Family Income Benefit (FIB) Insurance is a type of life insurance policy designed to provide a regular, tax-free income to dependents if the policyholder passes away during the term. Instead of a one-time lump sum payout like traditional life insurance, FIB ensures that beneficiaries receive monthly or annual payments for the remaining policy term.
This type of cover is particularly useful for families with young children or those reliant on a single income, as it helps maintain financial stability, cover essential expenses such as mortgage repayments, utility bills, education costs and daily living expenses. The policy duration is typically set to align with key financial responsibilities, such as raising children until adulthood or supporting a spouse until retirement.
Family Income Benefit Insurance is a cost-effective way to ensure long-term financial security and protect loved ones from income loss due to an unexpected death.
With Family Income Benefit, you choose the amount of monthly income you want your beneficiaries to receive if you die during the policy term. The policy does not pay out a lump sum; instead, it pays regular monthly payments over a predetermined period. This can be a more affordable option than traditional life insurance, as the insurer is only required to make ongoing payments rather than a single large sum.
For example, if you choose a policy that pays £1,000 per month for 20 years, and you pass away two years into the policy, your beneficiaries will receive £1,000 per month for the remaining 18 years. If you live through the policy term, there is no payout.
Income Replacement
The primary advantage of FIB is the regular monthly payments that help your family maintain their standard of living after your death. This can cover daily expenses, such as mortgage payments, utilities, food, and childcare costs.
Affordability
FIB insurance can often be more affordable than traditional life insurance since it provides ongoing monthly payments instead of a lump sum.
Flexible Terms
You can adjust the policy duration based on how long you expect your dependents to need financial support, such as until your children turn 18 or 21.
Tax Free Payments
The monthly payments your beneficiaries receive are generally tax-free, providing a secure source of income during a difficult time.
Family Income Benefit does not provide a lump sum, so it may not cover all expenses, such as funeral costs or a large mortgage payoff. It is also important to consider how much income your family will need and for how long, as these factors affect the cost of the policy.
Family Income Benefit insurance is a useful option for those who want to provide long-term financial support to their family in the event of their death. It offers peace of mind through regular payments, helping loved ones cover ongoing expenses without the need for a large lump sum. However, it’s important to assess whether the coverage fits your family’s needs and financial goals.
If you have any questions regarding arranging family income benefit please get in touch with our team of qualified financial advisers for a no obligation chat.
Imogen Tallent
Financial Adviser
The earliest known life insurance policy was made in Royal Exchange, London on 18 June 1583. A Richard Martin insured a William Gybbons, paying thirteen merchants 30 pounds for 400 if the insured dies within one year.
The required coverage of protection will depend on factors such as outstanding debts (e.g., mortgage), future family expenses and your income. Our financial advisers will work with you to understand your specific circumstances and help you determine an appropriate level of cover.
Yes, it’s possible to hold multiple policies to cover different needs, such as a mortgage protection, family income protection and a whole of life policy to protect your estate against inheritance tax.
Payments continue for the remaining term of the policy which you elected when you took out the policy.
Generally, the payments are tax-free for the beneficiaries.
You cannot amend the payment amount whilst payments are being made but can select a suitable level of income payments when you set up the policy.
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