Kotak Life Insurance, Aria tie-up to help nominees manage death claim amount
2 min read . Updated: 24 Feb 2023, 09:42 PM IST
Premium- Making a financial plan with a lumpsum amount can be difficult, especially when there is a bereavement in the family
Managing a huge amount of money requires sound financial planning, but that may not be easy when one is grieving loss of a near and dear one. Now, Kotak Life Insurance has entered into a tie-up with Association of Registered Investment Advisers (Aria) to help insurance nominees manage these lumpsum payments with proper financial planning.
“We came across this problem during Covid-19. The claims shot up for all insurance companies during Covid times, by as much as five-times. So many families were going through their own challenges, it was not easy to get good financial advice. It was usually women, who were nominees in the life insurance policies," says Subhasis Ghosh, joint president (financial institutions, employee benefits, marketing & alliances), Kotak Life.
The two entities -- Kotak Life and Aria -- will launch a pilot first in the next few weeks, where Kotak Life will also be involved to monitor the process. The project will be led by Waria, which is an initiative by the women RIAs that are part of Aria.
“Usually, people misunderstand planning and advice for just investment planning. It is not just that, it is also about the logistics of getting the money, through transmission of assets, will, nomination, etc. The second part is the woman or the person, who has survived, what are the other kinds of financial risks they have. Then comes the goals and financial planning, then you plan the investments," says Renu Maheshwari, who is board member of Aria and co-founder of Finoscholarz.
Ghosh adds that the reason Kotak Life decided to go with Aria, because they wanted to work with an organization that will always act in a fiduciary capacity.
RIAs charge fees to their clients and there are no commission-linked charges that clients need to bear for any investment products.
Maheshwari adds that finally implementing a financial plan can take around a year, especially if the family is grieving loss of a family-member.
“A widowed women may be quite emotional at the beginning. So, the initial time is just spent on interacting, empathizing with them, letting them settle down. It is about slowly consolidating the finances. Slowly, as we consolidate their finances, look for more documentation, etc. it often happens that there are more funds available than they were aware of. This also helps them to slowly feel better and makes them more comfortable with the RIA. In the meantime, it is okay for the funds to just lie in a bank fixed deposit (FD)," Maheshwari points out.
So, will there be any fees charged for such clients? Initially, Aria members don’t intend to charge any fees, as Maheshwari says the initial process is more about counselling and consulting. “It is only when they enter into an agreement with an RIA, advisory fees will come into the picture," she adds.