Family and Personal Income Plan

Family and Personal Income Protection Plans (FPIP) are aimed at those who have a mortgage or large financial commitments and need to provide security to their dependants in the event of a critical illness or death. The policy is set up with a monthly sum assured, although the claim may be paid monthly or as a reduced commuted lump sum value. The commuted value is calculated differently at Underwriting and Claims stages.

As FPIP is a monthly benefit contract with the option to have a lump sum at claim stage, we need to be able to compare FPIP with normal term assurance policies, so a commuted lump sum value is calculated based on the term of the policy.
The lump sum can then be measured against medical and financial evidence limits, it must not be used to calculate a commuted claims value.

FPIP Sum Assured Formulae

To calculate the commuted sum assured value, you can use the formula below:

Level Sum Assured and Indexed Sum Assured 

Monthly benefit x 12 x Term (in years) / 2

eg £750 per month FPIP with £20 year term = £90,000

Key Points

  • The policy is set up with a monthly sum assured. The claim, however, may be paid monthly or as a reduced commuted lump sum value.
  • The policy provides a tax free benefit if the client either dies or fulfils a Critical Illness Cover (CIC) definition.
  • Policy conditions, eg waiver, residency clause, children's CIC cover etc. mirror products they are based on

Per Mille Ratings on FPIP Cases

Per mille ratings affect the premium differently on FPIP cases compared to normal term assurance contracts. If a pre-sales enquiry for an FPIP contract indicates a per mille rating, it is recommended that an indicative rated quote is prepared by Protection Customer Services (PCS).

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