SEBI registered Investment advisor (RIA) with Registration number – INA 000000342.
Personal Finance – First Aid Kit for your family

In 1998, I was with LIC of India as Assistant Branch Manager and I was in charge of death claim investigation. We have to do this investigation in respect of all death claims, happening in the first 2 years of the policy. When I met a widow for a claim investigation of a policy, she was not aware of how many policies her husband was holding. She has not even seen a single policy document and even don’t know where the policy bonds were kept by her late husband. Only because of the agent’s help, we could trace 4 more policies from their house, and the family could claim amount in all those policies. Still I remember the happiness in her face, when we settled the claim amount in all those policies!

We are interested in keeping all the information, relating to your financial life as secret. But have you ever thought of the situation, if an emergency occurs? Please do a check whether, the following are known to your family members?

1.   Your policy details and where they are stored and how to claim the amount, in case of a claim.

2.   Your bank account details and details of fixed deposits and where the deposit receipts are stored.

3. Contact details of your Life insurance agent/health insurance agent/mutual fund agent/family doctor/chartered accountant/lawyer.

4.   Business terms with your business partner, in case of partnership business.

Some of us are not bothered about what happened to our family after our death. This article is not for those. This is for those who want to make things easy for their family both before and after their time on earth.

Here is an example. Just to find out the procedure for settlement of a death claim in a life insurance policy. Your family has to start from scratch. They will start enquiring with others, search the internet (if they know how), and various other means. They might not have a clue that whom to contact and what options they have.

What about spending a few hours now to make a first aid kit which has all the information, they might need at any point of time, so that they don’t have to run from one office to another to get things done.  I feel, this is a great job all of us can do for our family.

Let us see how to go about? This kit is a kind of ready-to-use first aid kit, which contains all details of your financial life. It can contain instructions on what to do in case you are disabled or dead!  This might seem embarrassing to many, but will be very much useful, in case of an emergency. Note that making of this kit will not help you today, but help your family a lot at a later stage.

What all details you can have in that kit?

  • Contact details of your chartered accountant, lawyer, stock broker, bank manager, MF agent and Life insurance agent.
  • List of all assets and liabilities you have.
  • Details of important documents like Driving license, Passport, PAN card, Bank Pass book or account statements, Mutual Fund Investment proof etc. and where they are kept.
  • Important instructions for them to carry out, in case of your death like insurance claim process, steps for selling some property, claiming the amount in the bank and investments in mutual funds etc.
  • Details of home loan and the procedure to be adopted for loan closure and ownership transfer.

Who should make this kind of a Document

If your spouse and parents are financially literate and are actively involved in day to day financial management you won’t fully appreciate the beauty of this kit. But reality is not that in most cases. Most of the ladies do not take active interest in personal finance and leave it to their husband. For those, this kit can be one of the best gifts you ever make.

Ideally, you should inform your spouse about this kit and where it is kept. However many ladies/parents don’t want to hear about death and take it sentimental. This document is especially for that situation.  You can take 3 copies and give one copy each to your wife and one to your most trusted friend or relative in a closed cover. Also you can have one copy in your bank locker and tell a trusted friend about this. You can maintain confidentiality by not mentioning the amount invested in a mutual fund folio, but give other details like the folio number and the fund house name etc.

Sample Instructions in the kit

Make sure, you mention all the things which you wish your spouse, parents and children to do in your absence.

It can include things like

  • Life Insurance claim procedure: Give them detailed instructions on what they should do to claim your Insurance amount from the Life Insurance Company. It can start from contacting the agent, filling up the forms, making sure all the documents are in place, follow-up with company etc. Also it should contain details on how to handle situations like claim rejection. Details of insurance ombudsman, IRDA grievance cell etc. can be a part of this kit.
  • How to use and invest your life Insurance claim money for future needs: Once they get money from Life Insurance, suggest how they can invest or spend on different emergencies. You should suggest plans based on their understanding, risk taking capability etc.
  • How to Break Fixed Deposits or redeem Mutual funds in case of emergencies: Put some details on how they can break the FDs or in your name, or how to  redeem mutual funds for regular income etc.
  • How to make fresh investments and withdraw money for various occasions:You can give broad guidelines on how to allot investments and the like. This will be helpful for the family because otherwise, they have to depend on agents and can easily be misguided also.

Resolutions are better to make but to put into practice is difficult. Take Action today. Unless you take action, reading this article is of no use.  This document can help your family in case of a crisis. You may add more points and details, as per your situation. I have suggested a concept, you can make it more customized for you.

Also don’t forget to update it atleast once in a year.

 

 

 

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