Bell Mortgage Solutions

Find the answers to some of the most frequently asked questions about family income cover.

How does family income cover differ from life insurance?

Whilst both life insurance and family income cover pay out upon your passing, life insurance will release a lump sum pay-out. Family income cover, on the other hand, releases a monthly pay-out following a successful claim. Pay-out from both these forms of protection are tax-free.

Can you have family income cover and life insurance?

Yes, many individuals opt to take out both life insurance and family income cover. As life insurance pay-outs are in the form of a lump sum, it can be used to pay off outstanding mortgage debt. Whilst family income cover monthly pay-outs may be used to cover mortgage payments, it may be required elsewhere.

How long does family income cover pay-out for?

Family income cover will continue to pay-out, following a successful claim, on a monthly basis, until the end of the policy term.

Example policy: Duration of 25 years and a pay-out of £2,500 per month.
A successful claim made after 5 years will result in a £2,500 monthly pay-out for the remaining 20 years.
A successful claim made after 20 years will result in a £2,500 monthly pay-out for the remaining 5 years.

Is the pay-out tax-free?

Yes, pay-outs made for successful family income cover claims are tax-free.

What factors impact the monthly premiums?

Your monthly premiums for family income cover will be dependent on a number of factors. These include the level of pay-out you require to be made if you pass away.

Your age is also a factor – the younger you are when you take out the protection, the lower risk you are deemed to be to the provider. This is because the further into your policy that a claim is made, the fewer months of pay-outs are required to be made, if any at all.

Your medical history will be taken into account in the monthly premium calculations. Those with a more complex medical history may be a higher risk, and so monthly premiums may also be higher.

Is a pay-out made if you pass away after the policy ends?

Family income cover protection only pays out if you pass away during the policy term. Payments are made each month until the end of the policy. If you pass away after the policy ends, a claim cannot be made. If you do not pass away through the policy term, you will not receive back any of the premiums that were paid during the policy.