Family income benefit means term life insurance that pays your family a monthly income, rather than one lump sum, from a valid claim until the policy's term runs out, so the total it can pay shrinks the longer the policy has run. This page explains how the income works, the rising and lump-sum options, tax, and which insurers' documents describe the cover.
Curious how this cover would look at your age and over your own term? An FCA-authorised broker goes over exactly that on a call-back that costs nothing, set up by the short form on this page.
What does a family income benefit policy pay, and for how long?
Aviva's key features for YourLife Plan Family Income Benefit (EDCO0871-0126, January 2026) describe a monthly benefit paid if the person covered dies or has a terminal illness, meant to support the family financially, for example towards debts or a mortgage. Once a claim is accepted, the benefit keeps coming for whatever is left of the term.
Legal & General's Family and Personal Income Plan is built the same way. Its policy terms (LG2030, October 2026) set out a monthly benefit on death or a terminal illness diagnosis within the term, and its policy summary (QGI12844, October 2026) has the payments running until the policy ends; both documents sit in L&G's adviser area. Zurich's Personal Protection key features (PW720494014, April 2026, on Zurich's intermediary site) offer "Monthly payments, known as Family Income Cover" as the alternative to a one-off lump sum, and say the level version "Pays the sum assured as a monthly cover amount until the end of the policy."
Aviva's cover protects only against events within the term, and L&G's summary says a policy reaching its end date without a valid claim pays nothing and has no cash value. A terminal illness claim has to meet the insurer's own definition; Aviva's asks for a medical consultant's diagnosis of an illness expected to cause death within 12 months. Terminal illness benefit explains that part in full.
Why does the total payout fall as the years pass?
The monthly amount does not shrink; the number of months left to pay it does. To show the effect, here is a made-up example, using our own arithmetic rather than an insurer's illustration, and not a premium. Take a level £1,200 a month on a 15-year term, which is 180 monthly payments, and leave out any yearly rise or lump-sum reduction.
| If the claim comes | Income still due | Adds up to |
|---|---|---|
| At the very start | 180 months (15 years) | £216,000 |
| 3 years in | 144 months (12 years) | £172,800 |
| 8 years in | 84 months (7 years) | £100,800 |
| 13 years in | 24 months (2 years) | £28,800 |
That is the main difference from a level term life insurance policy, which pays the sum on its schedule whenever in the term a valid claim falls. It also differs from decreasing term, where one lump sum shrinks, usually alongside a repayment mortgage; here the monthly figure holds and only the months run down. The pros and cons of each shape are weighed on family income benefit against life insurance, and picking an end date on how long you need life insurance.
On price, Royal London's February 2020 webinar Q&A, marked "for financial adviser use only", had set family income benefit beside level term for illustration, and said that against decreasing term "the difference in the price would be much smaller". How the two shapes would price for your own age and term is a question a broker can answer side by side on the free call-back.
Level or index-linked: does the monthly amount stay the same?
On a level policy it does, while prices around it rise; Aviva's key features point out that inflation eats into what future payments will buy. Three insurers' documents describe a rising option, each in its own way:
| Insurer and document | How the monthly amount rises | How the premium moves |
|---|---|---|
| Aviva, key features (January 2026) | Increases by 5% each year, to take inflation into account | Rises by a higher percentage than the cover, because Aviva says a claim becomes more likely as you get older |
| Legal & General, policy terms (October 2026) | You may have the option of cover that follows the Retail Prices Index (RPI) over 12 months; no rise if RPI changed by less than 1%; at most 10% a year | Rises by the RPI change multiplied by 1.5, up to 15% a year |
| Zurich, key features (April 2026) | Increases each year by 3%, 5% or in line with the Retail Price Index | Rises 1.5% for every 1% the cover goes up |
Under Zurich's increasing version, "Your monthly cover amount will also continue to increase during any claim." The same idea applied to a single sum is increasing term life insurance.
Can you take a lump sum instead of the monthly income?
Two of the documents set out a way to swap the income for a single payment, and both pay less than the instalments it replaces:
- Aviva: at the point of claim, or while payments are being made, "you or the people looking after your estate can ask us to pay a lump sum instead of a monthly benefit." The lump sum "won’t be as much as the remaining monthly benefit payments added together"; Aviva will explain the amount when asked, and there "could be tax implications" in taking it.
