Preparing for the uncertain times

General
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We are living in unprecedented times. There is a surge in the daily covid cases. Last year, we were hearing about someone we know, knows someone who got it. But this time it is affecting us, and our first and second degree of contacts. I have already got three bad news so far.

Death, though certain is not spoken about in our society openly. At an individual level, we do need to take some precautionary measures so in case the odds are not in our favour, people we leave behind, our acts don’t add to their sufferings financially and eases their way ahead.

I am sharing few thoughts that came to my mind, and things that I have done personally:

  1. Health Insurance/ Term Insurance Policy Documents:
    Keep your policy documents handy. Check the nominee details are proper. Check the policy is active and the premium is paid. I have two health insurance policies - one corporate group health insurance that covers my parents too, and another my individual personal health insurance. Mentally, I have assigned the corporate health insurance policy provided by my company to be used by my parents only while I would be using my personal policy if need be. The reason being, I do not want to exhaust the cover of the corporate policy as the claim settlements are faster in it without any hiccups. Also buying a health policy for senior citizen parents having many pre-existing health issues would not help. I have kept at home the printouts of policy cards, emergency helpline numbers, list of network hospitals and their phone numbers for easy access. Another thing I have done is I have converted all my insurance policies into electronic format. Like Demat Account, there is eIA (e-Insurance Account). You can open your eIA for Free on CDSL or NSDL and convert your policies into electronic format (except LIC which doesn’t support eIA). You don’t need to carry or submit any policy papers and many changes like bank account, nominee etc can be done online with eIA login.

  2. Emergency Fund:
    Despite having health insurance, in such desperate times, many hospitals are not allowing cashless claims and they are asking for a deposit amount. In such a case, one must keep an emergency fund ready. I have a joint account with my parents where I have parked a considerate amount in that account as online FD which comes with a message “Break in case of emergency”. Even at the midnight, the FD can be liquidated and my parents can use that fund. Please note while creating an online FD, do not create an FD with joint names but under one parent’s name, (primary holder) and assign yourself as a nominee. The reason being, FDs with joint holders can’t be broken online. You have to visit the bank and submit a joint application with the signatures of joint holders which defeats the purpose of Emergency fund. I have kept aside another Emergency Fund for myself which is equivalent to 3 years of my current monthly salary. These two emergency funds are not to be touched and they are growing at 6% rate until broken. I have not kept more than 5 Lakh in any bank because DICGC insurance covers our funds in a bank account upto 5 Lakh only.

  3. Money Matters:
    Discuss money matters, loan/ debt, credit card bills if any, with your parents and family. If you or they owe anyone and if anyone has taken a loan from you or them, whether you/they expect him to pay back or not etc all details along with your bank account details, passwords, app PIN codes (I have removed fingerprint scan authentication as it is of no use when you are no more), assets, liabilities everything needs to be properly documented and shared with a family member you trust. Being an old-school guy I have made a google sheet tracker of all things money which I have shared with my brother.

  4. Nominee Details:
    Check that each of your bank accounts, mutual funds have nominee details added. One benefit of having mutual funds in Demat format is that you need to add a nominee in your Demat account which gets reflected in all your funds. Also, in case of an unfortunate incident, it would be easier for your nominee to claim the investments. In the case of mutual funds in SoA (statement of accounts) format, your nominee has to run after each AMC for the claim. @siva if you can guide us on how the process is at Zerodha for a nominee to claim the proceeds of the Demat account in case of an unfortunate incident? How seamless the process is? Does it involve paperwork or is it online? Can forms be submitted with e-signed by Digio etc or one has to submit hard copy. If you can elaborate on this please.

  5. Taxation:
    @quicko if you can guide us on how the ITR filing is done for someone who is no more and the nominee is the care taker of the assets and investments. Also, if I am not wrong, being a nominee is not enough. Having a will is always better. How are inherited assets/ investments taxed for your nominee? If you can touch upon these topics it would help many.

I am not saying everyone is going to die now but such a discipline about money matters would help any given day as death is certain someday.

Please feel free to add to the list of how you are preparing for such times.

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@lindo Can you,please.

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In order to add a nominee to your account, you can fill up the nomination form, sign it, and courier it to our head office address. There is no online option currently as this nomination requires the signature of the account holder and two witnesses. The details are mentioned in the support article here.

As you mentioned, the point of higher importance is the family being aware of all money matters. We are working on something that would help achieve this too.

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Yes, I had read that support article before writing this post. Considering the times when staying home is safe rather than going to the post office/ courier to send the hard copy of the forms, can’t it be done that a ticket be raised on Zerodha support and the documents are filled, signed, scanned and the PDF is signed again using Digio Aadhaar KYC and submitted online. Online submission instead of dispatching hard copy to Zerodha HO would help in achieving social distancing as well as save time. Can’t this be done?

Moreover, the second part of my question. Say, I am no more. What is the process for my nominee?

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In case of demise, the Legal heir has to file the ITR on his/her behalf if the deceased person had taxable income. The return is to be filed for the income earned till the date of death. The legal heir has to register himself at the income tax website for filing the return on behalf of the deceased.

Usually, the spouse or close relative of the deceased takes charge as the legal representative.

Hope this helps!

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Thanks for Sharing. I didn’t know about eIA

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We are working on the option to do this online, we’ll keep you posted on that.

The steps in case the account has nominee/ no nominee are mentioned in this support article..

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@lindo what about online address change process ? Some other brokers are already providing this feature whereas Zerodha still requires us to send hard copy for address change which can easily be done through Aadhar e-sign.

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If the address is to be updated as per aadhaar, you do have the Re-KYC option to do this online.

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@Stonecold I too needed to change my address. I tried this hack:

I went to UIDAI website and since my Passport has Mumbai address I submitted a request to change my Aadhaar address to Mumbai by uploading PDF of my passport as proof. Rs 50 are the charges for changing the Aadhaar address online. And once my address was changed in Aadhaar, I just did a Re-KYC of my Zerodha account using my Aadhaar so the Mumbai address gets reflected in my Demat. Thankfully, not a single paper I had to sign or courier.

Tip: While changing the aadhaar address online, please don’t rely on the UIDAI website to generate automatic English -> Hindi address. It creates a lot of mistakes. Instead, use Google Transliteration Tool to type your address in Hindi and copy-paste to UIDAI website.

@lindo considering the times we live in, as I mentioned earlier if Zerodha can revise the processes of commonly asked account change requests e.g. address change, bank a/c change, nominee addition/ modify, etc and also inform the customer care team about the revised SOP so that they recommend the online and paperless ways to get things done.

The more we can contribute towards helping people maintain social distancing and staying safe at home, the better for the collective us.

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Any update on how to claim by the nominee??

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Answered here: