Category: Specific protection products · Reviewed by Amy Price, Account Executive · Last reviewed 2026-06-10
Family income benefit (FIB) is a life assurance product under which a regular tax-free monthly income is paid (rather than a lump sum) on the death of the insured during the policy term. Income is paid from the date of death to the policy term-end date. FIB is widely used by parents who want to ensure replacement income for their family if they die during the years their children are dependent — and the cost is materially lower than equivalent lump sum cover because the average payment period reduces over the policy term.
Category: Specific protection products Also known as: FIB Tax treatment: Tax-free on recipient (where written in trust) Related concepts: Decreasing term assurance for mortgage protection, Whole of life cover, Trust written whole of life
FIB pays a chosen level of monthly income (e.g. £2,500 per month) from the date of death to the end of the policy term. If the insured dies in year 1 of a 20-year policy, the family receives 19 years of monthly income; if they die in year 19, the family receives 1 year of monthly income. The level of income can be index-linked at the option of the policyholder.
FIB is regulated by the FCA under ICOBS as a pure protection contract. Tax: a properly trust-written FIB policy keeps the benefit out of the deceased’s estate for IHT purposes; income paid from the trust is normally tax-free in the recipient’s hands. Some policies pay a single payment (“commutation lump sum”) at the trustee’s option.
FIB is normally cheaper than equivalent level term cover because the average payment period across the policy term reduces. It is particularly cost-effective where the insured wants to replace income for a defined period (such as until the youngest child is 18) rather than provide a lump sum.
A 35-year-old parent of two young children takes out a 20-year FIB policy with £2,500 monthly indexed benefit. Premium is approximately £25 per month (depending on insurer and health). If the insured dies at age 40, the family receives £2,500 a month for 15 years; if death is at age 50, for 5 years.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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