Family income benefit is a special type of life insurance policy. Generally, with life insurance, your loved ones will receive a lump sum payout from your policy when you die. It’s then up to them to handle that money as they wish. With family income benefit, your loved ones will instead be paid a regular income for a set period.
When you take out a family income benefit policy, you stipulate what income you would need your loved ones to receive, and over what time period. The insurer will work out what monthly premium you would need to pay in order to secure that cover. At the outset, figure out what sort of income would be needed your family to be financially stable should you pass away. Let’s say that your family would need £2,000 a month for the next 30 years in order to be secure were you to die. If you died in the first year of the policy, the insurer would pay out that sum for the full 30 years of the policy, while if you died in year 25, they’d receive £2,000 a month for the final five years. If you die after the term of the policy has finished, there will be no monthly payout to your loved ones.