How financial planning helps you deal with bereavement

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₹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%.

Yet, even as insurance policies do help alleviate financial hardships, beneficiaries of insurance policies face several other problems, including with filing claims. More importantly, a lot of people are unsure of what to do with the proceeds once it is credited into their bank accounts, like in the case of Tiwari. For one, bank relationship managers want them to deploy that money in investment products that the lender is promoting.