Rather than providing a lump sum should you die, Family Income Benefit provides a regular, tax free, monthly income for you and your dependants - from the time of the claim to the end of the plan term. The policy is primarily designed for those with young families.
A family income policy is often cheaper because the liability is always decreasing for the insurer, for example, if you die in the 18th year of a 20-year policy, the insurers would only have to pay income for two years. It's also easier to work out the level of cover with this type of policy because you simply work out the income you would need to replace.
Example: A couple both aged 35 years old with a mortgage, additional monthly commitments of £1,000.00 a month and a 6 year old child might take out a Family Income Benefit policy, alongside their mortgage protection policy, for £12,000 a year over a 15 year term to provide cover until the daughters 21st birthday.
Options include: -
Level payments
Increasing payments to take the effects of inflation into account