As with term assurance policies, family income benefit policies provide cover on death if you die during the policy term. But instead of a lump sum, it gives regular set payments (income) for the rest of the term of the contract. Premiums remain level throughout and if you live beyond the end of the policy, there will be no pay out. As this type of contract only provides cover in the event of death there is no surrender value. So if you stop paying the premiums at any time, your cover will stop immediately and you won’t get any money back.
As it is a fixed term, there is no flexibility and you won’t be able to increase cover or extend the term. If you become ill near the end of the term (duration of your policy) you might not be able to get further cover.
Income payments keep pace with inflation so you can usually have them increased as inflation rises. It’s also possible to take a cash sum instead of the income option upon death.
Many policies now have additional features:
• If you can’t work because of an accident or illness your contributions are paid for you.
• The policy will pay out if you are diagnosed as having less than twelve months to live.

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