FAMILY INCOME BENEFIT

 

Family Income Benefit (F.I.B.) is a type of life insurance. Policies run for a set period of time known as "the term". If you die within this period, the policy pays out a regular tax-free income until the end of the term. With traditional life insurance, a lump sum is paid out on death.

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How family income benefit works

Cover is only for as long as the policy runs. Once the term ends, the cover and any income payments cease.

For example, if you have a 20 year policy and die five years into this, then the policy will pay out a regular income for the remaining 15 years. If you die 16 years into the policy, it will pay out for the remaining 4 years of the term.

 

Why you might want Family Income Benefit

F.I.B. is a cheap and easy way to provide your family with an income rather than a lump sum if you die. If you have a young family, you might want cover to run until your children are grown up. This income could be used to meet everyday expenses or to pay for specific on-going expenses, such as school or university fees.

Cost

Premiums are based on the amount of cover you need and how long you want it for, your health, lifestyle (such as whether you smoke or not) and your age. You can opt for a level income or pay more for an income that rises by a set amount each year. Waiver of premium cover is also usually available. This ensures your premiums are met if you are unable to pay them yourself because you fall ill and are unable to work.

Policies now offer a critical illness option which means the policy would pay out if the policyholder developed a serious illness such as cancer or a stroke.

Policies are often bought on a joint basis which means the income payments are made as soon as one partner dies. However, it may be only slightly more expensive to own two individual policies. This is potentially better value as they would offer double the pay-out if both parties died during the policy term.

 

 

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