Financial Planning : Insurance,Investment & Retirement


All of us have the different goals in our life and we are saving & making the investment accordingly, some are saving for a child`s education while others are saving for buying a home. We all have the different objectives & goals and accordingly we are making our financial decisions, but are we going in the right direction to achieve our goals? The answer would be probably yes, no or not sure because we are not certain or specific in making our financial planning. We will explain it with a very simple example: Saving and investing regularly in ULIP plans for life protection which is ideally not correct.

There comes the importance of financial planning to ensure that we are moving in the right direction to achieve our desired goals on time.


“Financial Planning is the process of organizing one`s personal financial affairs by establishing the present and anticipated assets & liabilities in a manner that helps in achieving the financial goals and objectives on time”.


Financial Planning provides the clear direction and a meaning to financial decisions; which in turn allow us to understand the manner and the extent in which each of our financial decision would affect our financial state of affairs as a whole.

It is favorable to consult the financial planner who can takes care of all the above task as per the client`s goals and objective,further can define it very clearly, then able to prioritize the short term and long term objectives by taking the client risk appetite into consideration and finally can make a financial plan that would help the client to achieve its financial targets easily & at the end should be doing regular monitoring of the portfolio.

We have explained below the concept of few of the important financial planning tasks:

Estate Planning:

An estate is the accumulated assets of an individual when he dies and to ensure that all of the individual assets should get distribute according to his wish, he can develop a plan- called an estate plan that states the amount of assets and debts he is likely to have when he dies and how best to preserve those assets so that they can be distributed as he desires.

Insurance Planning:

“ A contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event.”

In simple terms Insurance is a method of transferring from an individual or entity to an insurer the risk of financial loss from events such as accident, illness or death. It is a risk management tool which only covers the pure risk associated with individual or entity, the purpose of insurance is to make good the financial losses, not provide an opportunity for a financial gain.


For Example:

Mr. X bought a Term Life Insurance Policy for Rs 50 lakhs as a Sum Assured from LIC , now if he dies while the coverage is in force, LIC will pay Rs 50 lakhs to the beneficiary/nominee as a policy proceeds or death benefit.

These are just few of the examples we have shared for financial planning, retirement planning, planning of children education, vacation planning are few of the other example of financial planning tasks.

Do you like it, would you like to read:

Insurance as a Healthy Gift | Features of Debt Product in Indian Financial Market | 5 effective investment options.


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