Financial Planning — DU Bachelor of Management Studies Previous Year Question Papers

3. ttempt all parts of a question togethe 4. Show vour workings clearly on the answer shee (t) Define personal financial planning and explain why every individual needs it. (it) Discuss the major stages in the personal financial planning life cycle, illustrating the typical financial decisions in any two stages. (b) A 27 year old new employee in a metro city earns ‹70,000 per month, has no dependents, and wants to create an emergency fund, repay an education loan, and save for a foreign vacation in 3 years. (1) Identify and classify these goals (safety, income, growth / short, medium, long-term) with reasons. (ii) Prepare a simple monthly budget framework for this person and explain how budgeting supports the overall financial planning process. (i) Distinguish between tax planning, tax avoidance and tax evasion with one example each. (i) Explain any three common tax planning strategies used by salaried individuals to reduce taxable income while staying within the law. (b) A resident individual aged 30 has the following income and deductions during a financial year: Salary income: 79,00,000 Deduction under a retirement-oriented section: 71,50,000 Health insurance premium paid for self and parents: 735,000 (eligible under relevant section) Ignoring surcharge and cess, (i) Compute the taxable income under the old regime, clearly showing each step. (ii) Comment in brief on how early tax planning during the year could improve this person's cash flows and savings behaviour. (ii) Discuss any three important clauses or features commonly found in life insurance policies that policyholders should read carefully before signing. (b) A 38-year-old married person with two school-going children earns 712,00,000 per year. Household annual living expenses are 76,00,000; outstanding home loan is $30,00,000; existing life cover is Using a simple "income replacement plus liabilities" approach, and making any reasonable assumptions where necessary, answer the following: (i) Estimate, with reasonable assumptions, the life insurance cover required for this person and show the broad steps of calculation. (ii) Briefly explain how underinsurance can affect the financial security of the family in case of premature death. (ii) Discuss any four key factors an individual should consider while choosing between an individual health (i) Explain the terms: sum insured, waiting period, co-payment and exclusions in health insurance. policy and a family floater policy. health insurance plan of 710 lakh for the family. Premium is significant compared to current income, but (b) A 45 years old self-employed person with irregular income is considering buying a comprehensive there is no employer cover. (i) Analyse the pros and cons of relying on health insurance versus self-funding medical expenses through savings, from a risk management perspective. (ii) Suggest a suitable combination of health cover and emergency fund for such a person, giving reasons.