Insurance Consulting
Financial planning simply means you need to take charge of your finances. This includes you charting out your incomes, expenses, assets, liabilities along with your financial goals. Thereafter, you create a financial portfolio and invest in different avenues to meet your goals. With high inflationary expenses looming and the rising cost of lifestyle, insurance appears inevitable, especially with the shift toward nuclear families in India..
As a first step towards creating your financial plan, you need to identify your goals, their horizon and your disposable income (income – expenses). Next you need to allocate your disposable income to different investment avenues to create a fund for goal fulfilment. However, in all your planning, where does insurance fit in? The question that you may need to answer is insurance important, and if yes, how important?
To protect your family from any form of financial stress in your absence, insurance assumes importance. Insurance works as your safety net and it could be a good time to consider taking an insurance plan, here’s why.
Importance of Insurance in Financial Planning
Insurance, as a product, is beneficial in safeguarding your finances. Here are some reasons which make insurance a quintessential part of your financial portfolio:
Financial Planning is a Five-Step Process
According to the financial planning pyramid, a derivation from Maslow’s Hierarchy of Needs, the five steps can be categorized as:
Managing your money: where the focus is on your daily expenses, reducing debt and establishing a stable cash flow
Building a safety net: where the focus is oncreating your emergency corpus, growing savings and opting for adequate insurance coverage- both health and life.
Accumulating wealth: where the focus is ongrowing your investment portfolio, retirement corpus and utilizing tax benefits and exemptions efficiently.
Preserving wealth: where the focus is on enjoying financial independence by converting retirement corpus into income and maximising pension earnings.
Leaving a legacy: where the focus is on estate planning, succession and continuity planning along with philanthropy.