Family life insurance
Secure family life insurance to protect your loved ones',…
8 min
Family income benefit (also known as FIB or family income protection), is an alternative form of life insurance.
It provides financial protection for your family during a set term by paying out in ongoing monthly payments (instead of one lump sum) if you pass away.
These family income benefit payments run from the day a claim is accepted until the end of your policy term.
Payments are tax-free and can help to replace your income so that your loved ones can maintain their current standard of living.
Family income benefit is well suited to new parents, or those with young families, who want an affordable way to help provide for their loved ones should the worst happen.
Watch our short family income benefit video:
Family income benefit works similarly to term-based life insurance, by providing your loved ones with financial security during a set period.
The difference is, while a term-based policy provides a lump sum pay out, family income benefit provides monthly tax-free payments if you pass away.
These payments can help to replace your income for the remainder of the set term, allowing your loved ones to keep up with financial commitments.
You can choose whether your cover amount remains fixed (level) or increases each year in line with inflation (the Retail Price Index).
Here’s how family income benefit works step by step:
If you don’t pass away within your policy term, no pay out will be made and your policy will simply expire.
How much family income benefit cover you need will depend on your personal circumstances and what financial commitments you’d like to cover for your loved ones.
Family income benefit is ideal for young families who want to help protect ongoing family living costs.
It can help to replace lost income after your passing and allow your loved ones to continue with their current lifestyle.
Need help with family budgeting? The Money Helper (set up by government) can provide free & impartial advice.
Therefore, when working out how much cover you need, it’s important to consider:
By adding together all your financial commitments, you should find the sum of money your loved ones are likely to need to help cover all essential costs.
You can use our handy family income benefit calculator below to help you do this.
Family income benefit is available from just £5 a month through Reassured.
However, the exact price you’ll pay will depend on your personal circumstances.
The details listed above will be taken into consideration by insurers in order to calculate your premium.
The table below shows an example of family income benefit quotes through Reassured.
Quotes are based on a non-smoker, in good health, with a monthly payment of £2,500 (£30,000 per year) over a 20-year term:
Age | Family income benefit price a month |
---|---|
20 | £7.50 |
25 | £8.96 |
30 | £10.68 |
35 | £14.35 |
40 | £20.22 |
45 | £30.66 |
50 | £47.79 |
As with any form of life insurance, the price you pay for your cover typically increases as you get older.
Taking out cover as soon as possible can help you to lock in the most favourable premium price.
To find the most affordable family income benefit premiums it’s essential to compare quotes.
Why not let Reassured help you do this? Simply get in touch for your free quotes.
No, family income benefit payments are not subject to income tax.
This means, if a claim is made, your loved ones would receive the full pay out amount each month without any tax deductions.
In some cases, family income benefit might be subject to inheritance tax.
It’s possible to avoid or minimise inheritance tax (if your estate is liable) by writing your policy in trust. We explain this in more detail below.
Yes, it’s possible to add critical illness cover to a family income benefit policy for an additional cost.
Critical illness cover can allow you to make an early claim on your policy if you’re diagnosed with a life-threatening illness.
In this scenario, you and your loved ones would start receiving payments from the point of your claim being made until your policy expires.
These funds could help to replace any lost income if you’re unable to work, help to maintain family living standards and/or pay for any private medical treatments.
Once a critical illness cover claim has been made, your policy will expire and your loved ones won’t be able to make another claim on your policy upon your passing.
FREE terminal illness cover with family income benefit through Reassured
Terminal illness cover comes as standard with all family income benefit policies secured through Reassured.
This additional level of cover will allow you to make an early claim on your life insurance policy if you’re diagnosed with a terminal illness and given less than 12 months to live.
The funds received can help to pay for end-of-life care, allow you to get your financial affairs in order or you can use the proceeds to enjoy time with your loved ones.
Contact a friendly member of the advised team at Reassured team for more information.
