15 Dec 2017
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Family Income Benefit

What is a Family Income Benefit Policy ?

Family income benefit (FIB) is where the benefits of a life assurance policy are paid as a monthly income (typically to your family) instead of as a one-off lump-sum.

For example, if you were to cover yourself for £1000 per month for the next 10 years and you died on day one of the plan, your family would get £1000 per month for the next 10 years.

If you died in year 5, they will get £1000 per month for the next 5 years only.

Family income benefit is normally used to cover the cost of things where the need for the cover gets less over time or is for a fixed period, so for example, children growing up, school fees etc......

Typically, premiums are paid monthly and when the term comes to an end, your policy has no cash value.

Things to Know About Family Income Benefit Assurance

In the event of a claim on your policy, some insurers will offer to ‘commute’ the money to a one off lump-sum. They do this as it saves them money on administration costs. It is worth bearing in mind however that the amount offered is generally less than would have been paid out if received monthly.

Index Linking can be included in your family income benefit. This means that each year your provider will automatically increase the sums insured under your policy to reflect changes with inflation offering you peace of mind.

Waiver of premiums is a feature which can be added to your plan which means if you are off work due to illness or injury for more than 6 months, your premiums can be waived, although you keep the policy, until you go back to work. What you do for a living and your health, will be deciding factors as to whether there are any exclusions to this option.

You are able to set up critical illness cover plans in this way and they won’t stop the payments if you get better.

A family income benefit policy with ‘Guaranteed Premiums‘ means that the amount you pay every month is guaranteed to stay the same.

If you choose a family income benefit with ‘Reviewable Premiums’ the monthly premium is fixed, typically for the first 5 years only. At this point, it will then be reviewed by the assurance provider. They do this based on their claims history over that period and could increase, decrease or leave your premium the same. After the first review, some providers will fix the premium for another 5 years; others will review it every year thereafter.

Family Life Insurance Advice

If you would like to find out more about family income benefit our professional advisors can advise you on all the different family income benefit options. Simply complete our life insurance advice form and advisor will call you to discuss you family life insurance needs.