FIB explained in plain English

Family income benefit, or FIB, is a term assurance contract that pays a tax-free monthly amount instead of a single lump sum on death during the policy term. The structure mirrors the lost salary the household is built around — useful precisely because most family budgets are run on a monthly basis, not a one-off windfall.

The monthly payments continue until the end of your policy term, providing ongoing financial support similar to a salary.

Key features:

• Regular monthly payments (not a lump sum)
• Tax-free income for your family
• Typically up to £5,000 per month available
• Cover for a fixed term (e.g., until children finish education)
• Payments stop at the end of the policy term
• Premiums are personalised and should be compared with equivalent lump-sum cover
• Terminal illness cover usually included

Example: If you have a 20-year policy paying £2,000/month and you die 5 years in, your family receives £2,000 every month for the remaining 15 years (total £360,000).

How a FIB claim actually pays out

1. Choose monthly income amount: Decide how much monthly income your family would need (e.g., £2,000)
2. Select policy term: Choose how long cover lasts (e.g., 20 years until children are independent)
3. Pay fixed premiums: Make regular monthly or annual premium payments
4. Claim if needed: If you die, your family receives monthly payments for the remainder of the term
5. Payments continue: Monthly income continues tax-free until the policy end date

Important timing consideration:

The earlier you die in the policy term, the longer the payments last. If you die near the end of the term, fewer payments are made. This is why FIB is cheaper than lump sum cover - the insurer's payout reduces over time.

When FIB is the right shape of cover

When FIB might not be suitable:

- You need to clear a specific debt (mortgage, loans) - lump sum better

- Family would prefer to invest a large amount themselves

- You want to leave an inheritance

Family income benefit vs lump sum life insurance

FIB vs Lump Sum Comparison

Both provide tax-free payouts and include terminal illness cover.

Example comparison:

A 35-year-old non-smoker wanting 20 years of protection:

Family income benefit pays the selected regular benefit for the remaining policy term after an accepted claim, subject to the policy terms.

Level term life insurance pays the selected lump sum after an accepted claim during the policy term, subject to the policy terms.

These products provide different payout structures and should be compared using personalised premiums, equivalent cover needs and the full policy terms.

Can you combine both?

Yes! Many families use a hybrid approach: smaller lump sum to clear mortgage + FIB to replace ongoing income.