What is family income benefit?

  • Helps to replace your lost income
  • Provides tax-free monthly payments
  • Could pay out up to £5,000 a month (depending on the provider)
  • Term length up to 40 years
  • Low-cost premiums from just 20p-a-day ¤
Family income benefit summary

Family income benefit (also known as FIB or family income protection), is an alternative form of life insurance.

It provides financial protection for your family during a set term by paying out in ongoing monthly payments (instead of one lump sum) if you pass away.

These family income benefit payments run from the day a claim is accepted until the end of your policy term.

Payments are tax-free and can help to replace your income so that your loved ones can maintain their current standard of living.

Family income benefit is well suited to new parents, or those with young families, who want an affordable way to help provide for their loved ones should the worst happen.

Can be more or less depending on the provider

Compare Family Income Benefit Quotes »

How does family income benefit work?

Family income benefit works similarly to term-based life insurance, by providing your loved ones with financial security during a set period.

The difference is, while a term-based policy provides a lump sum pay out, family income benefit provides monthly tax-free payments if you pass away.

These payments can help to replace your income for the remainder of the set term, allowing your loved ones to keep up with financial commitments.

You can choose whether your cover amount remains fixed (level) or increases each year in line with inflation (the Retail Price Index).

Here’s how family income benefit works step by step:

Friendly Helpful

Step 1: Fill in our simple online form and we’ll be in touch to discuss your cover requirements. We’ll also compare multiple quotes to help you find the right policy at the right price.
Inhertiance

Step 2: Once your cover is in place, you’ll need to pay a monthly premium to keep your cover valid.
Health

Step 3: If you pass away or are diagnosed with a terminal illness during the policy term, your loved ones can make a claim on your policy.
Planning the funeral your way

Step 4: Your provider will send out a claims form, which will need to be completed by your loved ones and sent back to be assessed. They may also have to provide additional information such as a death certificate.
Flexible funeral payments

Step 5: Once the claim has been deemed successful, your loved ones will start to receive their monthly income payments.
Family Protection

Step 6: Payments will continue until your policy term comes to an end. For example, if your policy term is 30 years and you pass away 5 years into the policy, your family will receive payments for the remaining 25 years.

If you don’t pass away within your policy term, no pay out will be made and your policy will simply expire.

How much family income benefit do you need?

How much family income benefit cover you need will depend on your personal circumstances and what financial commitments you’d like to cover for your loved ones.

Family income benefit is ideal for young families who want to help protect ongoing family living costs.

It can help to replace lost income after your passing and allow your loved ones to continue with their current lifestyle.

Need help with family budgeting? The Money Helper (set up by government) can provide free & impartial advice.

Therefore, when working out how much cover you need, it’s important to consider:

  • What financial commitments you have - It’s wise to consider both your current financial commitments, as well as any costs that are likely to occur in the future
  • How long your cover should last - If you have a mortgage or long-term rental agreement, it’s wise for your policy term to mirror this, so your loved ones could continue making the payments and remain in the family home. You may also wish to have your policy term end when your children reach financial independence

Commonly, payments from family income benefit are used to help cover:

  • Mortgage payments - Average monthly mortgage payments in the UK are at around £1,473 per month[1]
  • Rent - Average rent in the UK, as of 2024, stands at £740 per month[2]
  • Household bills - British Gas suggest gas and electricity costs on average £130.50 a month for a medium sized home[3]
  • Family living costs - On average UK families spend £628 per week (that’s £2,700 per month) on housing, transport, food shops and so on[4]
  • Debt/loan payments - The average credit card debt per household in the UK is £2,452 and average total debt per person is £34,737[5]
  • Childcare - It now costs £151.72 per week for part-time childcare, with full-time childcare costing £288.13 per week[6]
  • Transportation - The average UK household spends just over £947 on petrol/diesel each year, with £1,070 being spent on public transport each year[4]
  • Higher education costs - A 2023 study found that the average student receives around £171 a month from their parents[7]

By adding together all your financial commitments, you should find the sum of money your loved ones are likely to need to help cover all essential costs.

You can use our handy family income benefit calculator below to help you do this.

Family income benefit calculator

Enter your monthly financial commitments below to calculate how much family income benefit cover you may need.

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Lloyds Bank have found that the average monthly mortgage payment in the UK is around £753 per month, with Spare Room stating that the average monthly rent price is £606.

The loss of a parent could result in loved ones having to having to leave the family home if they’re unable to keep up with these monthly payments.
£
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The Jubilee Debt Campaign found that £373 is the average household spend on monthly loan payments.

Factoring in any debt/loan payments when arranging life insurance means this financial burden won’t fall to your loved ones.
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According to MoneyHelper.org the cost of full-time childcare in the UK is £263.81 per week.

Losing a parent could mean that additional childcare is required while the surviving parent is at work.
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It’s estimated that families spend £2,548 each month on daily living costs such as food, transportation, bills and key other expenses.

