Adding a family income rider to a single parent life insurance policy may be suitable for parents with a young family financially dependent on their income. Some policyholders may add a family income rider to an increasing term life insurance product where they feel monthly payments would be more manageable than a death benefit paid as a lump sum. 

If you are unsure which insurance coverage would be most suitable, you’ll find the common types of life insurance explained through our earlier knowledge guides.

A rider is an optional addition to a life coverage product, where a family income rider means that your death benefit would be paid to your family on a monthly basis. Those payments typically continue for the remaining duration of the life coverage term, and you can often specify the amount you would like to be paid each month.

If the life insurance term ends, depending on the product you have, your beneficiaries will receive any remaining death benefit as a lump sum. Policyholders with term life insurance may also be able to convert their coverage into a whole life product, permanently retaining the death benefit. Note that all insurance policies and riders must be underwritten at the time of application.

There are varied scenarios in which a life insurance policyholder might consider a monthly payment more suitable, where the death benefit is split into equal monthly payments rather than paid as a one-off lump sum. Some insurance products offer the option of including a family income rider at a small additional cost. In contrast, others allow you to opt for your preferred payout structure without any extra charge.

In some cases, a family income rider is only available against decreasing term life insurance products. Your beneficiary would be entitled to a decreasing death benefit over time, where the type of coverage is often aligned to the remaining amount payable against a mortgage or other debt.

It is important to be conscious that some insurance products may have a restricted time frame, which dictates the maximum time your beneficiary would have to submit a claim after your death. Therefore, you might need to let your recipient know if you are considering a family income rider and there are time constraints they will need to adhere to.

Typically, policyholders with whole life coverage can add a family maintenance policy to their insurance–an equivalent to a family income rider but providing permanent coverage. Family maintenance policies work similarly and may allow you to decide whether you would like your death benefit remitted to your beneficiary in installments, normally if you pass away before a certain age.

Once you exceed that age, the coverage remains in place, but the death benefit would usually be paid as a lump sum.