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When a relationship ends and children are involved, child maintenance becomes one of the most important financial commitments in a family’s life. It provides for school uniforms, food, heating, childcare, and the hundred other costs that go into raising a child. It arrives every month, like clockwork or at least, it is supposed to.
What very few people stop to consider is this: what happens to those payments if the parent making them dies?
The answer, without life insurance in place, is that they stop. Not gradually, not with notice — they stop immediately and permanently. For the parent left raising children alone, the financial impact can be immediate and severe. This is precisely the gap that life insurance can fill, and it is one of the most practical and often overlooked reasons for arranging cover following a divorce or separation.
The Child Maintenance Service is currently managing around 790,000 arrangements covering 1.1 million children across Great Britain, with 720,000 Paying Parents in the system as of the most recent government data. There were 150,000 new applications to the CMS in the year to September 2025, up 6% on the year before a figure that reflects both the ongoing rate of family separation and growing awareness of formal arrangements.
Of the roughly £372 million in maintenance due per quarter through the CMS alone, compliance is far from guaranteed even while both parents are alive and well. Government data shows that only 68% of Paying Parents using the Collect and Pay service contributed any payment in a recent quarter, and only 45% paid over 90% of what was due. Since the CMS was established in 2012, £756.6 million in unpaid maintenance has accumulated representing 7% of all maintenance that should have been paid over the lifetime of the service.
These figures paint a picture of significant financial fragility for the households receiving payments. If compliance rates are this variable during normal circumstances, the implications of losing the paying parent entirely — with no life cover in place — are stark.
When most people think about life insurance in the context of divorce, the instinct is to consider a lump sum policy — a standard level term or decreasing term policy that pays out a fixed amount if the insured person dies within the term.
A lump sum can seem reassuring, but it is not always the most appropriate solution for protecting maintenance payments specifically. The reasons for this are practical. A large lump sum paid to a receiving parent who may be managing other financial pressures may be spent inconsistently or erode more quickly than intended. It is also harder to structure in a way that clearly mirrors the purpose replacing the stream of monthly payments that would otherwise have kept arriving.
There is a more targeted solution, and it is one that relatively few separated families have in place.
Family Income Benefit (FIB) is a type of life insurance that pays out a regular monthly income rather than a lump sum if the insured person dies within the policy term. This makes it a natural match for the specific financial need it is designed to address.
Where a paying parent contributes, say, £800 a month in child maintenance, a Family Income Benefit policy can be structured to provide £800 a month to the receiving household from the date of death until the end of the term. The payments are tax-free. They arrive regularly. They can be used to cover the costs school meals, activities, utilities, rent contributions — that the maintenance was intended to fund. And because the total payout value of the policy decreases over time as the term shortens, Family Income Benefit is typically more affordable month-to-month than a comparable level term policy.
The term itself can be calibrated to reflect when maintenance would naturally end usually when the youngest child reaches financial independence, typically around 18 to 21 years old. If your youngest child is currently 5, for example, a 16-year term policy aligned to their 21st birthday gives you cover for the precise window in which they remain financially dependent.
Royal London, LV=, and a range of other UK protection insurers specifically highlight Family Income Benefit as a recommended solution for divorcing and separating clients, precisely because of how naturally it maps onto the structure of ongoing maintenance obligations.
There are two main ways to structure a Family Income Benefit policy in a maintenance context, and the right approach depends on your circumstances.
Own life written in trust. The paying parent takes out a policy on their own life and writes it into a discretionary trust, naming the children as the beneficiaries and the receiving parent as a trustee. This means that in the event of the paying parent’s death, the trust receives the monthly income and the receiving parent acting as trustee can use it for the children’s benefit. This structure ensures the money goes where it is intended, bypasses probate, and is held outside the paying parent’s estate for inheritance tax purposes.
Life of another. Alternatively, the receiving parent can take out a policy on the paying parent’s life — a structure known as “life of another.” In this arrangement, the receiving parent is the policyholder and owns the policy, meaning they will receive the payout directly if the paying parent dies. This gives the receiving parent greater control and removes any concern about the policy lapsing due to the paying parent missing premiums. It does, however, require the paying parent’s consent and will usually require them to answer medical questions as the insured life.
Both approaches are legitimate and used in practice. A protection adviser can help you determine which structure makes most sense for your specific family arrangement, particularly if there are multiple children at different stages of education or additional complications such as court orders or shared care arrangements.
Whichever structure you choose, writing a Family Income Benefit policy in trust is strongly recommended when children are the intended beneficiaries.
Without a trust, any payout forms part of the deceased’s estate and is subject to probate a process that typically takes six to twelve months and can take longer in complex cases. During that time, the monthly income payments the children depend on may be delayed entirely. A trust bypasses probate, meaning the payments can begin quickly after a claim is settled.
Writing a policy in trust also means the payout falls outside the deceased’s estate for inheritance tax purposes, which can be a meaningful benefit depending on the size of the estate. And for policies where children under 18 are the intended beneficiaries, a trust is not just advisable it is essentially necessary, since minors cannot directly receive financial payouts from a life insurance policy.
Setting up a trust alongside a new policy is free of charge with most UK insurers and takes a relatively small amount of additional administration at the point of arranging cover. It is one of the most important steps you can take to ensure the policy does what it is supposed to do.
It is also worth considering the risks from the other direction. If the receiving parent dies the parent with primary care of the children the practical and financial burden falls heavily on whoever takes over their care. Child maintenance payments from the other parent may continue, but the cost of replacing everything the receiving parent was providing in terms of childcare, household management, and day-to-day parenting can be substantial.
Both parents having their own Family Income Benefit policy each covering the scenario in which they die, for the children’s benefit provides a more complete safety net. For a relatively modest monthly outlay, both households can have the reassurance that the children will be provided for regardless of which parent is lost.
In some financial settlements, a court will include a requirement for the paying parent to maintain a life insurance policy as a condition of the maintenance arrangement. If this applies to you, the policy you put in place must comply with the specific terms of the order including the sum assured, the term, and the beneficiary arrangement. Failure to maintain cover in accordance with a court order is a breach of your settlement.
If you are a receiving parent and your settlement includes such a provision, it is worth confirming that the policy is in place and remaining active. A whole-of-market protection broker can help you structure an arrangement that satisfies court requirements and ensure both sides have the documentation they need.
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