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Family income benefit

Family income benefit

Family income benefit is a form of life cover that pays a regular monthly income to your family for the rest of the policy term, rather than a single lump sum.

The idea

Replacing a wage, not clearing a debt

A lump sum is the right tool for clearing a mortgage. It is a less obvious tool for replacing the weekly reality of a salary, particularly for a family who have just lost someone and are not in a state to make investment decisions.

Family income benefit pays out monthly, so it behaves like the income it is replacing. Set the term to run until the youngest child finishes education and you have covered the years that matter most.

The economics

Why it costs less

Because the total paid out reduces as the term runs down, family income benefit is generally cheaper than level term life cover for the same monthly figure. A claim in year two pays for eighteen years. A claim in year seventeen pays for three.

That makes it an efficient way to cover the specific period when your family is most financially dependent on you, and it often sits alongside a separate decreasing term policy covering the mortgage itself.

Important

Cover is subject to underwriting. A policy will not pay out if premiums are not maintained.

Common questions

Questions we get asked

How is it different from normal life insurance?
It pays a monthly income rather than one lump sum, and the total payout reduces as the term progresses, which makes it cheaper.
Can I have it as well as mortgage life cover?
Yes, and that is a common and sensible combination. One clears the debt, the other replaces the income.
Is the income taxable?
Payments from a family income benefit policy are generally free of income tax, though inheritance tax can apply unless it is written in trust.

Cover the years that matter

Often cheaper than people assume. Let us show you what it would cost.