It is obvious that you buy an insurance cover to secure your family. This naturally translates to the fact that you must inform your family about the investments that you make to secure their future. However, the data released by the Insurance Regulatory and Development Authority of India (IRDAI) reveal how more than ₹51,500 crore remain unclaimed with financial institutions including banks, insurance companies, and mutual funds.
If the idea to invest is all about securing the future, how is it that many people miss out on informing their loved ones about the investments they made? Considering how insurance and other mutual fund investments are bought to secure your family’s financial well-being in case of unforeseen death or disaster, not involving them in your decisions can be a big blunder on your part. While you spend time deciding where to park your money or your investment portfolio that would serve you best in the long run, take a few hours out of your busy schedule to inform and educate your family about the various investments made. Investing money would be futile if it does not serve the intended purpose.
To ensure that your investments do not end up being among the unclaimed amounts, inform your family about the money invested and the instruments in which you have put your money. Make your family more aware of personal finance nuances. Tell them of the various investments you made and their purpose. Advise them on which to redeem and which to continue. This would depend on how you visualize their expenses in the future and the amount you intend to leave behind as a legacy.
Raising awareness among your family members to help them make better money decisions includes
Money management skills
Death and disaster can knock on your door unannounced. This means that your family must be well aware of how to use the available money optimally. During crises, it serves best to pay for only what is essential. Needs must be carefully demarcated from wants to ensure optimal use of money. Tell your family about the death benefits on your policies, how to park and invest the lump sum payout and whether to continue or redeem the running mutual fund investments. Your family may not be aware of the stock market details, so inform them of stocks that must be held for a long term and those that must be sold off after a period to earn returns.
Insist on better family bonding
Bond with your family over investments. Tell them of the term insurance policy that you may have bought to secure their finances in the future. Tell them how the money received (in a lump sum or staggered payments) can help them navigate their various life goals. Let them know of the children’s plans or the money invested to further children’s education. Teach them how they can redeem them and use them to help children complete their education. Inform them of the loans you have taken. If you have taken a home loan, ensure to take a loan protection insurance cover so that the onus of repayment does not suddenly fall on them. Have you taken vehicle loans or credit card debt too? Teach your family how not to falter on repayments and inform them of the cons of incurring too much debt or continuing with the loans for a prolonged period.
Keep documents to manage crisis
News of sudden death can be unnerving. Crisis management takes a major hit during such situations. A well-informed family can be better equipped to handle such situations. Empower them so that they may take appropriate actions to tackle unforeseen circumstances. A prepared mind is well placed to take on duress.
Make sure to keep your insurance documents in order. Collect the documents in one place and place them in a folder. Ensure that the folder is easily accessible as and when needed. Apart, keep your family members in the loop regarding important details including type of insurance plan, policy number, premiums paid, insurance payout, date of purchase/ maturity, riders added and corresponding additional benefits if any, etc.
It does not matter if you had made these investments online. Take printouts of the policies and sort them out in a physical folder along with other necessary documents. These documents may include both your and your nominee’s identity documents, photographs, etc. Considering how your family members will be well aware of the various investment documents and their associated costs, they will find it relatively easy to get over the sudden financial loss.
Achieving collective family goals
You decide on certain goals in life with your wife hoping to accomplish them together. But what if destiny has something else in store for you? This is where your investments pitch in to help your spouse realize what you had set out to achieve. With adequate cover, your family will not face any problem in getting over both immediate and distant financial hassles. Involve your family members in financial decision-making. Take cues from them to understand what would serve them best in the long run. Once they learn your intent behind the investments, you will see them too making financial decisions independently.