Family Income Benefit
A regular monthly income for your family if you die — often more practical and affordable than a lump sum.
Most people think of life insurance as paying a large lump sum. But for many families, a regular monthly income is more practical — it mirrors the salary they depend on and is easier to manage than a large one-off payment. Family income benefit pays a tax-free monthly income to your beneficiaries from the date of your death until the end of the policy term. Premiums are typically lower than equivalent lump sum life insurance, making it an excellent option for families who want meaningful cover at an affordable price.
What is Family Income Benefit?
Family income benefit is a form of life insurance that pays a regular monthly income to your beneficiaries if you die during the policy term, rather than a one-off lump sum. For example, if you take out a 20-year policy paying £3,000 per month and die in year 7, your family receives £3,000 per month for the remaining 13 years. Because the potential total payout decreases over time as the policy term shortens, premiums are typically lower than equivalent level term life insurance. The monthly income is paid tax-free and can be used however your family needs — to cover the mortgage, childcare, school fees, household bills, or day-to-day living costs. Family income benefit can be arranged on a standalone basis or combined with a lump sum life insurance policy for comprehensive cover — for example, a lump sum to pay off the mortgage and a monthly income to replace your salary.
Who is it suitable for?
Key Benefits
Real-World Examples
Young family — income replacement
A parent with two young children takes out a 20-year family income benefit policy paying £3,500 per month, written in trust. If they die, their family receives £3,500 per month until the youngest child is 18 — replacing the lost income and covering childcare, school costs, and day-to-day living expenses. The monthly premium is significantly lower than an equivalent lump sum policy.
Combined with mortgage protection
A couple arrange two policies: a decreasing term mortgage protection policy to repay the outstanding mortgage balance, and a family income benefit policy paying £2,500 per month for 20 years. If either partner dies, the mortgage is paid off and the surviving partner receives a monthly income to cover living costs. The combination provides comprehensive cover at a lower total premium than a single large lump sum policy.
Affordable cover on a tight budget
A single parent needs life insurance but finds lump sum policies expensive. A family income benefit policy paying £2,000 per month for 15 years provides meaningful cover — enough to cover rent, childcare, and living costs — at a premium that fits within their monthly budget. The regular income is more practical than a lump sum they would need to manage carefully.
Inflation-linked income
A parent arranges a family income benefit policy with an inflation-linked benefit, increasing by 3% per year. If they die in year 10 of a 20-year policy, the monthly income their family receives will be significantly higher in real terms than the starting amount — protecting against the erosion of purchasing power over a long payout period.
Frequently Asked Questions
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I help company directors and business owners protect their families, shareholders and businesses.
01737 333249[email protected]