income plans are very effective insurance policies but
to understand the plan you first need to understand the
reasons for the plan.
The whole reason for life insurance is to ensure that
there is sufficient monies paid out to someone's
beneficiaries in the event of their death.
People have many reasons to need this money such as
mortgages loans or to just maintain their standard of
living. It is this reason that Family income plans have
been brought about.
If you take out life cover to ensure your standard of
living is maintained what you essentially want an amount
of money which is sufficient once invested to replace
the income you may have bought into the household. This
can be very complicated for your beneficiaries to manage
in the event of your death.
Say you earn £20,000pa, in the event you die you want
your beneficiaries to have £20,000pa. In order to
achieve this you might take out a life insurance plan
for £200,000 on the basis that if it was invested it
might earn enough money to provide an income of £20,000
for the amount of time you require it.
Now not least the fact that there is a few "mights" in
that example but isn't it all a bit complicated and left
to chance as far as investment growth is concerned.
Well! that is were family income benefit and family
income plans come in. They do exactly what you need them
to do. You want £20,000 pa annum in the event of death
then they will give you £20,000pa in the event of death.
You can even get them to give you £20,000 that goes up
with inflation each year ensuring that your
beneficiaries will have a rising income, this is known
as indexing the benefit or indexation.
So if you want life insurance and it is to maintain your
families standard of living in the event of your death
then instead of lump sum life insurance consider a
family income plan it is far more simple to meet the
need all you need to work out is how much do you want
them to have in the event of your death and how long do
you want them to have it. The you take out a family
income plan under those exact terms, Job done!