Is this a figure your loved ones could keep up with without your income?
£

Your total cover estimate

£ 0

Let us find you our best quote.

Compare Family Income Benefit Quotes »

How are family income benefit premiums calculated?

Family income benefit premiums are calculated in the same manner as other forms of life insurance; based on your likelihood of making a claim.

During the application you’ll be required to provide information about your health and lifestyle, which will allow insurers to assess your level of risk.

This includes the following details:

  • Age
  • Smoking status
  • Medical history
  • Any dangerous hobbies
  • Occupation
  • Monthly cover amount
  • Policy term

When taking out family income benefit, you have the option of guaranteed premiums or reviewable premiums.

Guaranteed premiums will remain the same throughout the lifetime of the policy, meaning the price you pay each month doesn’t change.

Reviewable premiums can often be cheaper initially, but your insurer has the right to increase them throughout the term of your policy (this can be down to a range of factors such as your age or change in risk).

How much is family income benefit?

Family income benefit is available from just £5 a month through Reassured.

However, the exact price you’ll pay will depend on your personal circumstances.

The details listed above will be taken into consideration by insurers in order to calculate your premium.

The table below shows an example of family income benefit quotes through Reassured.

Quotes are based on a non-smoker, in good health, with a monthly payment of £2,500 (£30,000 per year) over a 20-year term:

AgeFamily income benefit price a month
20£7.50
25£8.96
30£10.68
35£14.35
40£20.22
45£30.66
50£47.79


As with any form of life insurance, the price you pay for your cover typically increases as you get older.

Taking out cover as soon as possible can help you to lock in the most favourable premium price.

To find the most affordable family income benefit premiums it’s essential to compare quotes.

Why not let Reassured help you do this? Simply get in touch for your free quotes.

Family Income Benefit Comparison » Save Money

Is family income benefit taxable?

No, family income benefit payments are not subject to income tax.

This means, if a claim is made, your loved ones would receive the full pay out amount each month without any tax deductions.

In some cases, family income benefit might be subject to inheritance tax.

It’s possible to avoid or minimise inheritance tax (if your estate is liable) by writing your policy in trust. We explain this in more detail below.

Can I get family income benefit with critical illness cover?

Yes, it’s possible to add critical illness cover to a family income benefit policy for an additional cost.

Critical illness cover can allow you to make an early claim on your policy if you’re diagnosed with a life-threatening illness.

In this scenario, you and your loved ones would start receiving payments from the point of your claim being made until your policy expires.

These funds could help to replace any lost income if you’re unable to work, help to maintain family living standards and/or pay for any private medical treatments.

Once a critical illness cover claim has been made, your policy will expire and your loved ones won’t be able to make another claim on your policy upon your passing.

FREE terminal illness cover with family income benefit through Reassured

Terminal illness cover comes as standard with all family income benefit policies secured through Reassured.

This additional level of cover will allow you to make an early claim on your life insurance policy if you’re diagnosed with a terminal illness and given less than 12 months to live.

The funds received can help to pay for end-of-life care, allow you to get your financial affairs in order or you can use the proceeds to enjoy time with your loved ones.

Contact a friendly member of the advised team at Reassured team for more information.

Family income benefit vs term life insurance

Family income benefit pays out in monthly income instalments, whereas term life provides a lump sum payment.

Both are an affordable way to protect your loved ones financially - allowing them to keep up with essential daily living costs if you pass away.

Family income benefit policy

Family income benefit

  • A term-based policy (can provide cover for up to 40 years)
  • You’ll need to pay a monthly premium for your cover
  • Pays out in tax-free monthly instalments if you pass way during the term
  • Could pay out up to £5,000 per month (this can vary depending on the provider)
  • Pay out sum can be fixed (remains the same) or increasing (to keep up with inflation)
  • Payments can help cover monthly mortgage or rental payments, household bills and daily living costs
  • Can be secured through Reassured’s advised team from 20p-a-day ¤
Term life insurance policies

Term life insurance

  • A term-based policy (can provide cover for up to 40 years)
  • You’ll need to pay a monthly premium for your cover
  • Pays out in one lump sum if you pass way during the term
  • Sum assured (pay out amount) can be up to £1,000,000 (although the amount you secure will depend on your circumstances)
  • Sum assured can be level (remains the same) or decreasing (reduces over time)
  • Can to help cover large debts such as an outstanding mortgage, as well as family living costs and/or funeral costs
  • Can be secured through Reassured from 20p-a-day †

If you have the budget, it doesn’t always have to be a choice between one or the other - it’s possible to take out multiple life insurance policies at the same time.

This could be a term life insurance policy to help protect larger costs, such as your mortgage and funeral costs, alongside a family income benefit policy to help protect your family’s daily living costs.

Conduct a full family income benefit vs term life insurance comparison using our award-winning broker service.

Compare Multiple Family Income Benefit Quotes »

Family income benefit vs income protection

While family income benefit and income protection sound similar, they are two different policies.