Family income benefit pays out in monthly income instalments, whereas term life provides a lump sum payment.
Both are an affordable way to protect your loved ones financially - allowing them to keep up with essential daily living costs if you pass away.
If you have the budget, it doesn’t always have to be a choice between one or the other - it’s possible to take out multiple life insurance policies at the same time.
This could be a term life insurance policy to help protect larger costs, such as your mortgage and funeral costs, alongside a family income benefit policy to help protect your family’s daily living costs.
Conduct a full family income benefit vs term life insurance comparison using our award-winning broker service.
While family income benefit and income protection sound similar, they are two different policies.
Family income benefit provides a monthly income for your loved ones if you pass away during the policy term, whereas income protection will provide monthly payments to cover your income if you’re unable to work due to illness or injury.
Income protection
If it’s within your budget it can be possible to take out both policies simultaneously; an income protection policy to cover your income during your working life and family income benefit to provide your loved ones with a regular income in the worst-case scenario.
By having both policies in place you can rest assured that you and your loved ones are protected no matter what.
Why not compare both family income benefit and income protection, for free, using Reassured?
You can write a family income benefit policy in trust.
Writing your policy in trust is the process of placing someone you trust in charge of your policy and detaching its value from your estate.
This can offer several benefits:
Reassured offer a FREE trust writing service with the majority of policies we sell. Simply get in touch to find out more.
Yes, it's possible to take out family income benefit on a joint basis through Reassured.
A joint policy provides cover for two people at the same time (such as a married couple).
It could help you to save money as only one premium is paid between both policyholders.
However, this also means that only one claim can be made if either partner passes away during the policy term.
Once a successful claim has been made, the policy will expire, and the surviving partner will no longer be covered.
This means the surviving partner will need to secure a new policy, potentially at an older age, which could result in higher premiums.
Taking out two single policies may be slightly more expensive but will provide two separate sets of monthly payments if both mum and dad were to pass away.
Whether family income benefit is right for you will ultimately depend on your personal circumstances.
Everyone takes out life cover for different reasons so, depending on your unique reasons, family income benefit could be a good match.
Below you’ll find the advantages and disadvantages of family income benefit:
Advantages of family income benefit | Disadvantages of family income benefit |
---|---|
An affordable policy option with low monthly premiums | Potential pay out amount could be much less than a standard level term life insurance policy |
Monthly payments can help loved ones to manage monthly financial commitments | Not suitable for clearing large debts, such as a mortgage, or covering expensive funeral costs |
Potential pay out is not subject to income tax | The number of payments your loved ones could receive reduces throughout the policy term |
Can help with long-term family budgeting | Policy value may reduce over time due to inflation, unless you choose the increasing cover option |
Avoid complicated money management / investment of a large lump sum | |
Potential pay out is not subject to income tax | |
Can be written in trust which gives you more control over the policy |
If you need any help choosing the right life insurance option for you, it’s always worth reaching out to an expert.
Reassured can provide you with all the information you need about multiple policy options (from family income benefit to life insurance and income protection) to help you make a fully informed decision.
We’re dedicated to helping you find the right policy to meet your needs, at the best available price from the whole of the market.
Family income benefit can be an extremely cost-effective way of protecting your loved ones.
Comparing quotes can allow you to find the right family income benefit policy to meet your needs at a price that’s within your budget.
The advised team at Reassured can help you to do this and provide you with quotes from the UK’s best life insurance providers free of charge.
A friendly member of the team can also unpick any jargon you don’t understand and answer any questions.
Protect your family from as little as 20p-a-day and get in touch for your free, personalised and no-obligation quotes.
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[3] https://www.britishgas.co.uk/energy/guides/average-bill.html
[4] https://www.nimblefins.co.uk/average-uk-household-budget
[5] https://www.finder.com/uk/personal-loans/debt-statistics
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[7] https://www.savethestudent.org/money/asking-parents-for-money-university.html