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Reminder from Life Insurance Company

Tue, 03 Jul 2007

Life insurance firm Bright Grey has released a pertinent reminder about the role of family income benefits in life assurance policies.

Speaking on behalf of the firm, Roger Edwards reportedly commented: "Family income benefit accounts for a mere 5% of all life assurance sales yet it can be more flexible than policies that pay out a lump sum. There seems to be no stopping the term assurance price war. Emails hit my home inbox on a daily basis from discount advisers promising me the cheapest rate if I take some life assurance out through them. Or they offer me a significant reduction in premium if I switch my existing cover across. Meanwhile, the supermarkets and other retailers run adverts which all seem to focus on the message that ‘cheapest is best’ such as ‘life assurance from 26p per day."

Edwards continued by further condemning discount life insurance: "But there is one thing glaringly absent from the shelves of retailers and pretty much missing from the wares of the discounters as well: family income benefit (FIB). FIB is life insurance that pays out an income for the remainder of the policy term when a claim is made. So, for example, FIB could be taken out over a 25-year term to provide an income of £10,000 a year after the death of the life assured. That’s potentially a total income of £250,000 if a claim is made near the start of the policy. But because the total amount the insurer has to cover reduces as each year goes by without a claim, the total cost of FIB can be up to 60% less than that of £250,000 lump sum cover ."

He apparently concluded: "So the next time you’re looking at life cover, consider FIB."
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