Family Income Rider

Key Takeaway

A family income rider is a supplementary addition to a life insurance product. It means that your death benefit would be paid in monthly installments to your named beneficiary, helping replace your income. Family income riders are often used to protect the financial interests of children or other dependent relatives. This rider is added to a life coverage product and ensures that if you pass away, your death benefit will be remitted to your beneficiary in monthly installments to replace your salary or earnings.

Family income rider van

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.

How Does a Family Income Rider Work?

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.

What Is the Benefit of a Family Income Rider?

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.

How Does a Family Income Rider Work on a Whole Life Insurance Policy?

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.

ELO1603A6 (6-24)

The information above is for educational use only and does not represent insurance, tax or legal advice. It is not a recommendation or solicitation to buy insurance. Please talk to your licensed insurance agent for more information about life insurance and your needs. Please consult with the appropriate professional for tax or legal advice. Guarantees are backed by the claims-paying ability of the issuing insurance company.

Article Author: Meredith Bell
Author Bio: Meredith joined Everly in 2022 and has 20+ years of experience in the life insurance industry. She has held various roles in advertising, marketing, communications, sales and distribution support, and product development. Outside of the office, Meredith lives with her daughter Kennedy and their dog Mavis. Meredith enjoys cooking, camping, gardening, hiking, and bourbon (though not always at the same time). She is a live music enthusiast and an avid reader. Her favorite quote is by Thomas Jefferson: "I cannot live without books." Meredith agrees, but would add cheese, movies, and dogs to that list.

Policies are issued by Everly Life Insurance Company (“Everly Life”), Topeka, KS. Everly Life is not licensed in the state of New York and does not solicit or transact business in New York.

CalendarLive support: Mon–Fri, 8am–5pm CT

© 2023 Everly, LLC