How financial planning helps you deal with bereavement

Proceeds from insurance claims after the death of a loved one should be invested wisely

- Aprajita Sharma

Tiwari, a resident of Noida in Uttar Pradesh, was just 33 when the pandemic struck a terrible blow. It claimed her husband’s life and she was left to fend for herself and her daughter. It took her some time to recover from the devastation. Her finances also were in a mess. Fortunately for her, Tiwari’s husband had invested in an insurance policy. And she was the beneficiary.

However, Tiwari, who came into a large sum of money soon after, was unsure of how to invest the money for her daughter’s future needs. “I kept the money in my bank account for several months. I paid ₹50,000 tax just on interest income," says Tiwari, who did not want to be identified by her first name.

Tiwari then got in touch with a certified financial planner who advised her to invest in mutual funds. “Some other people wanted me to buy savings-linked insurance products but I finally invested in mutual funds, fixed deposits and Kisan Vikas Patra for my daughter’s future," she says. Tiwari, however, declined to say how much she received from the insurer because her financial planner forbid her from revealing this.

Tiwari’s hardships immediately after her spouse’s death puts the focus on the importance of life insurance policies. Typically, people buy these policies to ensure that their loved ones do not face any financial problems in the unfortunate event of their demise. And Tiwari is thankful for that.

Life insurers paid out ₹45,817 crore individual death claims involving 1.58 million policies during FY22 as against ₹26,421 crore (1.08 million policies) in FY21, data available from the Insurance Regulatory and Development Authority of India shows. The death claim settlement ratio increased to 98.64% in FY22 from 98.39% in the previous year and the repudiation/rejection ratio decreased to 1.02% from 1.14%.