Family income benefit

Family Income Benefit (FIB) is a financial product that offers a tax-free monthly income to beneficiaries

It facilitates long-term family budgeting with low-cost premiums starting from just 20p per day.

Depending on the provider, FIB could potentially payout up to £5,000 per month. Term lengths can extend up to 40 years, ensuring a professional and secure financial future for your loved ones.

Family Income Benefit (FIB), offers a distinct approach to life insurance. Instead of a lump sum payout, your beneficiaries receive regular monthly income payments upon your passing. These tax-free payments are designed to sustain their lifestyle seamlessly from the day of the claim acceptance till the policy’s end. Ideal for new parents or those with young families, FIB allows for affordable financial security, ensuring your loved ones can maintain their current standard of living in challenging times.

How does family income benefit work?

Family income benefit operates akin to conventional life insurance, allowing you to designate the desired amount for your beneficiaries and the coverage duration. In contrast to a lump-sum payout, your family receives monthly income instalments.

In the event of your passing, your loved ones can file a claim, initiating regular payments for the policy’s duration. This consistent financial support can assist your family in maintaining their lifestyle seamlessly after your passing, mitigating the need for significant lifestyle adjustments.

Speak to a member of the team to find out more.

Bear in mind, 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?

Determining the adequate family income benefit required is crucial and depends on your individual situation and the financial obligations you aim to safeguard for your family.

Family income benefit serves as a valuable resource for young families seeking to secure their ongoing living expenses and financial stability.

This coverage can effectively replace lost income post your death, facilitating your loved ones in upholding their present lifestyle.

Hence, when calculating your necessary coverage, it’s essential to evaluate:

  • Your existing financial commitments, alongside anticipated future expenses.
  • The duration your coverage should endure, aligning with your mortgage or rental terms to ensure continuity in payments and residence for your family. Additionally, you may wish to synchronise the coverage with your children attaining financial independence, maintaining a professional and informative tone throughout.

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

  • Mortgage payments
  • Rent
  • Household bills
  • Family living costs
  • Debt/loan payments
  • Childcare
  • Transportation
  • Higher education costs

By compiling all your financial obligations, you can determine the total amount of funds necessary to assist your loved ones in meeting essential expenses.

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How are family income benefit premiums calculated?

Family income benefit premiums are determined similar to other life insurance policies, relying on the probability of you filing a claim. As you apply, you will need to furnish essential details enabling insurers to evaluate your risk profile.

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

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

When opting for family income benefit, you face a choice between guaranteed premiums and reviewable premiums.

Guaranteed premiums offer consistency throughout the policy’s duration, ensuring that the price you pay remains constant.

On the other hand, reviewable premiums may present a more cost-effective option at the outset. However, it’s important to note that the insurer retains the authority to adjust these premiums over the policy term. This adjustment can stem from various factors like your age or changes in risk factors.

 

How much is family income benefit?

The cost of Family Income Benefit varies based on individual factors. Insurers consider your specific details to determine the premium.

Generally, premiums for this type of life insurance rise as you age. Securing coverage early can ensure a more favourable premium.

Family income benefit advantages and disadvantages

Determining whether family income benefit is suitable for you hinges on your individual circumstances. Given that each individual seeks life cover for diverse reasons, family income benefit might align well with your specific needs.

Below you’ll find the advantages and disadvantages of family income benefit:

Advantages

  • It pays out in monthly instalments
  • Payments are tax-free
  • This can help with long-term family budgeting
  • An affordable policy option, with low premiums
  • Terminal illness cover comes as standard
  • Critical illness cover can be added for an additional cost
  • This can be taken out on a joint basis
  • This can be written in trust

Disadvantages

  • Only pays out if you pass away during the term
  • Possible to outlive your policy term
  • Will only pay out for the remainder of the policy term
  • Not suitable for clearing large debt, such as a mortgage, or covering expensive funeral costs
  • You don’t get your money back if you don’t pass away during the term

If you need advice, or have a specific question about this, please contact one of our experienced team members. We can ensure you are given the right options to suit your personal situation.

Because we play by the book we want to tell you that…

For insurance business we offer products from a choice of insurers.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Frequently asked questions

Can I get family income benefit with critical illness cover?

What’s the difference between family income benefit and term life insurance?

What’s the difference between family income benefit and income protection?

Can I take out joint family income benefit?

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