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A quick guide to family income benefit

LifeSearch author Katie Crook-Davies
3 min read

by Katie Crook-Davies, Protection Writer

See author bio

Katie works with insurers and distributors to make protection propositions more accessible, pricing more transparent and marketing messages more simple.See author bio

Guide last reviewed 10 Oct 2023

Death isn’t something we like to think about but, sadly, it happens, and when it does it can cause money worries at an already stressful and emotional time. Family income benefit is a product designed to reduce that financial stress and can be used to replace the income from a lost loved one. Find out more in this three-minute guide.


What is family income benefit?

You’re probably already familiar with the type of life insurance that pays a one-off lump sum on death. Family income benefit is different, it pays a regular tax-free income if you die, which may be more helpful for your family as the payments can be used to cover regular and ongoing bills and mortgage payments. 

How does family income benefit work?

When you buy a family income benefit policy, you will need to decide how long you’d like to be protected for (the term) and how much protection you need (the monthly cover amount). If you die within the term, your policy will start paying the monthly cover amount to your family and will continue to do so until the end of the term.

You take out family income benefit of £1,000 for a period of 20 years. If you die in year 10, your policy will start paying £1,000 a month to your family for the remaining 10 years left on the policy.

Who needs family income benefit?

If you’ve got a family you want to protect then have a think about family income benefit. Here are a few key questions to ask yourself:

  • What would happen if my family lost my income, could they cope financially?
  • Do we have savings or other assets that could support the family if I wasn’t around?
  • Do we have a mortgage or other large debt that I’d like paid off if I died?

The last question is key, because if it’s debt that you’re worried about and you’d rather get everything paid off, then there are other insurance products that might be more suitable for you. Standard life insurance would be an example, as the lump sum payment can be used to pay off your mortgage. If, however, you’d prefer your income to be replaced, then family income benefit could be the perfect solution for you and your family.

There are lots of different insurance products, each designed to meet different needs. Why not request a call back from one of our helpful advisers, who’ll take the time to understand your circumstances and create a bespoke protection solution designed for you.

How much does family income benefit cost?

The cost of your family income benefit will depend on a number of things, including:

  • Your age
  • Your health
  • Whether you smoke
  • Your monthly cover amount
  • Your cover term

As a simple rule, the more likely you are to die and make a claim on your policy, the more expensive your cover will be. So the younger you are when you apply for your policy, and the healthier your lifestyle, the lower your insurance premiums will be.

It’s also worth bearing in mind that your premiums will be lower if you choose a smaller monthly cover amount, and a shorter cover term. This again links to your chances of claiming and the amount the insurer would have to pay out.

People often find family income benefit to be an affordable alternative to standard life insurance, which pays a lump sum, because the amount that the insurer would pay on death reduces over time. This is because they only pay the regular income until the end of the cover term, unlike with standard life insurance, where the insurer would pay the full lump sum cover amount, regardless of when the death happened. 

At LifeSearch, we search the market to find the best cover - at the best value - to protect you and your loved ones.

Find out if family income benefit could suit you with free advice & quotes

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LifeSearch author Katie Crook-Davies
Katie Crook-Davies Protection Writer
Katie is an independent insurance consultant who is passionate about protection and wants to share that passion with others through engaging marketing content. She hopes that one day people will get as excited about protecting themselves and their loved ones, as she does!
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