Importance of Financial Planning | ICICI Prulife (2024)

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Calculate What is Financial Planning? Why is Financial Planning Important? Child's education Post-retirement goals Money management Tax-saving Emergencies People like you also read ... FAQs

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IN ULIPS, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

A bigger home, a better car, your children’s admission to the best college, or financial stability during your post-retirement years – sometimes your financial goals may seem challenging. However, achieving your goals is simple when you have the right plan to help you manage your money. There lies the significance of financial planning. Let us find out about financial planning and its importance to grow your wealth.

What is Financial Planning?

Financial planning helps you create a step-by-step roadmap to meet your financial objectives in the future, keeping in mind your current income and investments. Financial planning gives you better control over your income by:

  • Properly defining your financial goals
  • Managing your expenses & taxes, and
  • Investing efficiently

Why is Financial Planning Important?

Child's education

Education is becoming increasingly expensive. With prices rising every year, these costs will only go up in the future. You can use a children’s education calculator to understand the amount of funds required for your child’s bright career. A good financial plan will help you build up the amount required by the time your child is ready for college. A ULIP plan like ICICI Pru Smart Kid1 is a viable solution. It offers:

  • Financial rewards2 for staying invested for a longer duration
  • Returns3 at the end of the policy term to fund your child’s education
  • Life cover4 offering lump sum payout to cover your child’s expenses in case of an eventuality during the policy term
  • Waiver of premiums in case of an unfortunate event before the maturity date

Post-retirement goals

Everyone wants to be financially independent after retirement. Thus, you must ensure you have enough funds to cover future expenses and fulfil your post-retirement dreams. A retirement plan offering regular income ensures financial security even after your paycheque stops. With a retirement planning calculator, you can review how much to invest to build enough funds for a comfortable retirement. When you start investing early, you get a head start for achieving this goal.

Money management

Managing your money is essential to achieve important financial milestones. A financial plan helps you prioritise your important life goals and estimate the funds needed to achieve them. It also helps with getting significant returns on your money within the time-frame available for fulfilling your goals.

Tax-saving

Taxes form a significant part of your expenses every year. Hence, it is necessary to make the right investments that help with saving taxes5. With financial planning, you can identify such tax-saving investment options that match your savings goals as well.

Emergencies

With careful money management, you can keep aside a nest egg worth six months’ salary. It can be useful in case of unforeseen expenses. Financial planning keeps you ready for uncertainties so that financial emergencies do not derail your savings or affect your living standards.

Thus, the significance of financial planning is the clarity it gives on managing your money effectively and improving your financial well-being.

People like you also read ...

Disclaimer

1 Unit Linked products are different from traditional insurance products and are subject to the risk factors.
The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/ her decisions. ICICI Prudential Life Insurance is only the name of the Life Insurance Company and Smart Kid Solution is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contact, its future prospects and returns.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the Insurance company.
The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns .

2 Wealth Booster : Average of the Fund Values on the last business day of the last eight policy quarters where Fund Value is the total value of your money that is invested in equity and debt fund of your choice.

3 Fund Value is the total value of your money that is invested in equity and debt fund of your choice.

4 Life cover is the benefit payable on death of the life assured.

5 Tax benefits are subject to conditions under Section 80C,10(10D), 115BAC and other provisions of the Income Tax Act,1961. Good and Service tax and Cesses, if any will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for more details.

ICICI Pru Smart Life (unit-linked non-participating individual life insurance plan) - UIN: 105L145V08

L/II/1232/2015-16

Importance of Financial Planning | ICICI Prulife (2024)

FAQs

Importance of Financial Planning | ICICI Prulife? ›

One of the main objectives of financial planning is to ensure that you have enough funds to meet your financial goals. These can include buying a house, your child's education, travelling, saving for emergencies, a comfortable retirement, and more. Planning well can help you achieve these goals easily.

Show Me More ›
What do you think is the importance of financial planning? ›

Financial planning allows you to achieve your financial goals, be it buying a family home, saving for children's education, having a comfortable retirement, or going on a dream vacation. It also prepares you for unforeseen situations and emergencies like falling sick, losing your job, or having to renovate your house.

Learn More ›
Why is life insurance important in financial planning? ›

Insurance can help mitigate risk in your financial plan.

