What is family income benefit and how does it work?
Family income benefit 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 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 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 five 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.
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.