You may have seen in the media, discussions around the impact of the new bereavement benefit system that came into effect on 6th April.  The changes have been labelled as a ‘modernisation’ of the current system, but Johnny Timpson, our Financial Protection Market & Industry Affairs Manager disagrees.  You can learn more about why he thinks this in the following article.

 

Impact of the new bereavement benefit system:

  • Under the old system, the potential payment to a bereaved spouse or civil partner with a very young dependent child under the Widowed Parents Allowance could be as much as £119,050 over a maximum 20-year support period (the average payment being around £29,000). This compares with a maximum of £9,800 under the new Bereavement Support Payment benefit and an 18-month support period.
  • 91% of widowed parents will be supported for a shorter period of time than they would under the present system*.
  • The revised benefits are still only available to those who lose a spouse or civil partner, not co-habitees, despite just over one in five UK couples (22%) with dependent children being co-habiters.**

This is also not the only working-age welfare reform that newly bereaved parents could be impacted by.  Other reforms also apply to the following: Support for Mortgage Interest benefit if they have a mortgage, housing benefit if they rent, Council Tax support, the household benefit cap, and the controversial  change to the child support element of Universal Credit being restricted to two children.

 

What can you do?

Many parents do not have financial protection in place, it means families could face a significant financial struggle in the event of an unexpected loss of income due to serious illness or death.***  This makes it more important than ever for families to review their financial protection, and gives advisers an opportunity to have a protection conversation to ensure they have an appropriate plan in place.

 

Is Family Income Benefit a missed opportunity when address client needs?

 

Kind regards

Tim

 

Sources:

*Childhood Bereavement Network research, 2017

**Office of National Statistics, Families and Households, November 2016.

***Scottish Widows protection research – 32% of people have life over and 9% have critical illness insurance. Research is based on a survey carried out online by YouGov who interviewed a total of 5,161 adults between 28th January and 4th February 2016.