Bismillahir rahmaanir raheem

“Inna Lillahi oa inna ilayhi Raji'un”

Truly, to Allah we belong and truly, to Him we shall return. [Noble Quran 2:156]
The translation of the verses mentioned before and after this ayah is:

“And certainly, We shall test you with something of fear, hunger, loss of wealth,
lives and fruits, but give glad tidings to As-Soabiriin (the patient).” [Noble Quran
2:155]
Who, when afflicted with calamity, say: "Truly, to Allah we belong and truly, to
Him we shall return.'' [Noble Quran 2:156]

“They are those on whom are the Salawat (who are blessed and will be forgiven)
from their Lord, and (they are those who) receive His mercy, and it is they who
are the guided ones.” [Noble Quran 2:157]

 When do we recite this ayah?

A prevalent perception in our society is that the words Inna Lillahi oa inna ilayhi
Raji'un are only recited at the time of someone's death. However, this perception is not
correct. This ayah is to be said in cases where a person has suffered any kind of loss, be
it the death of a person (Muslim or non-Muslim) or any living creature, loss of wealth
or property, deterioration of health, etc.
There is one Hadith where the Prophet (peace and blessings be upon him) is quoted to
have said "Inna Lillahi wa inna ilayhi Raji'un" when the lamp went off at night.
Ayesha (May Allah be pleased with her) asked him, "O Messenger of Allah. Is this also
a calamity?" Allah's Messenger replied, "Yes. Whatever hurts or causes difficulty to a
Muslim is a calamity and on bearing it patiently, it carries Allah's promise of reward."

 The Virtues of reciting the Ayah

As mentioned before, Allah asks us to be those who are patient [As-Sabirun]

during calamities by reciting the ayah "Inna Lillahi wa inna ilayhi Raji'un". In
the very next ayah Allah tells us of the reward for this practice:
They are those on whom are the Salawat (i.e., who are blessed and will be
forgiven) from their Lord, and (they are those who) receive His mercy, and it is
they who are the guided ones. [Noble Quran 2:156]
Muslim narrated in his Sahih that Umm Salamah said:
I heard the Messenger of Allah (peace and blessings be upon him) say: "There is
no person who is afflicted with a calamity and says, 'Verily to Allah we belong
and unto Him is our return. O Allah, reward me for my affliction and
 compensate me with something better' - but Allah will reward him for his
affliction and compensate him with something better." She said: When Abu
Salamah died, I said: Who is better than Abu Salamah, the companion of the
Messenger of Allah? Then Allah caused me to say it and I said it. She said: Then
I married the Messenger of Allah (peace and blessings be upon him).
Alhamdulillah (praise be to Allah), who could be a better husband than the
Prophet (peace and blessings be upon him)?
It is narrated in the Hadith that the Messenger of Allah said: "When a man's
child dies, Allah, may He be exalted, says to His angels: 'Have you taken the soul
of the child of my slave?' They say, 'Yes.' He says, although He knows best, 'Have
you taken the apple of his eye?' They say, 'Yes.' He says: 'What did My slave
say?" They say: 'He praised you and said "Inna Lillahi wa inna ilayhi Raji'un"
(Verily to Allah we belong and unto Him is our return).' Allah, may He be
glorified and exalted, says: 'Build a house for my slave in Paradise and call it the
house of praise.'" [Narrated and classed as good Hadith by al-Tirmidhi and al-
Albani].

 A Reminder
truly, to Allah we belong and truly, to Him we shall return.
This ayah reminds us that whatever is in this world belongs to Allah and is a Blessing
from Him. If, for example, a person had given some money as loan to his friend for
some time and now he wants the money back. Is the person doing anything wrong in
wanting back his own money? Similarly when a person dies, Allah is only taking back
the soul of His creation. By reciting this ayah at the time of someone's death, we remind
ourselves that the creation has returned to his Creator. We also should bear in mind
that just as the departed soul we ourselves will one day return to our Lord and be
answerable for our deeds on the Day of Judgment before our entry into Paradise (Allah
willing) or the Hellfire. With this is mind we should always strive to attain Allah's
Mercy, for no one but Allah knows the appointed time of death.
In a Hadith, Allah's Messenger (peace and blessings be upon him) says, "How
wonderful is the case of a believer; there is good for him in everything and this applies
only to a believer. If prosperity comes to him, he expresses gratitude to Allah and that
is good for him; and if adversity befalls him, he endures it patiently and that is better
for him." [Muslim]