Family Income Benefit
Family income benefit pays a regular monthly income to your family if you die during the policy term — not a lump sum. For many families, a predictable monthly payment is far more practical than a large sum of money to manage all at once. It provides a tax-free income, month after month, for as long as the policy runs.
Why family income benefit works for so many families
Most people think of life insurance as a lump sum. But for families with young children and a mortgage, what they actually need is a replacement salary — money coming in every month to cover the mortgage, the bills, the childcare, and the cost of daily life. Family income benefit does exactly that.
Free Trust Service — Included for Every Client
Placing your family income benefit policy in trust ensures the payments reach your family quickly and without forming part of your estate. We provide free trust guidance to every client we work with, as standard. No hidden fees, no extra appointments.
Find out about our free trust serviceWhat is family income benefit and how does it work?
Family income benefit is a type of life insurance that pays a regular monthly income to your family if you die during the policy term, rather than a one-off lump sum. You choose the monthly benefit amount, the term length, and whether the benefit is level or index-linked.
If you die in year one of a 20-year policy, your family receives the monthly benefit for the remaining 19 years. If you die in year 18, they receive it for the remaining 2 years. The earlier a claim is made, the more the policy pays in total — which is why it is particularly well-suited to families with young children who need long-term income replacement.
- Pays a monthly income, not a lump sum
- Tax-free when written in trust
- Often cheaper than level term for same benefit
- Can be index-linked to keep pace with inflation
- Whole of market — we find the right fit
Family income benefit vs level term life insurance
| Pays out as | Monthly income |
| Best for | Replacing a salary |
| Typical cost | Lower premium for same monthly benefit |
| Flexibility | Predictable, manageable payments |
| Pays out as | One-off lump sum |
| Best for | Clearing a mortgage or large debt |
| Typical cost | Higher premium for equivalent cover |
| Flexibility | Family manages a large sum |
Many families combine both — a decreasing term policy to cover the mortgage, and family income benefit to replace the salary. We can help you build a protection plan that covers both needs without overpaying.
Who should consider family income benefit?
| Your situation | Why it matters |
|---|---|
| Parents with young children | Replaces your salary month by month — covering childcare, school costs, and daily living for years |
| Families where one partner earns significantly more | Protects the household against the loss of the primary income without leaving a large sum to manage |
| Families on a tight budget | Often cheaper than level term for the same monthly benefit — more protection for less premium |
| Anyone who wants simplicity | A predictable monthly payment is easier to plan around than a lump sum that needs investing or managing |
| Families combining protection products | Works well alongside decreasing term (for the mortgage) and critical illness cover (for a serious diagnosis) |
How to get family income benefit through That’s Family Finance
We keep the process simple and pressure-free. Here is what to expect from start to finish.
Initial conversation
We start with a no-obligation chat to understand your situation — your family, your income, your mortgage, and what you are trying to protect. No forms, no pressure.
We research the market
As a whole-of-market broker, we search across every insurer — comparing monthly benefit levels, term lengths, index-linking options, and premiums to find the right fit.
We talk you through your options
We present the options that best fit your needs and budget, explain the differences clearly, and answer any questions. You decide — in your own time, with no pressure.
We handle the paperwork
Once you are happy to proceed, we manage the application on your behalf — keeping you informed at every stage until your cover is confirmed and in place.
Buying a home or thinking about your mortgage?
We work closely with award-winning mortgage advisers and can make a warm introduction — so your protection and mortgage advice can be sorted together. Mortgage advice is provided by separately FCA-authorised firms. We simply make the connection, at no cost to you.
Why families choose That’s Family Finance for family income benefit
Your family income benefit questions answered
What is family income benefit?
How is family income benefit different from life insurance?
Is family income benefit cheaper than life insurance?
Is family income benefit taxable?
Can I index-link my family income benefit?
Can I combine family income benefit with other cover?
What happens if I don’t die during the policy term?
Explore our other protection services
Qualifications: Level 4 Diploma in Financial Advice · Level 3 Certificate in Mortgages & Protection · Level 3 Certificate in Equity Release.
FCA Individual Reference Number: BXT01420 · Last reviewed: August 2026.