In this article I will discuss the benefits of a little known but very important plan called a family income plan which is also known as family income benefit. I will explain how the plan works and further I will go into how this type of plan can benefit the average client looking for life insurance.

First of all it is important to understand the various needs for life insurance and therefore have a greater understanding of were exactly the likes of family income plans fit within good financial planning.

There is generally only a handful of reasons one would have life insurance. The obvious ones are family protection and loans or mortgage protection. Mortgage protection or loan is quite simple you have a liability of a certain amount of money, so best advice dictates that you should insure exactly that amount in the event of death, and if funds allow in the event of a critical illness. Family income benefit does not cater for mortgage or loan protection for reasons that will be later explained.

Family protection is where family income plans fit perfectly. Family protection is all about making sure that your family or your dependents are adequately taken care of financially in the event of your death. In order to suitably meet this need you invariably have to have a figure to insure, an amount of money that your dependents would need in order to maintain their standard of living in the event that the worst actually happens.

A lot of people tend to use their incomes as a good benchmark to work from when ascertaining what level of cover they actually need. The reason for this is during life you may support your family to the tune of 25,000 for example, so it is fair to say that in the event you die they would need 25,000 per annum in order to maintain their standard of living.

Before the likes of family income plans people only had lump sum insurance plans to to take out as protection. This meant people would have to work out what size of lump sum they needed if they wanted an annual benefit of 25,000. Due to the fact tat they would never know what future inflation or investment returns would be meant this was far from an exact science and again from a good financial planning point of view was a poor and risky way to work.

Along came family income benefit. In short this plan pays out the annual required benefit. So if you wanted 30,000 per annum you took the plan out with that level of sum assured and then if the worst happens the plan pays out 30,000 per annum.

The plan went a bit further to ensure that it did the job correctly, by including something called indexation. This meant that each year the value of the benefit actually increased to ensure that if and the when the worst actually happened the amount your loved ones would receive would be the right amount regardless of how high or low inflation had been. Furthermore once claimed it would continue to rise with inflation making sure that continued to maintain that value from the benefit.

So in summary if you are looking for family protection and it is a level of income you are looking to protect, which 99% of time it really should be, then family income benefit is generally the right plan for you. It will ensure you have adequate cover to protect your family in the event of your death and it will continue into the future with inflation protection as a result of the indexation benefit available as an option within the plan.

Financial freedom is something that a lot of people want to achieve in their lifetime. Having to pay all debts and liabilities, enjoying all luxuries in life and enjoy life without to worry about any financial problems. More and more people are very interested in making their financial dreams come true. There are also motivation classes which main aim is not to discourage people from thinking that getting their first million dollar is possible.

As a financial planner, I am also aware that people usually do not quantify their goals. Having a goal of becoming a millionaire is something that is achievable and not impossible. I do have clients who want me to plan their millionaire journey. Having said that, a million dollar road map is easy to develop but very difficult to follow.

Before you can be a millionaire, you need to have a very good financial planning. You need to hire a financial planner to assist you as financial planners went through series of examinations and training perfecting their financial planning skills. It is impossible to be a millionaire if you do not have a financial plan.

Seminars on how to become a millionaire do not give you customized financial plan. You can be earning $ 200,000 per annum but if there is no financial planning, you will be asset rich and liquid poor. Managing your cash flow is the most basic element in financial planning.

One of my client, Mr Doctor (names are kept confidential), a doctor who has his own practice and earns $180,000 to $250,000 a year initially do not have any financial planning. He does have insurance policies and that was all. I had a hard time convincing him to meet me. He was very reluctant and told me that he already have a financial planner.

After much persuasion, I managed to meet him and assist him in his financial planning. I did a financial analysis on him and explained to him that financial planning is not just about insurance planning, financial planning also stresses on cash flow management, investment planning, child education planning, tax planning, estate planning and most importantly retirement planning.

After a year we had that meeting, he came back to me and told me that he now understand how important a financial plan is. He told me that he now can quantify his financial goals and he also told me confidently that he will be a millionaire in 5 years time.

I knew that after my appointment with him, he will identify his strength and weaknesses financially and able to quantify his goals. With my customized financial planning and financial planning tools, I am sure everyone will achieve their financial dreams.