CPCU 556 - Personal Financial Planning Practice Questions with Answers

Definition of personal financial planning The process by which individuals and families develop and implement a comprehensive plan for achieving their financial goals Personal financial planning focuses on allocating resources towards the achievement of financial goals in a systematic manner Personal financial goals are... are established then prioritized PFGs can create conflicts because individuals often have limited resources to meet their goals Personal finance planning is... a continuous process because goals and priorities change over time Personal finance goals come before personal finance action plans 5 types of personal finance planning techniques 1. risk management 2. savings and investment 3. tax 4. retirement 5. estate Major types of insurance loss exposures - health - premature death - property - liability dollar cost averaging - investing the same amount of money on a regular basis regardless of market conditions - reduces inherent risk of investing, can see long term gain despite short term market fluctuations The cost of health insurance can be reduced by... efficient tax planning Tax laws are... complex and ever changing Experts recommend that individuals accumulate enough financial resources to provide income equal to... 70 to 100% of their pre-retirement income each year during retirement