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Family Income Life Insurance Offers Monthly Income Payments

By Mike Heuer


Tax-free monthly benefits payments can be made to families when using a family income term life insurance plan offering monthly payments as income to help protect family finances if the named insured should die while the policy is in force. The plans are among the least costly forms of insurance protection due to the fact the potential payout decreases the longer the policy is in force, meaning the insurer will have less cash to pay if the named insured dies.

The payouts continue for only as long as the policy is in force. So if the term is 30 years and the named insured dies during year 25, the policy would provide predetermined monthly payments for five years. Many times, such plans are used to help ensure children can be cared for if the family bread-winner dies from some unfortunate event. That means the policies can be made to last for 18 years or 25 if wanting to ensure potential college tuition can be covered more easily.

The policies do not have level premiums, unlike standard level term life insurance policies. Instead, the premiums vary based on the potential payout. And that means they typically get lower as the named insured lives longer into the policy period. The closer to the end of the term, the lower the rates get due to the fact the potential payout also is lower. And in most cases, the income derived from the insurance benefit is tax-free.

A typical term life policy pays the benefit in a single lump sum and has a level premium throughout. But the family benefit term life policy offers monthly payments for the duration of the term rather than a single lump sum payment. So the reduced risk as the policy is in force longer results in lower costs for insurers and lower premiums for policyholders. Benefit payments can be predetermined when the policy is purchased with potential payouts adjusted to account for inflation and other potentially rising costs of living.

It’s also possible to protect against potential critical illnesses, such as cancer or other serious illness that can result in high medical costs and reductions in income if the named insured is stricken and cannot work or eventually dies. Not all insurers offer the special coverage, but those that do provide a great potential service to families whose primary earner winds up stricken with a critical illness that makes it impossible to work for a period of time or results in eventual death. The cost of medical treatments can be very high, so having such protection in place can be a great comfort during trying times.

Such policies mostly are sold in the United Kingdom rather than the United States, which makes them impossible for U.S. families to buy due to the fact they are not approved for sale in the United States by respective state regulatory officials and departments of insurance. But if working or living abroad in the United Kingdom, obtaining the insurance protection is a likelihood.