Family income benefit

Most families do not need a lump sum. They need the money that stopped.

It pays a regular monthly or annual sum to your family from the point of a claim to the end of the term, rather than one payment. Often a lower-cost way to cover children to the age they leave home.

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What it does

In plain terms

It replaces a wage, not a debt

£2,000 a month until the youngest turns twenty-one is easier for a family to handle than £300,000 arriving at once, and easier for them to budget around.

It costs less than it looks

Because the total falls as the term runs down, the premium is usually well below level life cover for the same monthly figure. Whether that makes it the right cover depends on what the money is for.

It sits alongside the mortgage cover

Decreasing life cover clears the loan; family income benefit keeps the household running. Between them they answer two different questions.

What it will not do

Said before you buy, not after

It will not pay a lump sum

If your family would need capital — to clear a debt, to move, to stop working for a year — that is a different policy. Some plans allow the remaining payments to be commuted to a lump, usually for less than the total.

The total falls as time passes

A claim in year two pays far more in total than a claim in year eighteen. That is how the cost stays low, and it matches how the need actually falls away.

It will not cover what you did not declare

The same rule as every policy on this site. Full, accurate answers at application, including anything you think is old or trivial.

Straight answers

Asked every week

How do I pick the monthly figure?

Start from what actually leaves the account each month — not your salary. Childcare, food, the car, the bills. Then ask what the surviving partner could realistically earn. The gap is the figure.

How long should the term run?

Usually to the year the youngest child finishes education, or to the end of the mortgage, whichever is later. Beyond that the money is usually less needed.

Is the payment taxed?

Payments from a personal family income benefit policy are normally free of income tax. Your own tax position can differ and we are not tax advisers, so your accountant should confirm anything unusual.

Can it be written in trust?

Yes, and it normally should be, so the payments go to the people you named without waiting for probate. We set it up with the policy at no extra cost.

Can I have this and life cover?

Most families should. One clears the mortgage, the other keeps the lights on. We price them together so you can see what each is doing for the money.

Why do so few people have it?

Because it is rarely offered. It does not produce a big headline number, so it gets skipped — which is a poor reason for a family to be without it.

Start from what actually leaves the account each month — not your salary.

Insurance policies are subject to eligibility, underwriting, terms, conditions and exclusions. Benefits may not be paid in all circumstances. Cover is not guaranteed to be available, and premiums depend on your age, health and the cover chosen. This page is general information about how the cover works. It is not advice and it does not take account of your circumstances — what is right for you is decided after we have asked about them.

How we are paid. We act on your behalf, not the insurer’s. You pay us no fee; we are paid commission by the insurer when the policy starts, and that commission does not vary by which insurer you choose. You can ask us what it is at any point before you decide.

The wage stops. The direct debits do not.

A monthly figure is easier to size than a lump sum, because you already know what the household costs to run. Bring a month of bank statements and we can work it out in one sitting.

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