Family Income Benefit insurance

Sue and Graham Smith have divorced. They have a daughter, Millie, aged six and a son, Thomas, aged nine. The couple have agreed that Millie and Thomas will live with Sue, and Graham will pay £900 maintenance per month (£450 for each child) until they are 18.

Sue could protect those maintenance payments with life and/or critical illness cover under a family income benefit policy on the life of Graham. If Graham died prematurely or became critically ill and was unable to make the maintenance payments, the children would continue to be cared for financially.

In this example, just £36.16 each month will give Mrs Smith peace of mind. This would consist of two separate arrangements, one to provide for Millie, and one for Thomas. Once Thomas reaches age 18, the maintenance payments will stop, but the cover for Millie's maintenance payments will continue until she reaches age 18. Therefore after 9 years, when Thomas reaches age 18, the cost of the cover will reduce to £20.47 each month, as the premium to the policy for Thomas will stop.

It is also possible to protect the maintenance payments from inflation by incorporating indexation into the arrangements.

This inexpensive type of cover can provide peace of mind that your children will not be financially disadvantaged.  Can you afford to ignore it?