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Family Income Benefit

What is family income benefit insurance?

Family income benefit (or ‘FIB’) is a type of life insurance, however, unlike traditional policies that pay out a lump sum, family income benefit provides beneficiaries instead with a regular, fixed, tax-free income.

Regular income payments run from the date of death, until the end of the policy term, as chosen at the outset by the policyholder. No benefit is provided if a claim has not been made before the policy expires.

Family income benefit can be well suited to new parents with young children, who want an affordable way to ensure their dependants are adequately provisioned for. A regular income can also help with long-term budgeting.

Family income benefit cover

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This type of life cover is generally very cost effective because the risk to the insurer reduces each year and they are not guaranteed to pay out, (unlike whole of life insurance).

Another advantage of family income benefit is it does not require beneficiaries to budget, manage, invest a large sum. This can involve complicated investment decisions, that incur fees/taxes, at a time when you are grieving.

How does a family income benefit plan work?

Before you buy family income benefit, you need to establish how much income your dependents require each year. Ideally, this would cover all living costs, not just now but in the future.

Then you need to decide how long you require the cover to last, (known as the ‘term’). Often policyholders ensure the term lasts until their children are financially independent.

Normally this tax-free income is paid monthly, although it can be paid quarterly. This can help with the long-term budgeting for day-to-day living expenses.

Family income benefit example scenarioFamily income benefit scenario

Family income benefit in summary:



Why use Reassured to secure family income benefit cover?

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