Home/Personal protection/Family Income Benefit
Personal protectionA monthly income, not one large cheque.
Family income benefit pays your family a regular monthly amount for the rest of the policy term if you die, rather than a single lump sum they then have to invest and manage themselves.
Why a monthly payment can suit better
A lump sum sounds like the better prize. In practice a household runs on a monthly figure, and that is what this replaces.
- What it pays
- A monthly income to your family
- For how long
- From the claim to the end of the term
- Cost
- Usually less than level term life cover
- Best suited to
- Replacing a salary, not clearing a loan
It mirrors a wage
Your family receives roughly what your income was contributing, month after month, rather than having to turn a large sum into an income at a difficult time.
It usually costs less
The later a claim happens, the less the policy pays in total. That falling liability makes it cheaper than level cover for the same monthly amount.
Set the term to the children
A common approach is to run it until the youngest is likely to be financially independent, which is the period the income is genuinely needed.
How we arrange it
Work out the monthly shortfall
Not your whole salary. What the household would actually be short each month once your income stops.
Choose the term
Most often until the youngest child finishes education, or until the mortgage ends, whichever is longer.
Decide whether it stands alone
It often sits alongside a lump sum policy that clears the mortgage, so the house is safe and the income continues.
Apply and put it in trust
Same underwriting as life cover. Writing it in trust normally keeps it outside your estate and speeds payment up.
Family Income Benefit, answered
- How is this different from life insurance? Ordinary life cover pays one lump sum. This pays a monthly income from the date of the claim until the policy term ends, which is usually what a family needs to keep going.
- Why is it cheaper? Because the total the insurer might pay reduces as the term runs down. A claim in year two pays for many more years than a claim in year fifteen.
- Can I have this and a lump sum policy? Yes, and it is a common combination. The lump sum clears the mortgage, the monthly benefit replaces the income.
- What happens at the end of the term? The cover stops and nothing is paid back. It is a term policy with no cash value, in the same way as term life insurance.
- Is the money taxable? Payments from a personal policy written in trust are normally free of income tax and outside your estate for inheritance tax. Your own circumstances can differ.
Paid for the remainder of the term, which is how a household budget actually works.
Often paired with a smaller lump sum policy: one keeps the roof on, the other keeps the lights on.
Request assistancePeople asking about this usually ask about these
Ask us about family income benefit
Tell us where you are up to and an adviser will come back to you. The answers below just save us a phone call working it out.
- One of the five advisers on Eastfield Road, not a call centre.
- Usually the same working day.
- No obligation, and nothing to sign at the end of it.
Would rather talk now? Call 01733 602 033.
Worth comparing side by side.
We will price this against ordinary life cover so you can see the difference for yourself.