Would your family have enough to live on?
A lump sum sounds good in theory. But could your family actually manage it? Family income benefit pays a regular monthly income instead — often more practical and more affordable.
What is family income benefit?
Family income benefit (FIB) is a type of life cover that works differently from standard life insurance. Instead of paying a one-off lump sum when you die, it pays a regular tax-free monthly income to your family for the remainder of the policy term.
Think of it this way: if you set up a 20-year policy paying £2,000 per month and you died in year 5, your family would receive £2,000 per month for the remaining 15 years. If you died in year 18, they'd receive £2,000 per month for 2 years.
Why a monthly income can be better than a lump sum
I've seen it happen: a family receives a large lump sum and doesn't know what to do with it. They're grieving, they're overwhelmed, and suddenly they have to make major financial decisions. Some invest wisely. Others, understandably, make choices they later regret.
A regular monthly income removes that pressure. It replaces the income that's been lost, covering the mortgage, the bills, the school uniforms, the weekly shop. It's predictable, manageable, and it keeps life as normal as possible during the most difficult time.
How it compares to standard life cover
| Standard Life Cover | Family Income Benefit | |
|---|---|---|
| Payout | One-off lump sum | Monthly income for remaining term |
| Cost | Higher premiums | 30-50% cheaper for equivalent cover |
| Best for | Paying off mortgage, leaving a legacy | Replacing lost income, covering bills |
| Management | Family must manage a large sum | Regular income — no investment decisions |
Who is it best for?
- Families with children — a steady income keeps life stable during the most difficult time
- People on a tight budget — it's significantly cheaper than equivalent level term cover
- Couples where one partner earns significantly more — replaces the higher income
- As a complement to decreasing term life cover — use decreasing term to cover the mortgage, and FIB to cover everything else
A common combination I recommend
For many of my clients, the smartest approach is a combination:
- Decreasing term life cover — matched to the mortgage. If you die, the mortgage gets paid off.
- Family income benefit — on top. Provides a monthly income to cover bills, childcare, and daily life.
This gives your family both things: the house is safe, and they have money coming in each month. And because FIB is so affordable, the combined cost is often less than people expect.
How much does it cost?
| Scenario | Monthly Benefit | Approx. Cost |
|---|---|---|
| 30-year-old, non-smoker, 20-year term | £2,000/month | £10-20/month |
| 35-year-old, non-smoker, 25-year term | £2,500/month | £18-30/month |
| 40-year-old, non-smoker, 18-year term | £2,000/month | £20-35/month |
These are illustrative examples only. Your actual premium depends on your age, health, smoking status, and the level of cover. I always get quotes tailored to your specific situation.
Common questions about family income benefit
Your home may be repossessed if you do not keep up repayments on your mortgage.
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