Family Income Life Assurance - Lump Sum or Monthly Income?

Rutlander_2

I'm looking at a Life Assurance Policy that will provide an income for my family in case I die / have a critical illness / terminal illness. I'm looking to cover myself for the next 20 years or so.

From what I can see, the options include a policy that will provide a montly income, or one which will give a lump sum. A return on the capital of the lump sum could then provide an income - eg. £625,000 at 4% would give £25,000 a year.

1. What are the pros and cons of these options?

Also, some specific queries:

2. Can the lump sum be invested in an annuity, for example?

3. For a lump sum - is it cheaper to go for a policy with a short term (eg. 10 years), then re-new for another 10 years once this has ended? [This wouldn't work for a monthly income, as the pay out would stop at the end of the 10 year term].

4. With a lump sum - I assume the return would continue beyond the term, whereas a monthly income would cease at the end of the term?

5. The income from a lump sum would not increase in line with inflation, so in real terms the value would go down over time - right?

Hope this all makes sense.