Death or illness: Who will provide for your family?

The Department for Work & Pensions has now confirmed the details of the changes to bereavement support payments from 6 April 2017.

The Pensions Act 2014 contains a provision on State Benefits which are unrelated to pensions. It deals with the benefits that are paid to families with young children on the death of a parent.

In these sad circumstances, the current benefits system provides:

  • A one-off tax free lump sum of £2,000 (Bereavement Payment)
  • A taxable weekly benefit of up to £112.55 per week paid until the youngest child no longer qualifies for Child Benefit (Widowed Parent’s Allowance)

From April 2017, the new bereavement support payment (BSP) will replace the current three-tier system of bereavement payment, bereavement allowance and widowed parent’s allowance and will be available to working-age people with children, or childless bereaved spouses and civil partners aged over 45.

It will provide the following:

  • An increased lump sum of £3,500
  • Monthly payments of £350, paid for 18 months.

The new payment, which is tax-free, will work out to be a significantly less amount in the longer term than the current benefit arrangements, particularly for claimants with young children.

The changes confirm that you cannot rely on someone else to provide for your family in the event of financial hardship resulting from death or illness.

You should be looking to review your protection arrangements, outside the bereavement support payment, to ensure that your family is adequately provided for and give you the financial support you will need to maintain your current standard of living.

Providing financial protection can also help take the pressure off the main wage earner who feels it is their responsibility to make sure their family has financial security if the worst happened.

Contact Innes Reid today. We offer totally independent advice and we can shop around to get you the right cover at the right price. Our experienced and high-quality independent financial advisers can talk you through all your options, including obtaining tax relief on your premiums (subject to conditions) and making sure your family receives the life assurance benefits tax free.

Call us on 01244 347583 or email to arrange a free, initial consultation – we are available at times to suit you.

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