Your family would have had a proper lifestyle set which, with time, becomes your comfort zone. This lifestyle, in one way or other, is linked to the income of the breadwinner. And this lifestyle includes home loans, annual school fees of children, day to day living expenses and other monthly commitments.
In the absence of the insured, or in case of his/her unfortunate death, the family is left with no direction of how to manage things financially. With this in mind, income replacement plans have been put in action to take care of the family and its needs.
The benefits of the insurance plan, wither monetary or otherwise, will be available to be claimed by the dependants of the insured, irrespective of whether insured is alive or not. The most important feature of this insurance plan is that the benefits of the plan after the insured’s demise, is split into 2 parts – One time pay out as a lump amount and the rest is planned such that the family receives the payment as monthly income for the next one or two decades.
In other words, the full assured sum is broken into a one-time payment and continued monthly financial support which is received every month. It is also interesting to note that the total sum received by the beneficiary family over the specified period of time, is more than that of what was mentioned and assured initially in the policy.
People are mostly unaware of financial investments or planning when it comes to putting the insurance claim to good use. They are confused and clueless as to what to do with the monetary benefits received from the income replacement plan after the insured’s demise. There are couple of options which are, either the family can use the fraction of the one-time payment, every month till it runs out. Or they can find a way to channelize or invest the lump amount efficiently.
Usually, the buck stops at only one point – planning and securing the family with income replacement plans is not enough. Leaving behind a huge monetary support is only a part of the story and the rest depends of how efficiently the family manages the money. It has been made clear that awareness about financial planning is very significant and that people should have prior knowledge as to where to invest the money and how.