Family Income Benefit is often known as FIB. It is a form of Term Insurance cover, in that it pays an amount on the death of the insured person. However, it is designed to pay an income, rather than a lump sum.

This type of policy never acquires a surrender or cash-in value, and is not a savings policy. Rather, it should be viewed in the same way as your Building or Contents cover. It is there to protect the family from the financial effects of a tragic early death of a breadwinner.

Family Income Benefit (FIB) is designed to pay an income to the surviving family of a breadwinner. This income is designed to pay towards the day to day living expenses, in order to maintain a standard of living. So, if you have a family, and do not yet have adequate levels of Life Insurance, then FIB is certainly worth considering.

Essentially, the purpose is to maintain a standard of living. So if you take away Mortgage costs – assuming this is covered separately – and account for any existing cover, such as Death In Service Cover, then you should plan to insure for an annual amount that can maintain this lifestyle. This could be, for example, £15,000 per annum, until the youngest child reaches the age of 21.

A Financial Adviser will be able to help you calculate this figure for your particular circumstances. Please contact us.

On the death of the Insured, the policy will pay out an agreed income for the remaining term of the policy. So, if you set up a £20,000 per annum policy, for a term of 20 years, and died after 5 years had passed, the policy would pay out £20,000 per annum for another 15 years, or £300,000 in total.

It is possible that your family may prefer a lump sum on your death. If this were the case, then instead of the income, a lump sum can be paid. This is known as a Commuted Value, and will be lower than the sum of the remaining income, perhaps only 80% or so.

An integral part of the nature of FIB is that it runs out. Because of this, many people have instead chosen to use Level Term Insurance instead. That is, a policy that simply pays out a lump sum on the death of the insured. This can then be invested in order to generate an income. It should be noted that FIB is cheaper than other forms of term assurance, which can be an attraction when budgets are tight.

Whole of life policies have sometimes been used as an alternative protection policy, but are less popular as they can be significantly more expensive.

We can help you decide the most appropriate policy for you and your family. Please contact us.

Yes, you often can. Some policies have built in extension and conversion options. These can be valuable if, for example, your health had changed since setting up the policy.

Other changes may require further medical evidence to be made available.

We can advise you on your options. Please contact us.