Level FIB
The monthly benefit stays the same throughout the policy term. Straightforward and predictable. Best suited where the income need is relatively consistent over the term.
Family income benefit pays a regular monthly or annual income to your dependants if you die during the policy term, rather than a lump sum. This can be easier to manage and may be more suited to replacing lost income than a single payment.
Family income benefit is a term assurance policy that pays a regular income rather than a lump sum. It is a straightforward and often cost-effective way to replace lost income for your family.
You set a policy term, typically to a point when your youngest child becomes financially independent, or to your planned retirement age. The income is paid from the date of death to the end of the chosen term.
If you die early in the term, the total income paid over the remaining term is higher. If death occurs later, less income is paid. This naturally decreasing liability means premiums are often lower than for an equivalent lump sum policy.
The regular income is generally paid tax-free directly to the beneficiaries. Unlike a lump sum, there is no large amount of money to invest or manage, the income simply replaces the earned income that has been lost.
A lump sum life policy pays a single large amount that must then be managed by your family. FIB provides a predictable monthly income stream, which many people find more practical, particularly for replacing a salary.
Family income benefit policies are subject to underwriting. Benefits are paid tax-free to beneficiaries but the tax treatment of any invested proceeds depends on individual circumstances.
FIB is not the right product for everyone, but for some families it is a more natural fit than a lump sum policy.
If you have young children and want to ensure a regular income for your family until they reach adulthood, FIB provides a clear, predictable stream of monthly payments.
If your primary goal is to replace your monthly take-home pay for your family, FIB mirrors that structure more closely than a lump sum policy.
Some people worry that their partner or family might find a large lump sum difficult to manage or invest wisely under the stress of bereavement. A regular income removes this concern.
FIB can be combined with a lump sum term policy, for example, the lump sum covers the mortgage and FIB provides ongoing income. Your adviser will help you design a comprehensive protection strategy.
We compare the full range of family income benefit policies from all major providers.
The monthly benefit stays the same throughout the policy term. Straightforward and predictable. Best suited where the income need is relatively consistent over the term.
The monthly benefit increases over time, either by a fixed percentage or in line with an index. Helps protect the real value of the income against inflation over a long policy term.
A combined policy that pays the monthly income benefit if you die or are diagnosed with a specified critical illness during the term. Broader protection on a single policy.
A family income benefit policy structured to cover mortgage repayments alongside living costs. Designed to ensure the monthly mortgage payment and household expenses are both covered.
Benefits increase in line with the Retail Prices Index or Consumer Prices Index. Suitable for long policy terms where maintaining the real value of income is a priority.
Covers two lives on one policy, paying on the first death. Cost-effective for couples with dependants where either death would significantly impact the family's income.
Standard life insurance pays a lump sum on death. Family income benefit pays a regular income from the date of death to the end of the policy term. Both are forms of life assurance, the key difference is the payment structure. FIB mirrors a salary and may be easier for families to manage, particularly where the deceased was the primary earner.
The income paid directly to beneficiaries is generally received free of income tax. The policy proceeds themselves do not usually form part of the estate for inheritance tax purposes if the policy is written in trust. However, tax treatment depends on individual circumstances and you should seek advice if in doubt.
You choose the policy term at outset. Common approaches are to set the term to run until your youngest child reaches 18 or completes full-time education, or to your planned retirement age. If you survive the policy term, it expires and no benefit is paid, this is the same as term life insurance.
Yes, FIB is often used alongside a lump sum term policy. For example, a decreasing term policy covers the mortgage and FIB provides ongoing income for living costs. Critical illness cover can also be added. Your adviser will help you design a protection structure that addresses all of your key financial risks.
If you survive to the end of the policy term, the policy expires with no payout. This is consistent with all term-based life insurance. The purpose of FIB is to provide income during the years when your dependants are reliant on your earnings, if you reach the end of that period, the financial risk the policy was designed to address has naturally reduced.
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