Knowledge Series I - Vital ingrediants of Financial Planning

We at Knowledge Series continuously aspire to educate our clients and everyone in touch regarding planning of their finances.
This should definitely help you attain your financial goals and keep your family’s bright future safe.


Today, I wish to bring 3 vitals of financial planning to your notice.
1) Health Policy (Medi-claim policy)
2) Term Insurance (Pure Risk Cover)
3) SIP


Let me detail you about the importance of these 3 vitals in our life.


A health Policy (a family floater) is an insurance that covers your entire family for any hospitalization that occurs due to an unforeseen disease or accident.
In the current scenario of the environment and traffic, we are highly prone to accidents and diseases; and any kind of hospitalization shall wipe out major amount of our savings. 
A health policy takes care of these expenses and saves any unforeseen/unplanned medical expense.


Benefits:
a) Covers hospitalization and all expenses related to that hospitalization.
b) Little yearly premium.
c) No-claim benefit at the end of the year.
d) Cashless facilities at networked hospitals.
e) Entire family can be covered in single policy.
f) Least paperwork.
g) Tax benefit U/S 80D on the amount of premium paid.




A Term Insurance Policy is an insurance that provides purely risk cover. You are charged only for the mortality(risk) charges and hence the premium is way too low than any other kind of life insurance. In case of any unfortunate event like demise of the insured, the beneficiary get the entire amount by the insurance company. Since the premium is very low, one can take high amount of risk cover.


Benefits:
a) High Sum Assured on very low cost.
b) ECS mode available for yearly renewal.
c) Single policy of the earning member can protect entire family’s future.
d) Tax  benefit U/S 80C on the amount of premium paid.




An SIP – Systematic Investment Plan is any investment made systematically via month on month basis for a long term. This investment serves as a key ingredient of financial planning and helps us accumulate wealth through our monthly savings. The future value is supposed to yield us quite handsome returns. 
An SIP can be classified in two types on the basis of risk:
1) Market linked: Any SIP made in an instrument that invests into stock market is risk oriented and may yield you quite handsomely depending on the market performance. This can be done via Mutual Funds and Unit Linked Insurance Plans.
2) Non market linked: Any SIP made in an instrument that does not invest into stock market and tends to provide limited but safe returns without any risk. This can be done via a Recurring Deposit at a Bank or a Post Office or an Endowment Insurance Plan in monthly mode. Returns are same but an Endowment Insurance Plan gives more benefits like tax saving, insurance cover and Tax-free returns at the end of the term.


The above 3 points states the most vital organs of anybody’s financial summary and covers most of our financial needs.


Hope this little knowledge shared with you shall help you improvise upon your impeccable financial plan.


Happy Investing!