Perhaps the most common reason to own life insurance is to reduce risk. If your family's primary income provider passes away, life insurance can help fill the resulting financial void. But life insurance can mitigate risk in other ways.

Learn More ›
What does financial planning mean and why is it important for individuals to do this? ›

A financial plan is an essential planning tool for your financial well-being, now and into the future. It involves setting down the current state of your finances, your various financial goals, and methods that can help you achieve them. It's never too early or late to create a financial plan.

Read On ›
What are the three points of importance of financial planning? ›

The importance of financial planning helps investors achieve their financial goals e.g. home purchase, children's higher education, children's marriage, retirement planning, estate planning etc. and long term financial security.

Find Out More ›
What is the most important part of financial planning? ›

Budget and cash flow planning

Your budget is really where the rubber meets the road, planning-wise. It can help you determine where your money is going each month and where you can cut back to meet your goals.

Learn More Now ›
What is financial planning in insurance? ›

Financial Planning refers to a comprehensive plan of your long term or short term objectives for financial security. The purpose of financial planning is to form the foundation for a specific goal or destination in your life.

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What are the 6 reasons that insurance is involved in financial planning? ›

6 Ways Insurance Can Strengthen Your Financial Plan
  • #1: Insurance can protect your assets and reduce risk. ...
  • #2: Insurance can add predictability and stability to your financial plan. ...
  • #3: Insurance can enhance your estate plan. ...
  • #4: Insurance may provide tax benefits. ...
  • #5: Insurance can help secure your retirement.
Sep 21, 2023

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How important is insurance planning? ›

Risk Mitigation: Effective insurance planning can significantly reduce the financial impact of unexpected events. By identifying and addressing potential risks, individuals and businesses can better protect their assets and financial well-being.

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What is financial planning in simple words? ›

Financial planning is the process of assessing the current financial situation of a business to identify future financial goals and how to achieve them. The financial plan itself is a document that serves as a roadmap for a company's financial growth.

See Details ›

What are the four basics of financial planning? ›

Use this step-by-step financial planning guide to become more engaged with your finances now and into the future.
  • Assess your financial situation and typical expenses. ...
  • Set your financial goals. ...
  • Create a plan that reflects the present and future. ...
  • Fund your goals through saving and investing.
Apr 21, 2023

Keep Reading ›
What are the 5 steps of financial planning? ›

Plan your financial future in 5 steps
  • Step 1: Assess your financial foothold. ...
  • Step 2: Define your financial goals. ...
  • Step 3: Research financial strategies. ...
  • Step 4: Put your financial plan into action. ...
  • Step 5: Monitor and evolve your financial plan.

Read More ›
Why is it important to have a financial plan? ›

Your financial plan can give you the full lay of the land: You'll know what your goals are, how much time you have to reach them, and how comfortable you are with risk. Once you have a comprehensive view, you can figure out how to reach each individual goal.

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What are the golden rules of financial planning? ›

You must save at least around 10% of your income every month. Holding the funds and investing them in liquid funds will help you. Liquid funds are a type of debt mutual fund that invests money in fixed income instruments like FDs, paper, deposit certificate, etc.

Discover More Details ›
Which is the most important step in financial planning? ›

Establish Clear Goals

In order to kickstart the financial planning process, the first crucial step is to establish crystal-clear goals. This entails identifying your financial objectives, be it saving for retirement, creating an emergency fund, or eliminating debt.

Find Out More ›
Why is financial planning important, especially as a student? ›

Students can better manage their money, avoid common financial pitfalls, and plan for long-term goals, ultimately setting a foundation for a more prosperous and independent future. It also fosters responsible financial behaviors and helps students contribute positively to their communities and the broader economy.

Tell Me More ›
Why is financial planning skills important? ›

Financial planning skills refer to the ability to determine the most appropriate financing and investing activities for a firm after evaluating all available options. Utilization of these skills mean aspiring to figure out how the achievement the strategic goals and objectives of a business will be afforded.

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Why are you interested in financial planning? ›

"The main reason why I want to be a financial advisor is my passion for helping people and interacting with them. A person's financial decisions are very likely to influence their entire future, and I'd like to take the responsibility of helping them.

Explore More ›
What is the purpose of a financial plan Quizlet? ›

A personal financial plan involves decisions about financial goals and describes the spending, financing, and investing plans necessary to achieve those goals.

Explore More ›
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