Family income benefit insurance policies are added to financial plans on the Protection > Term & Endowment screen. Premium payments and benefit payouts from these policies can then be tracked on the Let's See > Cash Flow chart and policies are listed in the General Overview.
FIB cover will come into play, together with term life and whole life policies, when doing contingency planning. Plans can be tested for adequate protection by modelling an earlier than expected mortality either in comprehensive what-if scenarios or by using Voyant's quick and easy-to-use Life Insurance Need Analysis simulation.
How to Enter a Family Income Benefit
1. Go to the Protection > Term & Endowment screen.
2. In the Type drop-down, select Personal Policy .
3. Enter a name for the policy in the Policy Name field.
4. In the Begin Premiums At drop-down, select when premiums are to begin on the policy. Premiums payments can be scheduled to start by either Event or policyholder Age.
How you set the beginning of family income benefit coverage will depend on whether the policy is an existing one, already in force or if this is possible future coverage under consideration.
Is the Family Income Benefit currently in force?
Select Event and on the Time panel, Event tab (located on the right side of the screen) select the Start event. A green dot will appear next to the Start event.
- Alternatively, select Age and enter the policyholder's age at the beginning of the plan.
Will the Family Income Benefit go in force later in the plan?
Select Event and on the Time panel, Event tab, located on the right side of the screen. If an existing event can be used to time the start of the policy, select it. Otherwise, click the New Event button, located in the bottom-right corner of the panel to add a new event to the timeline to time the start of the FIB coverage. Click the future start event. A green dot will appear next to the selected event indicating when premiums will begin and when coverage is in force.
- Alternatively, select Age and enter the policyholder's future age.
5. In the Benefit Type drop-down, select Regular Income.
6. In the Benefit Amount £ field, enter the annual benefit amount.
7. Is the policy benefit indexed? Select the in the Benefit Escalation drop-down (Advanced Settings) the rate at which policy benefits are escalated.
Note: RPI, CPI and RPI are set on a scenario specific basis in Preferences > Plan Preferences(located on the right side of the screen) > Default Inflation / Growth Rates panel > in theCPI/RPI% field.
8. In the Term (Remaining) field, enter the remaining term of the policy. If the policy is in force at the beginning of the plan, enter the term remaining. If this is policy is to go into effect in the future , enter the full future term.
Note: The Begin Premiums At Event/Age and the Term (Remaining) will be used together to determine the coverage period.
9. In the Annual Premium £ field, enter the amount that will be paid annually in premiums whilst the policy is in force.
Note: An expense will be created automatically and linked to the family income benefit. Premium payments will be made until either the term of the policy ends or until benefits are in payment.
10. Joint - Is the family income benefit a joint policy?
- Select Yes if the family income benefit has two policyholders (a joint policy). Select in thePayout drop-down whether the benefit is to be paid upon First Death or Second Death.
- Select No if the family income benefit is held by one policyholder (a single policy).
11. Select the policyholder(s) in the People panel, located on the right side of the screen. Be certain to select two owners if entering a joint policy.
12. Click the Add or Update button to save the policy to the plan.
The policy and the amount of its initial benefit (in current value, prior to any future indexing) will be added to the ledger on the right side of the screen.
Benefits are assumed to be paid to the policy owner's spouse or partner. Alternative or additional beneficiaries can be specified on the Advanced Settings > Inheritance Details panel, if necessary. Beneficiaries can include the spouse, estate of the insured, surviving insured (for joint policies), other people within the plan, persons outside the plan, and charities.
Let's See Charts
Family Income Benefits will appear in the Let's See charts, primarily in the Cash Flow chart when a benefit is received as an inflow after the death (Mortality) of the policyholder.
Inflows from FIB payouts will be categorized as Protection in the detailed view of the chart.
Specifics about the policy can be found in the chart legend, Detailed Info view of the chart legend.
Policy premiums are listed on the Expenses tab, categorised as Basic expenses. Premium payments and the potential annual Benefit Amount, as of the selected year, are tracked on the Protection tab.
When the policy is in payout, payments will be shown as inflows on the Cash Flow tab. The Protection tab will also list policy Payouts .
Simulations - Life Insurance Need Analysis
The Life Insurance Need Analyser can be used to easily model payouts from life insurance policies, endowments and family income benefits, provided the policyholder is the primary client, the client's spouse or partner, or in the case of joint policies, both.
When running an analysis, payouts from family income benefits will occur at the policyholder's death only if the policy is in force in the year of death. Benefit payments will continue for the term remaining in the policy and will be deducted from any coverage shortfall identified by the analyser.
Notes on Payouts to Persons and Entities Outside of the Plan
Payouts from family income benefits will only be displayed as inflows in the Cash Flow chart if these funds can be considered as an income accessible to the individuals who are active participants in the plan. Benefits are by default assumed to be paid to the policyowner's spouse or partner. Alternative beneficiaries can be specified, however, on the Term & Endowment screen's Beneficiary Designation panel.
If the policy beneficiary is set to be a charity, persons outside of the plan or adult children/dependants who are past the age child owned accounts are available in the plan (a setting found in Preferences > Plan Preferences > Default Ages), the benefit will not appear in the Let's See Cash Flow chart and will not be considered when analysing life insurance coverage needs.
Notes on Displaying Payouts on Second Death
If the joint policyholders are the primary client and a spouse or partner, setting the policy Payout to Second Death effectively removes the benefit from the purview of the plan. Since the benefit is an annual payment, the payout on second death will not be shown on theOverview > Legacy screen (the estate plan overview) nor will it be shown in the Let's See charts since the planning timeline has ended.
Family income benefit policies are also listed on the plan Overview > General screen, beneath the heading Insurance - Term & Endowment. These are active links, which can be clicked to jump directly to any policy within the plan.