David Nicholls Associates David Nicholls Associates David Nicholls Associates

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Family Protection

Family Income Benefit = Life assurance but paid monthly

  • The lowest cost method of buying Life assurance.
  • It pays out a Tax Free Income every month.
  • It avoids Investment fees, charges & tax.
  • It’s ideal for families and those who want a regular income to cover lost income if a person dies unexpectedly.

While it’s name (Family Income Benefit – FIB) sounds strange, FIB is one of the most value protection products you can buy. Rather than providing a lump sum should you die it provides a regular, tax-free, monthly income for your Family & dependents – from the time of the claim to the end of the plan term.

Family Income Benefit is particularly attractive to those who like to know they have a regular monthly income and would rather not have to worry about paying the regular bills if a death in the family happens. It is cheaper than a lump sum payout and is normally arranged until children become no longer dependent financially or until the earner in the family stops receiving their regular wage.

The way the insurance works is that the total amount that could be paid out decreases each month, as the payments are only made until the end of the policy. But it is also fair to say that most families need for cover reduces to just about zero over a period of (many) years.

An Example and Some Guidance

A FIB Plan is set up for 20 years (until the child or children are all 20 years old and classed as an adult). The example Family requires £24,000 a year. If a claim is made after one year, the following would be paid out = £24,000 x 19 years, this equals a total of £454,000 would be paid to you. But if a claim is made after 16 years, £24,000 x 4 years, or £96,000 would be paid. This is why family income benefit often costs less than life insurance, but a family with a new born could well need all of that £454,000, but the same family with a 16 year old might well find the £96,000 enough.

Please note, the plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

Nicholls Financial Services Limited trading as David Nicholls Associates