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Income or Lump Sum? The Life Plan Conundrum

Effective wealth management is about many things but it can perhaps be boiled down to two essential elements: protection and (or) growth.

Whether you prefer to emphasise protection or growth will depend largely on your circumstances, goals, and attitude to risk. One part of this is determining whether you want your investments to create the security of income or the flexibility and reinvestment potential of a lump sum.

Investors are typically split around 50-50 on this question, which is why it is no surprise to learn of a recent Aegon survey of 1,300 investors which found that 58% preferred insurance plans to pay monthly income rather than a lump sum at maturity.

Life plans are an investment opportunity whereby part of the monthly premium buys life insurance and the balance is invested by the provider into various vehicles to, hopefully, grow the savings portion of the plan. Once the plan reaches maturity, the savings are paid out to the investor. If the customer dies before maturity, the life insurance will provide a lump sum to family.

There are many types of insurance policy to help provide essential financial protection for investors whether they reside in the UK or as an expat in the EU or elsewhere. Such policies offer various benefits to individuals and families, which is, surely, the point of any wealth management strategy, regardless of whether it is growth or preservation-focused.

Protection policies include:

  • Life, Critical Illness & Family Protection Plans
  • Income Protection & Accident, Sickness & Redundancy Cover
  • Whole of Life Cover
  • Private Medical Insurance
  • Long Term Care Cover

Your choice of insurance policy or regular savings plan should be carefully considered and it is always wise to seek regulated financial advice before signing on the dotted line. Your financial adviser should be able to answer all your questions about any product they recommend and explain the key points from the outset before you sign any agreement.

Finding the right balance of growth and protection

Blacktower Financial Management can help you achieve the right balance of growth and protection so that you can have confidence your assets are safely working towards your personal wealth management goals. We can also help you decide which products, including those which pay an income or a lump sum, are right for you.

For more information contact us today.

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