What is family income benefit and how does it work?
Family income benefit insurance is a type of life insurance for parents and families.
The key difference between FIB and standard life insurance is that rather than your loved ones receiving a lump sum of money, they’ll get monthly payments instead.
If you die, the family income benefit policy will pay out a regular, tax-free income up until a specified date to replace your lost income.
For example, if you take out a 20-year term family income benefit policy and a claim is made 10 years into it, it’ll continue to pay out for another 10 years. If the claim was made 15 years in, payouts would only continue for 5 years.
You get to decide how much of your income you'd like to be covered, but the larger the monthly payout, the higher your premiums.
Disadvantages
This is not a savings or investment product; if nobody makes a claim during the course of the policy, it will pay nothing at the end.
It also offers a decreasing level of cover. For example, if the policyholder were to die a month before the end of the term, then the policy would only pay out for one month.
In contrast, a level term life insurance product could still pay out the full, agreed lump sum. Though that’ll still be restricted by the term.
Who is family income benefit for?
It could suit families with young children as it provides a regular income to cover the cost of living expenses, with potentially cheaper premiums than other life insurance policies.
At Sturgess Mortgage Solutions, we understand how important financial security is for your family, which is why we often recommend exploring FIB as part of your protection planning. If you are unsure where to start, our experienced team can guide you through your options and help you obtain a tailored family income benefit quote based on your circumstances.
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