- Legal & General: you may ask for the cover as a commuted lump sum. L&G multiplies the monthly benefit by the months left to the expiry date, then, acting fairly and reasonably, reduces that total "to reflect the fact that you would be receiving all of the monthly benefits due in advance."
Whether Zurich's Family Income Cover allows the same swap is something a broker can check for you on the free call-back. How the figure is worked out is covered on taking family income benefit as a lump sum.
Is the income paid tax-free?
The three insurers answer in similar terms, with different conditions. Aviva's key features say benefits are normally free of Income Tax and Capital Gains Tax for UK residents under current legislation and HMRC practice, unless the policy is assigned to someone else. L&G's summary says pay outs should be free of both taxes, adding that the Government may change this at any time. Zurich says you will not pay either tax on benefits, a statement it bases on its understanding of current UK law and HMRC practice.
Inheritance tax is separate. Aviva says a payout that forms part of your estate may be subject to it, and L&G that a policy not written in trust will normally go into the estate, where inheritance tax may apply. This is the general picture rather than tax advice: is family income benefit tax-free goes further, and trusts are covered on family income benefit in trust.
Which insurers offer it, and what does each document say?
The documents behind this page come from three insurers. They are not a full list of providers, and terms change, so check the version sent with any quote.
| Insurer | Document and date | What it describes |
|---|---|---|
| Aviva | YourLife Plan Family Income Benefit key features (EDCO0871-0126, January 2026) | A monthly benefit for the remaining term; any number of years between 3 and 70 for the term, ending before the 90th birthday; applicants aged 17 to 86; Waiver of Premium at extra cost if you are 54 or under at the start; joint cover ends once the full monthly benefit has been paid |
| Legal & General | Family and Personal Income Plan policy terms (LG2030) and policy summary (QGI12844), both October 2026 and both in L&G's adviser area | A monthly benefit until the policy ends; an RPI-linked option; a commuted lump sum on request |
| Zurich | Personal Protection key features (PW720494014, April 2026), on Zurich's intermediary website | Family Income Cover as a way for the policy to pay out, level or rising by 3%, 5% or RPI |
Each insurer sets its own upper age for starting a policy, covered on the maximum age for family income benefit. To find out which insurers a broker can arrange family income cover with, and how their terms compare for you, ask when they call you back after you send the form.
Frequently asked questions
Is family income benefit the same as income protection?
No. Royal London's adviser Q&A (February 2020) explains that family income benefit "can only be set up for life and/or critical illness cover and therefore only covers defined conditions", while income protection "only pays out while they meet the definition of incapacity". Income protection covers illness or accident that stops you working.
Who receives the monthly payments?
That turns on ownership and any trust. Aviva pays whoever is legally entitled, confirmed when a claim is made. Legal & General's terms pay the person legally entitled: the owner's personal representative, usually the executor of their will, if the owner has died, the trustees if the policy is in trust, or the assignees if it has been assigned.
Can critical illness cover or Waiver of Premium be added?
Some insurers offer extras at extra cost. Aviva's Waiver of Premium can be added if you are 54 or under when you buy, and waives premiums if you are incapacitated for longer than 26 weeks. Where Zurich's policy includes critical illness cover, those claims are paid monthly, except for listed Additional Payment conditions, which are paid as a lump sum.
With a monthly figure and an end date in mind, a broker can price the cover for nothing, alongside a lump-sum policy if you want to compare; this page's form takes your details for that call. Other ways to protect an income are on the critical illness and income hub, and setting the figure is on how much family income benefit you need.
Sources
- Aviva Life & Pensions UK Limited, YourLife Plan Family Income Benefit key features (EDCO0871-0126, January 2026), read 22 October 2026. protection.aviva.com
- Legal and General Assurance Society Limited, Family and Personal Income Plan Policy Terms and Conditions (LG2030 2026/10, in its adviser area), read 22 October 2026. legalandgeneral.com
- Legal and General Assurance Society Limited, Life Insurance with optional Critical Illness Cover and Family and Personal Income Plan Policy Summary (QGI12844 2026/10, in its adviser area), read 22 October 2026. legalandgeneral.com
- Zurich Assurance Ltd, Key Features of the Zurich Personal Protection Policy (PW720494014 04/26, hosted on Zurich's intermediary website), read 22 October 2026. zurichintermediary.co.uk
- Royal London, The value of family income benefit webinar Q&A (PDFP8PD0014, February 2020; for financial adviser use only), read 22 October 2026. adviser.royallondon.com