What is family income benefit?

  • Provides a tax-free monthly income
  • Helps long-term family budgeting
  • Low-cost premiums from just 20p-a-day ¤
  • Could pay out up to £5,000 a month (this can be more or less depending on the provider)
  • Term length up to 40 years
Family income benefit summary

Family income benefit (also known as FIB or family income protection), is an alternative form of life insurance.

You’ll pay a monthly premium for your cover but, unlike traditional forms of life insurance, your loved ones will receive ongoing monthly income payments (rather than a lump sum) upon your passing.

These family income benefit payments will run from the day the claim is accepted until the end of your policy.

Payments are tax-free and can help to replace your income so that your loved ones can continue with their current lifestyle.

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.

Can be more or less depending on the provider

How does family income benefit work?

Family income benefit works similarly to other forms of life insurance, where you’ll choose how much you’d like to be paid out to your loved ones and how long you’d like to be covered for.

The difference is, instead of a lump sum, your loved ones will receive monthly income payments.

Upon your passing, loved ones can make a claim and payments will commence for the remainder of your policy term.

These payments can help enable your loved ones to sustain their current lifestyle when you’re no longer around, without having to make drastic cutbacks.

Friendly Helpful

Step 1: Speak to a friendly member of the Reassured team. You can talk through your needs, establish the level of cover you require and secure the right policy to meet your needs at a great price.


Step 2: Once your cover is in place, you’ll need to pay a monthly premium to keep your cover valid.


Step 3: If you pass away while your policy is active, your loved ones can make a claim on your policy.

Planning the funeral your way

Step 4: Your provider will send out a claims form, which will need to be completed by your loved ones and sent back to be assessed. They may also have to provide additional information such as a death certificate.

Flexible funeral payments

Step 5: Once the claim has been deemed successful, your loved ones will start to receive their monthly income payments. These payments can stay level or increase in line with the Retail Price Index (RPI). This is dependent on which you choose during the application process.

Family Protection

Step 6: Payments will continue until your policy term comes to an end. For example, if your policy term is 30 years and you pass away 5 years into the policy, your family will receive payments for the remaining 25 years.

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 do you need?

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:

  • What financial commitments you have - It’s wise to consider both your current financial commitments, as well as any costs that are likely to occur in the future
  • How long your cover should last - If you have a mortgage or long-term rental agreement, it’s wise for your policy to mirror this to allow loved ones to continue making payments and remain in the family home. You may also wish to align your policy with when your children reach financial independence

Commonly, payments from family income benefit are used to help cover:

  • Mortgage payments - Average monthly mortgage payments in the UK are at around £759 per month[1]
  • Rent - Average rent in the UK, as of 2023, stands at £683 per month[2]
  • Household bills - British Gas suggest gas and electricity costs on average £208.52 a month for a medium sized home[3]
  • Family living costs - On average UK families spend £671 per week (that’s £2,907 per month)[4]
  • Debt/loan payments - the average UK household spends £373 each month on loan/debt payments[5]
  • Childcare - It now costs £148.63 per week for part-time childcare, with full-time childcare costing £285.31 per week[6]
  • Transportation - The average UK household spends just over £1,545 on petrol/diesel each year, with £1,341 being spent on public transport each year[4]
  • Higher education costs - A 2021 study found that the average student receives around £149.80 a month from their parents[7]

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.

How much family income benefit do you need?

Enter your monthly financial commitments below to calculate the level of family income benefit cover you require.


Lloyds Bank have found that the average monthly mortgage payment in the UK is around £753 per month, with Spare Room stating that the average monthly rent price is £606.

The loss of a parent could result in loved ones having to having to leave the family home if they’re unable to keep up with these monthly payments.


The Jubilee Debt Campaign found that £373 is the average household spend on monthly loan payments.

Factoring in any debt/loan payments when arranging life insurance means this financial burden won’t fall to your loved ones.


According to MoneyHelper.org the cost of full-time childcare in the UK is £263.81 per week.

Losing a parent could mean that additional childcare is required while the surviving parent is at work.


It’s estimated that families spend £2,548 each month on daily living costs such as food, transportation, bills and key other expenses.

Is this a figure your loved ones could keep up with without your income?


Your total cover estimate

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Let us find you our best quote.

How are family income benefit premiums calculated?

Family income benefit premiums are calculated in the same manner as other forms of life insurance; based on your likelihood of making a claim.

During the application you’ll be required to provide key information, which will allow insurers to assess your level of risk.

This information includes details about yourself as well as details about your policy, including:

  • Age
  • Smoking status
  • Medical history
  • Lifestyle
  • Monthly income you’d like paid out
  • Policy term

When taking out family income benefit, you have the option of guaranteed premiums or reviewable premiums.

Guaranteed premiums will remain the same throughout the lifetime of the policy, meaning the price you pay doesn’t change.

Reviewable premiums can often be cheaper initially, but your insurer has the right to increase them throughout the term of your policy (this can be down to a range of factors such as your age or change in risk).

How much is family income benefit?

Family income benefit is available from just £5 a month through Reassured.

However, the price you pay will vary depending 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.

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:

AgeFamily income benefit price a month

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.

Is family income benefit taxable?

No, family income benefit payments are tax-free.

Inheritance tax is charged at 40% on anything that takes an estate (your savings, property, and possessions) over the threshold of £325,000.

With traditional life insurance policies, a lump sum payment can easily take an estate over this amount and make it subject to inheritance tax.

