When it comes to financial planning, people tend to assume that the term only encompasses a systematic method of saving money for a rainy day. While saving money is one of the aspects of financial planning, others such as investing wisely to improve returns on investments, protecting these returns from taxation, providing for one’s funeral expenses to be covered etc.

Questions are sure to be aplenty when it comes to financial planning. Here are some and their answers.

Does financial planning involve only saving money?

Directing a portion of your income towards saving is important in financial planning, but equally important is wise investments that fetch good returns and also risk protection in the form of life insurance and health insurance.

Should I invest in debt funds or equity funds?

Making a choice to invest in debt funds or equity funds depends on how much you wish to invest and what degree of risk you are willing to take. Generally, if your financial planning requires you to be very prudent with your investments, then you would do well to opt for a debt based fund, where the firm is legally bound to pay the investors. By contrast, equity funds are very closely tied in with the market and rates of interest could vary when the stock market is volatile.

What kind of insurance should I opt for?

Taking out a whole life insurance policy is considered an important aspect of financial planning because it offers some measure of protection to your dependents owing to the death benefit that is tied up to the policy. Further, senior life insurance policies also cover the cost of funeral and burial expenses, thereby reducing the burden on one’s family.

Do I need health insurance?

Given the skyrocketing rates of primary health care services, not to mention nearly astronomical costs of surgical interventions, it is essential that you protect yourself and your family with a sound health insurance policy. Speak to your agent about what is covered under the policy so that you get the maximum protection for the premium paid by you.