Financial Planning FAQ's

• What is Financial Planning?

  A policyholder is a person who owns the life insurance policy. Usually, they are the one insured under the policy. However, sometimes, the policyholder may be a relative of the insured, a corporation or a partnership. The policyholder has the right to exercise all privileges that are provided in the life insurance contract.

• Understanding and defining the life goals

  The first step of financial planning process is to understand and define your specific goals. The more specific the goals are the better it is. Sometimes, you may not have enough clarity about all the financial goals in your life. An expert financial planner can help you define the goals across your savings and investment lifecycle and determine the specific numbers you need to reach for each of the specific goals. You should remember that a financial plan is not working towards a singular goal, like retirement planning, Children’s education or marriage or buying a home etc.

  A financial plan includes multiple goals across your savings and investment lifecycle. However, you should establish definite time frames for achievement of each of these goals. Even though, ideally, we would like to achieve or even exceed all our financial goals, it is useful to prioritize the goals, especially if there are constraints with regards to how much you can invest and save. For example, you may prioritize your child’s higher education over buying a house or some other financial goals. The financial planner will take your priority into consideration, when developing your financial plan. Once the financial goals and the priorities are determined, the financial planner or adviser will examine these goals in respect to your resources and other constraints, if any. The objective of this step is to help you define specific, realistic, actionable financial goals.

• What are the benefits of Financial Planning?

  There are many benefits of having a financial plan. Once you have defined the specific goals and save or invest for it, you actually start a journey which helps you reach your financial goals. A financial plan actually helps you lead a disciplined and stress free life so that you can enjoy the life to the fullest. We will now discuss the various benefits of having a financial Plan.

• Know your risk

  Having a financial plan helps you prepare for risks. Risks are unforeseen events that can cause financial distress. The worst case contingency is an untimely death, which can result in financial distress for the family, apart from the emotional trauma. Financial planning can help us prepare for such contingencies through adequate life insurance. Another contingency is serious illness that can have an impact on your savings and consequently your short term or long term financial objectives. A good financial plan will make adequate provisions for health insurance and critical illness. There can also be other contingencies like temporary loss of income or major unforeseen expenditures. Financial plans helps you prepare for such contingencies.

• Aware about financial goals

  The first step of financial planning is to define specific goals. The more specific the goals are the better. As an investor, especially if you are young, you may not have enough clarity about all the financial goals in your life. This is where an expert financial planner helps you. Through a financial planning process, the biggest benefit is that you can define the goals across your savings and investment lifecycle and save towards it for achieving the different life goals. Investing or saving without knowing the goals is like embarking on a journey without knowing the destination.