As family income benefit provides monthly payments, rather than a lump sum that gets consolidated to your estate, they won’t be affected by inheritance tax.

Family income benefit payments also won’t be subject to income tax.

Can I get family income benefit with critical illness cover?

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 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 Reassured team for more information.

Family income benefit vs term life insurance

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 after your passing.

Family income benefit policy

Family income benefit

  • A term-based policy (can provide cover for up to 40 years)
  • You’ll need to pay a monthly premium for your cover
  • Will pay out in monthly instalments (like an income)
  • Could pay out up to £5,000 per month (this can vary depending on the provider)
  • Pay out sum can be fixed (remains the same) or increasing (to keep up with inflation)
  • Payments can help cover monthly mortgage or rental payments, household bills and daily living costs
  • As payments are monthly, they aren't subject to inheritance tax
  • Can be secured through Reassured from 20p-a-day ¤
Term life insurance policies

Term life insurance

  • A term-based policy (can provide cover for up to 40 years)
  • You’ll need to pay a monthly premium for your cover
  • Payment is made in the form of the lump sum
  • Sum assured (pay out amount) can be up to £1,000,000 (although the amount you require will depend on your needs)
  • Pay out sum can be level (remains the same) or decreasing (reduces over time)
  • Large pay out sum can be used to help cover a mortgage, family living costs and funeral costs
  • Can be subject to inheritance tax (charged at 40%)
  • Can be secured through Reassured from 20p-a-day

If you have the budget, it doesn’t always have to be a choice between one or the other - it’s possible to take 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 Reassured.

Family income benefit vs income protection

While family income benefit and income protection sound similar, they are two different policies.

Family income benefit will provide a monthly income for your loved ones after your passing, whereas income protection will provide monthly payments to cover your income while you’re unable to work.

Family income benefit policies

Family income benefit

  • Provides cover for a specified period (this term can be up to 40 years)
  • Up to £5,000 could be paid out per month (depending on the insurance provider)
  • Payments will be made to your loved ones after your passing
  • Ideal for young parents who want an affordable way of helping protect their family
  • Payments aren’t subject to inheritance tax or income tax
  • Available through Reassured from 20p-a-day ¤
Income protection policies

Income protection

  • Provides cover for a specified period (policies must often end by the age of 70)
  • Can cover up to 70% of your usual earnings
  • Payments will be made to you if you’re unable to work due to illness or injury
  • Can help enable you to keep up with your financial commitments (such as rent, utilities etc)
  • Payments aren’t subject to inheritance tax or income tax
  • Available through Reassured from 20p-a-day

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 working life and family income benefit to allow loved ones to receive a regular income after your passing.

    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?

    Should family income benefit be written in trust?

    You can write a family income benefit policy in trust.

    Writing your policy in trust is the process of detaching its value from your estate.

    With traditional life insurance, this is often done to avoid/minimise 40% inheritance tax for your loved ones - as It’s easy for the lump sum pay out to take your estate over the £325,000 threshold.

    However, in the case of family income benefit, as payments are made monthly they aren’t liable for inheritance tax.

    It can still be worth writing your family income benefit policy in trust to benefit from the following:

    1. Avoid/minimise a lengthy probate process
    2. Have better control over your pay out

    Reassured offer a free trust writing service with the majority of policies they sell. Simply get in touch to find out more.

    Can I take out joint family income benefit?

    Yes, it's possible to take out family income benefit on a joint basis through Reassured.

    A joint policy could help you to save money as only one premium is paid between both policyholders.

    However, in this instance, monthly payments will only be made after one partner passes away (usually the first).

    Once the policy comes to an end, payments will cease, 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.

    Family income benefit advantages and disadvantages

    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 benefitDisadvantages of family income benefit
    Pays out in monthly instalmentsOnly pays out if you pass away during the term
    A good option for young familiesPossible to outlive your policy term
    Payments are tax-freeWill only pay out for the remainder of the policy term
    Can help with long-term family budgetingNot suitable for clearing large debt, such as a mortgage, or covering expensive funeral costs
    An affordable policy option with low premiumsYou don’t get your money back if you don’t pass away during the term
    Avoid complicated money management / investment of a large lump sum
    Terminal illness cover comes as standard
    Critical illness cover can be added for an additional cost
    Can be taken out on a joint basis
    Can be written in trust

    If you’re unsure about whether a life insurance option is right for you, it’s always worth reaching out to an expert.

    Reassured can provide you with all the information you need to know about multiple policy options (from family income benefit to life insurance and income protection).

    This ensures you find the right policy to meet your needs, at the best available price from our panel of insurers.

    Compare family income benefit quotes

    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.

    Reassured can help you to do this and provide you with quotes from the UK’s best 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.


    [1] https://www.lloydsbankinggroup.com/media/press-releases/2022/halifax/buying-almost-1400-cheaper-than-renting.html

    [2] https://www.spareroom.co.uk/content/info-landlords/average-rent-uk/

    [3] https://www.britishgas.co.uk/energy/guides/average-bill.html

    [4] https://www.nimblefins.co.uk/average-uk-household-budget

    [5] https://www.theguardian.com/money/2022/mar/22/uk-households-debts-energy-prices-benefits

    [6] https://www.daynurseries.co.uk/advice/childcare-costs-how-much-do-you-pay-in-the-uk

    [7] https://www.savethestudent.org/money/asking-parents-for-money-university.html

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