The Covid-19 pandemic has adversely affected everyone. Each of us probably knows someone who has passed away or had a near death experience due to the pandemic. The premature death of a friend / family member / colleague also puts our own mortality into perspective.

While you need to take precautions and avoid infection, you also need to think through the various “what ifs”.

WHAT IF something happened to you Does your family know your investments and insurance?

WHAT IF Are you not making a claim from your term life insurance?

WHAT IF Your family CANNOT access your investments while you are away?

WHAT IF Is your family unable to manage the money properly?

Wouldn’t that jeopardize years of your careful investment planning? How does this affect the well-being of your family? Wouldn’t your family suffer?

How do you ensure that your family does not have difficulty accessing your investments and insurance?

Well, you need to take care of the following three aspects.

(1) INFORMATION: Your family needs to know about your investments. If the family doesn’t know your investments, they won’t even try to claim them. And that happens. As of March 31, 2018 there was an unclaimed amount of over Rs. 15,000 crores amount was held by insurance companies. While the information is slightly out of date, this does give you an idea.

Remember, this only applies to a limited number of insurance plans (traditional plans and ULIPs). With term plans, even the insurance company would not know because the claim is conditional. That being said, there are a whole host of other assets (MFs, Bank FDs, Small Savings, etc) that may not be drawn.

(2) ACCESS:: Your family must have access to such investments. A will, proper nominations, or the right holding pattern will help your family access investments faster.

(3) MANAGEMENT: Your family needs to be able to manage the money. Or your work will be rolled back if the family makes bad investment decisions.

# 1 What INFORMATION should you share with your family?

Everything about your assets and liabilities. Here is the list of the most common items.

  1. Your insurance policies (insurer and policy number, insurance document, receipts, etc.).
  2. Your bank account details (last account statement / savings book, account number)
  3. Bank time deposit details
  4. Mutual Fund (AMC, Folion Number)
  5. Demat account details (broker, Demat account number, portfolio)
  6. PPF (account details), EPF (UAN), NPS (PRAN) details
  7. Real estate investments (registration papers, etc.)
  8. Your companies, partnerships, etc.
  9. Any other investment (hand loan to friends / family)
  10. Loans (outstanding amounts, EMIs, etc.)

Sharing information about your liabilities is also important. Your family doesn’t want to default any of the loans. And that’s where your life insurance proceeds should go first. In addition, if you took out a hand loan from someone, you don’t want your family to be taken advantage of.

# 2 How can you share INFORMATION with your family?

# 1 It is best to involve your family (spouse, children, siblings or parents) in your investment decisions. Easier said than done. However, the more involved they are, the more conscious they will be. Not only will investment become easier to access, but it should be able to better manage money in your absence.

# 2 Prepare a physical folder for your investments and insurance data. Print out your insurance policies and investment statements in this folder. Regularly open the folder and discuss the contents of the folder with your spouse (or a family member).

# 3 Prepare a folder on the Google driveKeep copies of all your investment and insurance-related information. Share access with the spouse (or some other family member) or a trusted friend.

Your investment data will change all the time. So update the physical folder / Google data regularly (e.g. every 6 months).

Not everyone is equally tech-savvy. Think about that aspect.

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Use a tiered approach in my opinion. A physical folder / file is a must. Keep soft copies of policies and investment statements, as well as an excel list of all investments in Google Drive.

Also, include a clear document on how your life insurance revenues will be used and how the investments will be managed.

There are good initiatives from insurance companies that have provided formats for listing information about your finances. You can download the HDFC Life Legacy Little Book or the Aegon Life iCare brochure.

These are editable documents. So you can enter data once. Keep the document in Google Drive. Also, take a printout and keep it in the physical folder. Update the file regularly with the latest information.

# 3 who can you share INFORMATION with?

You might feel like your job is done when your spouse knows about it. Not really.

What if something happens to you two together? And that’s possible because you stay and travel together.

Therefore, It can be helpful if you share this information with a few family members (children, siblings, parents) or a trusted friend.

I understand that you may NOT find it convenient to share your finances with everyone. However, take the time to build such trust and relationships.

# 4 get your nominations right (ACCESS)

You must enter nominations for each investment. So that’s probably not a problem.

Still, take some time and make sure the nominations are updated for all of your investments.

You may also want to update nominations as you go through various life events.

For example, your mom or dad could be the candidate on your account before getting married. After getting married, you may want to change the nomination in favor of your spouse or children. Sometimes the nominee expires before the investor. Such events must also be updated by the nominees.

Improper nominations can later lead to family disputes.

I usually encourage my investors to open their investment accounts in “Anyone” or “Survivor” mode. This ensures that the second owner can at least manage the account (bank or investment accounts) even in the event of the death of one of the owners. Easily accessible investments in such a case. Note that this approach has certain limitations. Because the co-owners share the same ownership of the assets, this approach can be a problem in the event of a separation or a family dispute.

# 5 Consider writing a will

A will describes how your wealth will be distributed among your family after your death.

Making a proper will is extremely important if you expect your family to be fighting for your fortune. Otherwise, this is an important successor document, as it lists all of your assets.

Note that a candidate is merely a trustee who will hold your investment until the legal heirs come and demand money from them. So your job isn’t done with just getting your nominations right.

Sample wills are available online. You can find one at this link. You can fill in the details and sign the will in front of two witnesses. However, to avoid complications later on, I would suggest this You can get professional support from a lawyer in drawing up a will. There are online sources such as WillJini that can provide you with professional assistance in preparing a will.

If you want, you can register the will. You can share a copy of the will with legal heirs.

# 6 It is not enough just to access the investments (MANAGEMENT)

Your family can still mess up the finances and ruin your years of hard work.

Bad sales are common in financial products.

Making money decisions is not easy. For someone who has never made an investment decision, managing a large sum of money is an insanely daunting task.

While the investments can simply be transferred to the family’s name and continued, the spouse / family will have to make a new decision about the life insurance proceeds.

Once the life insurance amount is deposited into your bank account, expect a flurry of calls from the bank RMs. It is not difficult for the family (already under such emotional stress) to make wrong investment decisions.

Therefore, pass on your financial knowledge and not just your investments. Again, easier said than done, but you’ve got to try.

# 7 When working with a financial advisor

This doesn’t mean you have to work with a financial advisor.

However, if you do, you must Share the details of your investment advisor with your family. Such details can also be put in the physical folder / Google Drive folder.

And just sharing the details may not be enough. It takes time to build trust in money matters. It is therefore helpful if your spouse (or someone in the family) can be part of your discussions / meetings with your counselor.

If your spouse (or a family member) is satisfied with the counselor, they can contact the counselor and provide information about the tragic event.

A trusted advisor can help in all three aspects.

He will likely have KNOWLEDGE of all of your investments and insurance plans.

In addition to helping your family access your investments, they can help you manage them.

There will also be continuity in investment planning.

If you have an insurance agent, they can help your family with insurance claims.

Additional links

Hindustan Times: What if I’m gone … suddenly?


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