Maintenance payments provide essential financial support and can sometimes be the only source of income that is available to cater for the welfare of a young child or children.
Because the payments come from an individual they depend on the individual being able to maintain the payments.
Unfortunately, circumstances can lead to the individual being unable to keep up the maintenance payments. These can include redundancy, loss of job due to accident or illness and even loss of life.
If someone loses their job due to redundancy, it may only be a short while before they are employed again but if they suffer a more serious illness or die, the maintenance payments could stop completely.
Insurance companies offer a type of life insurance and a type of critical illness insurance that can make sure the maintenance payments continue for as long as they need to.
Maintenance payment insurance can be set up so that if the person making the payments suffers a serious illness or dies, an insurance policy will continue to keep up the regular monthly payments.
‘Family Income Benefit’ is the name give to the type of insurance policy that will pay a regular monthly income in the event of death or serious illness.
Not all insurance companies offer this facility but it is a valuable type of insurance policy that can protect a vital income.
The payments can be linked to inflation so they keep pace with an increasing cost of living.
They are set up so that the individual who makes the maintenance payments is the ‘life assured’ (person insured) and the person who receives the payments is the person who also receives the proceeds of a claim.
These types of policies can even be set up if two people no longer live together or even if they are divorced because the maintenance payments are being made for the benefit of their child or children. This is considered an ‘insurable interest’ which exists when it can be proven that a person would lose out financially if anything happened to another individual.
In addition, the person making the payments may wish to protect their own income against long term illness with some Permanent Health Insurance (PHI)
Maintenance payment insurance can therefore provide peace of mind that the valuable income would continue if the worst were to happen.
As with all types of insurance it is a very good idea to ask a professional for advice to make sure you set up a policy correctly so that it provides the right amount and the right type of cover.