An income that keeps arriving every month.
The short answer
Family income benefit is a type of term life insurance that pays your family a regular monthly or yearly income if you die during the term, rather than a single lump sum. Payments continue until the policy term ends. Because the total paid falls as time passes, it is often lower in cost than a lump-sum policy.
Who this cover may suit
- Your family mainly relies on your monthly income for bills, food and childcare.
- You want your family to receive money in the same rhythm as a salary.
- You have young children and want cover until they are independent.
- You want a lower-cost way to replace income alongside mortgage cover.
When to consider another option
- You need a large sum at once to clear a mortgage — see mortgage life insurance.
- You want to leave an inheritance or a fixed legacy — a lump sum suits that better.
- Your term is nearly over, so the remaining income would be small.
How it works
Tell us about you
A few simple questions about your age, health and what you want to protect.
Choose amount and term
Pick how much cover you want, its shape and how long it should last.
Review real options
See options based on your answers, with a real person to help if you want one.
How family income benefit works
You choose an annual income — often based on your take-home pay — and a term, usually until your youngest child is independent. If you die during the term, the insurer pays that income, typically monthly, until the term ends. MoneyHelper explains how the different types of life cover work, including plain term life insurance, which family income benefit is a variation of. [2] Our cover needs guide helps you work out a sensible income.
| Family income benefit | Level lump sum | |
|---|---|---|
| How it pays | Regular income until term ends | One payment |
| Total paid | Falls as the term passes | Same whenever you claim |
| Relative cost | Often lower | Often higher |
| Best for | Replacing monthly income | Clearing debts, lump-sum needs |
| Managing the money | Arrives like a salary | Family must invest or budget it |
Why a regular income can help
A large sum can be hard to manage during grief. A monthly income arrives in the same rhythm as a salary, making it easier to keep paying bills. State support is limited: Bereavement Support Payment is paid for up to 18 months and only to some surviving spouses and civil partners. [10] Rising prices also matter over a long term — ONS inflation data show how quickly costs can change. [9] Many policies offer an index-linked option.
A family replacing a salary
Fictional example: Rhys, 33, take-home pay of £2,400 a month, partner Beth and twins aged 1. No prices are shown because real premiums depend on underwriting.
- Income chosen
- £2,000 a month, index-linked
- Term
- 20 years, until the twins are around 21
- Mortgage
- Separate decreasing cover
- Trust
- Written in trust for Beth and the children
Beth would receive a monthly income until the twins are grown, with the mortgage cleared separately. See our mortgage guide.
Tax and trusts
Payments from family income benefit are usually free of Income Tax for the family. Without a trust, remaining payments could form part of your estate for Inheritance Tax, usually charged above £325,000. [4] HMRC explains how trusts are taxed. [5] A trust can also help the family avoid waiting for probate, which GOV.UK figures show now typically takes a few weeks once an application is complete. [15] See our trusts guide.
| Single policy | Joint policy | |
|---|---|---|
| Who is covered | One person | Usually two partners, paid on the first death |
| Second death | A separate policy is needed | Cover usually ends after the first claim |
| Relative cost | Higher for the same cover on two lives | Often lower for two names on one policy |
| Flexibility if you separate | Unaffected by a change in relationship | May need splitting into two single policies |
Can family income benefit be written jointly, and what about divorce?
Many insurers offer family income benefit on a joint basis, paying out on the first death of two named people, which can suit couples who both contribute to household income. The income usually stops once the first claim has been paid, so it does not also protect the second death. MoneyHelper’s guidance on money and divorce notes that protection policies are often reviewed as part of separating finances, since a joint policy may no longer reflect who depends on whom. [16] Many separating couples split a joint policy into two single ones written in trust for their own children or new dependants.
What happens if you survive the term
Like other forms of term life insurance, family income benefit has no cash-in value. If you are still alive when the term ends, the cover simply stops and nothing is paid to you or your family — you cannot get back the premiums you have paid. This is part of why it can cost less than cover that is certain to pay out eventually, such as whole of life insurance. If your needs continue past the original term, for example because you have another child, you would need to review your cover and may need a new policy based on your age and health at that time.
Family income benefit at a glance
What works well
- Replaces income in a familiar, manageable way.
- Often lower cost than an equivalent lump sum.
- Can be index-linked to help with inflation.
What to watch
- Total paid falls the later you claim.
- Not designed to clear a large debt at once.
- Some policies let payments be converted to a lump sum at a discount.
Splitting a joint policy after separation
Fictional example: Harriet and Owen, both 44, previously held a joint family income benefit policy covering a shared £1,800 monthly income over 16 years. They have separated and each now has sole care of one child on alternate weeks. No prices are shown because real premiums depend on underwriting.
- Original policy
- Joint, first-death, £1,800 a month for 16 years
- New arrangement
- Two single policies, each covering the income each parent provides
- Term chosen
- Matched to each child turning 21
- Trust
- Each new policy written in trust for that parent’s children
Each child’s household is protected independently of what happens to the other parent’s policy. Reviewing cover after a separation, alongside a will, is a common next step.
