replace lost income until the plan holder recovers or be used to pay for expensive treatment not covered under NHS rules.However in many cases the insured may recover quite quickly but return to a lower paid occupation or never return to work at all due to health issues. If this occurs then the monthly income of the household will take a big drop.
Family Income Benefit policies try to solve the problem of having a lump sum that is often wasted. Another issue is that the insured is often not financially savvy and may not know about investments and may waste or lose some of the monies. Instead a family income benefit policy that includes critical illness will pay the insured a monthly income until the plan ends.
At the beginning of the family income benefit policy with critical illness the proposer will choose what monthly or yearly income would be required. They will also choose how long the cover will be needed for. If the insured has young children then in many cases this will be until the children are dependent at age 18 or 21.
Definitions covered are usually the same as other critical illness definitions. These policies will normally cover death or life insurance also. If the plan is set up on single basis then it best to have the policy set up in trust. However because the policy also includes critical illness the trust should be a discretionary trust. This way if the claim is for critical illness then the sum assured would be paid to the policyholder. However if the claim was for death then the claim would be paid to the beneficiaries of the trust.
To ensure the plan you choose is right for you and your family it is best to speak to a financial adviser. Use the form on the right to enquire and get quotes. All the advice you receive will come from a qualified financial adviser.
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