Bereavement Support Payments
From 6 April 2017, the government has changed bereavement benefits in order to modernise and make the support available easier to understand. The Bereavement Support Payment replaces what was previously known as the Bereavement Payment, Bereavement Allowance and Widowed Parent’s Allowance.
However, the bereavement payments under this new system will reduce the amount of benefit available for parents, with an estimated 75% of bereaved parents being worse off.
Intended to cover the cost of a funeral for the deceased, from 6 April a tax-free lump sum of £3,500 will be payable to those with dependent children - or £2,500 to those without. This is actually an improvement (previously £2,000 under the bereavement payment), but may not be enough for many families - the average cost of a basic funeral using a funeral director is £3,675.
Previously, under the Widowed Parent’s Allowance, monthly payments were provided until, amongst other things, the youngest child no longer qualified for Child Benefit, which could be up to the age of 20. From 6 April 2017, a tax-free monthly payment of £350 for those with dependent children - or £100 for those without - will be payable for only 18 months.
What happens if the youngest child is just a baby when their parent dies? In the past, the surviving parent would receive £112.55 per week up until the child was 20 years old. With the new system, it’s estimated that 91% of bereaved parents will be supported for a shorter time.
What’s more, if you are co-habiting couples and aren’t married or in a civil partnership, they won’t be eligible for the bereavement benefits. This creates a further concern for an increasing number of clients, particularly those with children, who could be left in financial difficulty if their partner died.
There is something we can do to bridge the gap between what your family will need if they died, and the support they’ll get from the government. It’s a simple and cost-effective solution - Family Income Benefit (FIB). Where you typically use term assurance to pay off the mortgage, FIB will provide a tax-free monthly benefit to help pay for other household expenses, such as bills and childcare costs.
If you would like further information get in touch with Scott Robinson at Sabre Financial today, on 01548 856444 or firstname.lastname@example.org, to discuss how he we can help protect you and your family.
Sabre Financial is a trading title of Sabre Financial Planning Ltd. Sabre Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.
By Sabre Financial | Thursday, May 11, 2017