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Family Life Insurance

It’s a good way to go if a lump sum could overwhelm those you leave behind
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Life insurance is usually paid in one lump sum via a standard policy. But it can also be paid in regular instalments too. It’s like leaving a monthly tax-free income for your loved ones after you die.

You can also take cover that pays out both a lump sum (to cover the mortgage debt, say) and cover that pays out a lump sum for a set number of years. Normally via 2 separate policies.

What is family life insurance?

Family life insurance, often called family income benefit, is a kind of life insurance. Instead of paying out a big lump-sum if/ when the policyholder dies, family life insurance pays regular, manageable amounts.

Payments are tax-free and usually made monthly, although quarterly and annually can be arranged.

Many people often take out this type of life insurance alongside their normal lump sum (or level/decreasing term) policy.

Or you choose which type of policy suits your circumstances if it’s to be one or the other.

Protecting families is our business. Since 1998 we’ve protected hundreds of thousands of UK families – well over 1.5m individuals – in the ways that are best for them, their needs, budgets and future plans.

Life insurance isn’t fun. There are several kinds of life insurance policy to choose from and dozens of providers with their own versions of those products.

Without LifeSearch in your corner that’s a lot of reading … reading you don’t have to do.

LifeSearch are independent. We work for you – not for the insurer – and we match you with policy options from a range of providers. Our aim is to get it just right for unique you.

What are the benefits of family life insurance?

It’s generally cheaper than standard life insurance, and its main benefit is how practical it is.

Instead of asking your loved ones to divvy up and stretch out a big lump sum, family life insurance payments can meet the bills cycle and cover those recurring expenses - month after month after month.

Advantages of family life insurance

  • Generally more affordable than standard life insurance
  • Pays a steady ‘wage’ not an overwhelming lump sum
  • Helps loved ones maintain regular financial commitments

Disadvantages of family life insurance

  • Overall pay-out amount reduces over time
  • Not able to pay off major overheads (mortgage, for example)
  • Doesn’t offer a significant financial cushion or gift for surviving loved ones

Why is it cheaper than standard life insurance?

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LifeSearch From our Adviser Team

Family life insurance is cheaper because the overall pay-out amount reduces over time.

Take out a standard level-term life insurance policy for £200,000 over 20 years and your loved ones will receive all £200,000 in one lump sum, whether you die in year one or year 19.

With family life insurance, you’ll instead arrange a set amount that’ll be paid to your loved ones each month.

Die one year into a 20-year family life insurance policy and your loves ones will be entitled to 19 years of those set payments. Die 19 years in and your loved ones will get one year of those set payments.

How much does family income benefit cost?

The average monthly cost of family income benefit, over the term of 18 years:

Starting Age Cost to cover £18,000 annual income
25
£6.18 per month
30
£6.68 per month
35
£8.17 per month
40
£10.92 per month
45 £15.58 per month
50
£23.81 per month
55
£39.34 per month
 60 £64.12 per month

 

*Pricing information obtained 25/7/2022. This data is based on a non-smoker with no medical history.

The cost of any life insurance depends on your home life and health situation. In this case, it also depends on the amount of cover you want to your loved ones to be paid each month. Leaving £1,000 per month will be cheaper than leaving £3,000 per month.

There are ways to keep costs lower: buy young and keep healthy. High BMI and excessive alcohol consumption can increase your monthly premiums. An obvious one is to quit smoking and after a specified period (usually 12 months) you’ll be classed as a non-smoker and can get a quote based on that fact. If you have a health condition or risky hobbies, then those things may push your premiums up to reflect your risk.

But costs are very personal. Tell an expert a little about yourself and they’ll have accurate answers to this question.

Frequently asked questions about family life insurance

Like most life insurance products, you pay to be covered just in case.

If just in case doesn’t happen within your term time, then there’s no claim and no pay-out.

But the great news is … you’re still alive.

Family life insurance is a solid option for people with young families, single parents and those who care for others.

It’s a popular option for those groups – and others – where leaving behind a regular wage, not a big lump sum, feels like a better fit.

If in doubt speak to an expert adviser

It’s not an easy decision so let us help. Tell a LifeSearch expert what’s going on with your current situation and future plans, and we’ll help you get a handle on policies that fit your needs.

We listen, we search, we advise. The decision’s yours.

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