Family income benefit

What is family income benefit

Family income benefit is a type of life insurance policy. It provides a regular tax-free income to your dependents if you die during the term of the policy. Unlike a lump-sum payment offered by traditional life insurance policies, family income benefit pays out a regular income, typically on a monthly or yearly basis, which can help cover living expenses and other financial obligations.

Family income benefit can be particularly beneficial for families with young children or dependents who rely on your income for their day-to-day living expenses. It provides peace of mind knowing that your loved ones will have a regular income to support their needs if you’re no longer around to provide for them.

Here’s how it typically works

1. Policy Term: You choose the term of the policy, usually aligning with the years when your dependents would need financial support the most, such as until your children reach adulthood or finish education.
2. Premiums: You pay regular monthly premiums for the policy. The premium amount depends on various factors, including your age, health, smoking status, the level of cover you choose, and the term of the policy.
3. Benefit payments: Regular monthly payments  are made from the time you die until the end of the policy. Let’s say you choose £20,000 annual cover and a term of 25 years. 10 years into the policy term you pass away and a claim is made. The policy has 15 years still to run and will pay £20,000 every year for those 15 years.The income is normally paid  monthly and free of tax.

Critical illness cover can be added to the policy. This would produce an income in the event of certain serious illnesses being diagnosed. The insured would not have to die for a claim to be made.

How much does family income benefit cost?

The premium will depend on a number of factors. How much cover you need, the term of the policy, your age and your health.

Why use Moneyworld?

Family income benefit can be a cost effective way of protecting your loved ones if you die. We compare cover from leading providers and guarantee to offer the lowest premiums in the UK.