Family income benefit provides a monthly income for your loved ones if you pass away during the policy term, whereas income protection will provide monthly payments to cover your income if you’re unable to work due to illness or injury.

Family income benefit policies

Family income benefit

  • Provides cover for a specified period (this term can be up to 40 years)
  • Up to £5,000 could be paid out per month (depending on the insurance provider)
  • Payments will be made to your loved ones if you pass away during the policy term
  • Ideal for young parents who want an affordable way of helping protect their family
  • Payments aren’t subject to income tax
  • Available through Reassured from 20p-a-day ¤
Income protection policies

Income protection

  • Provides cover for a specified period (policies must often end by the age of 70)
  • Can cover up to 70% of your usual earnings
  • Payments will be made to you if you’re unable to work due to illness or injury
  • Can help enable you to keep up with your financial commitments (such as rent, utilities etc)
  • Payments aren’t subject to income tax
  • Available through Reassured from 20p-a-day ‡

If it’s within your budget it can be possible to take out both policies simultaneously; an income protection policy to cover your income during your working life and family income benefit to provide your loved ones with a regular income in the worst-case scenario.

    By having both policies in place you can rest assured that you and your loved ones are protected no matter what.

    Why not compare both family income benefit and income protection, for free, using Reassured?

    Should family income benefit be written in trust?

    You can write a family income benefit policy in trust.

    Writing your policy in trust is the process of placing someone you trust in charge of your policy and detaching its value from your estate.

    This can offer several benefits:

    1. Avoid/minimise inheritance tax (40% on estates over £325,000)
    2. Avoid/minimise a lengthy probate process
    3. Have better control over who receives the pay out and when

    Reassured offer a FREE trust writing service with the majority of policies we sell. Simply get in touch to find out more.

    Can I take out joint family income benefit?

    Yes, it's possible to take out family income benefit on a joint basis through Reassured.

    A joint policy provides cover for two people at the same time (such as a married couple).

    It could help you to save money as only one premium is paid between both policyholders.

    However, this also means that only one claim can be made if either partner passes away during the policy term.

    Once a successful claim has been made, the policy will expire, and the surviving partner will no longer be covered.

    This means the surviving partner will need to secure a new policy, potentially at an older age, which could result in higher premiums.

    Taking out two single policies may be slightly more expensive but will provide two separate sets of monthly payments if both mum and dad were to pass away.

    Family income benefit advantages and disadvantages

    Whether family income benefit is right for you will ultimately depend on your personal circumstances.

    Everyone takes out life cover for different reasons so, depending on your unique reasons, family income benefit could be a good match.

    Below you’ll find the advantages and disadvantages of family income benefit:

    Advantages of family income benefitDisadvantages of family income benefit
    An affordable policy option with low monthly premiumsPotential pay out amount could be much less than a standard level term life insurance policy
    Monthly payments can help loved ones to manage monthly financial commitmentsNot suitable for clearing large debts, such as a mortgage, or covering expensive funeral costs
    Potential pay out is not subject to income taxThe number of payments your loved ones could receive reduces throughout the policy term
    Can help with long-term family budgetingPolicy value may reduce over time due to inflation, unless you choose the increasing cover option
    Avoid complicated money management / investment of a large lump sum
    Potential pay out is not subject to income tax
    Can be written in trust which gives you more control over the policy


    If you need any help choosing the right life insurance option for you, it’s always worth reaching out to an expert.

    Reassured can provide you with all the information you need about multiple policy options (from family income benefit to life insurance and income protection) to help you make a fully informed decision.

    We’re dedicated to helping you find the right policy to meet your needs, at the best available price from the whole of the market.

    Compare family income benefit quotes

    Family income benefit can be an extremely cost-effective way of protecting your loved ones.

    Comparing quotes can allow you to find the right family income benefit policy to meet your needs at a price that’s within your budget.

    The advised team at Reassured can help you to do this and provide you with quotes from the UK’s best life insurance providers free of charge.

    A friendly member of the team can also unpick any jargon you don’t understand and answer any questions.

    Protect your family from as little as 20p-a-day and get in touch for your free, personalised and no-obligation quotes.

    Compare Family Income Benefit » Find Our Best Quote

    Sources:

    [1] https://www.finder.com/uk/mortgages/mortgage-statistics#what-is-the-average-length-of-a-mortgage-in-the-uk

    [2] https://www.spareroom.co.uk/content/info-landlords/average-rent-uk/

    [3] https://www.britishgas.co.uk/energy/guides/average-bill.html

    [4] https://www.nimblefins.co.uk/average-uk-household-budget

    [5] https://www.finder.com/uk/personal-loans/debt-statistics

    [6] https://www.daynurseries.co.uk/advice/childcare-costs-how-much-do-you-pay-in-the-uk

    [7] https://www.savethestudent.org/money/asking-parents-for-money-university.html

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