The FCA’s market study into pure protection found that competition generally works well, while noting many households remain underinsured. [3] Answer every application question accurately: under the Consumer Insurance (Disclosure and Representations) Act 2012 you must take reasonable care not to misrepresent. [6]
Employer death-in-service cover is valuable, but MoneyHelper notes it usually ends when you leave the job. [7] If a claim is ever disputed, the Financial Ombudsman Service handles complaints about insurers free of charge. [8]
Keep exploring
Frequently asked questions
What is family income benefit?
Family income benefit is a type of term life insurance that pays a regular income, usually monthly, instead of a single lump sum. If the insured person dies during the policy term, the insurer pays the chosen income to the family from then until the end of the term. The idea is to replace the salary the family would have relied on. If the insured person survives the term, the policy ends and nothing is paid. Because it works like a replacement salary, it is often chosen by parents of young children.
Is family income benefit cheaper than life insurance?
It is a form of life insurance, but it is often lower in cost than a lump-sum term policy that would provide a similar level of support. That is because the total amount the insurer might pay falls each year: a claim early in the term means many years of income, while a claim near the end means only a few. The insurer’s risk reduces over time, so premiums tend to be lower. Real prices depend on your age, health, the income chosen and the term, so only insurers can quote them.
How much family income benefit do I need?
A common starting point is your monthly take-home pay, minus any costs that would stop if you died, such as your own travel and personal spending. Then think about extra costs your family might face, such as additional childcare if you currently provide care. Subtract any other income they would receive, including existing cover and limited state support. Choose a term that runs until your youngest child is likely to be independent. The estimator on this page and our cover needs guide can help you reach a sensible figure.
Is family income benefit taxed?
The regular payments from a family income benefit policy are usually free of Income Tax for the people who receive them. Inheritance Tax is a separate question. If the policy is not written in trust, the value of the remaining payments may be treated as part of your estate, which could count towards Inheritance Tax where the estate is above the £325,000 threshold. Writing the policy in trust can often keep payments outside your estate. Tax rules can change and depend on circumstances, so check the details before you apply.
Can family income benefit be paid as a lump sum?
Some insurers allow the family to convert the remaining payments into a single lump sum if they prefer, for example to clear a debt. When this happens, the lump sum is usually less than the total of the remaining payments, because it is paid earlier and discounted. Not every policy offers this option, and the terms vary between insurers, so check the policy wording before you buy if flexibility matters to your family. Pairing family income benefit with separate mortgage cover is another way to meet both needs.
Should family income benefit keep up with inflation?
Over a long term, a fixed income can buy noticeably less as prices rise. Many insurers offer index-linked family income benefit, where the income increases each year, usually in line with an inflation measure, both before and after a claim. Premiums are usually higher for index-linked cover and may rise over time. If your term is long and the income would pay for everyday costs such as food, bills and childcare, index-linking is worth considering. Official inflation figures from the ONS show how quickly prices have moved in recent years.
Is family income benefit a good idea?
It can be a sensible choice if your family relies mainly on your regular income rather than a single large sum. Because the payments mirror a salary, they are often easier for a bereaved partner to manage than investing a lump sum and drawing it down carefully over many years. It also tends to be lower in cost than an equivalent lump-sum policy, since the total the insurer might pay falls as the term passes. It suits families with young children and a defined period of dependency more than those wanting to leave a fixed inheritance or clear a large mortgage balance at once. Whether it is right for you depends on your household’s needs, existing cover and budget, so compare it against a lump-sum policy before deciding.
Can family income benefit be written in joint names?
Yes, many insurers offer a joint version that covers two people, usually partners, and pays the agreed income after the first death. This can suit couples who both contribute to household bills and childcare. The cover usually ends once a claim has been paid, so it does not also protect against the second death, and the policy does not pay twice. Couples sometimes choose two single policies instead, each written in trust for their own dependants, which costs more but keeps cover in place after both deaths and gives more control if the relationship later changes, for example through separation.
Sources
- Association of British Insurers — Protection insurers pay out £7.84 billion in claims in 2025 (2026-06-29)
- MoneyHelper — What is life insurance? (2026-09-28)
- Financial Conduct Authority — MS24/1.5 Market Study into the Distribution of Pure Protection Insurance Products: Final Report (2026-09-21)
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances (2026-09-28)
- HM Revenue & Customs — Trusts and Inheritance Tax (2010-11-08)
- legislation.gov.uk — Consumer Insurance (Disclosure and Representations) Act 2012 (2012-03-08)
- MoneyHelper — Life insurance through work (2026-09-28)
- Financial Ombudsman Service — Complain about a financial business (2026-09-28)
- Office for National Statistics — Inflation and price indices (2026-09-17)
- GOV.UK — Bereavement Support Payment (2026-09-28)
- legislation.gov.uk — Income Tax (Earnings and Pensions) Act 2003 (2003-04-10)
- GOV.UK — Funeral Expenses Payment (2026-09-28)
- NHS — Cancer (2026-09-28)
- GOV.UK — Trusts and taxes (2026-09-28)
- GOV.UK — Probate waiting times halved thanks to Government push (2025-02-14)
- MoneyHelper — Life insurance when you get divorced (2026-09-28)