The modern methods of doing business means that the gain should be accepted to the fullest while any loss incurred or to be incurred must be minimized and mitigated to the maximum extent possible. Companies incur huge expenses in the form of insurance premium while getting their property insured. The items included in the property includes building, furniture and fixture, cars and vehicles, computer equipments, cash in hand and cash in transit as well as medical and health insurance for employees. Previously employers used to reimburse the medical expenses that are incurred by the employees which include expenses incurred on behalf of their household. The medical expenses were quite high at that time but thanks to the health insurance the companies have fixed their expenses.

Car insurance is the most common form of insurance. Under this form of insurance the car owner contacts an insurance company for getting their car insured. The insurance company determines the sum insured, which in case of a brand new car is the purchase price while in other case it is determined by carrying out valuation exercise. This valuation exercise is done and performed by specialists who check the car from every angle and considers various matter including its condition, model and mileage. After performing the valuation they come up with a certain amount called the valuation price. This amount is more or less the amount of sum insured.

Life insurance on the other hand is the conservative form of insurance in which a person pays a fixed amount of money into an account maintained with the insurance company. The amount paid is stored with interest charged on it on an annuity basis till it gets mature. The matured amount is paid to the household members of the deceased person. Such person declares the name of household members at the time of his entering into the insurance policy. However the policy holder is at discretion to change the beneficiaries name during his or her lifetime.

Financial planning is necessary and is performed not only by companies but also by households. Companies perform this type of planning on a large scale with a long term vision covering period of three to five years. The planning or projection becomes vague after five years and that is why they are limited to a time period of maximum five years. There are many ways through which such planning is implemented.

One such way is to introduce flexible planning and budgeting. In flexible planning, the unknown discrepancies and developments in the environment is incorporated in the planning aspects. The yearly plan is broken down into sub modules covering a quarter. Variance analysis is also a part of planning on a financial basis. The actual results are compared with the estimates and difference is called the variance. This variance is further broken down into sub variances for the purpose of better planning and performance. Like for example a variance in material can be calculated, which can be further broken down into material price variance and material quantity variance. The assessment and analysis of variance result in better control over the operation of a company.