Why Should Purchase a Term Insurance from your Surplus Funds?
Surplus funds investment in term insurance is a smart way to financially protect your family. Surplus funds mean the extra money you have after paying for your monthly expenses, school fees, home rent, and other needs. Instead of keeping this money idle or spending it on unnecessary things, you can consider purchasing a term insurance plan
A term insurance plan helps your nominee by paying the sum assured , in case of your untimely death during the policy term. If you are not around, your nominee will still have this money to live comfortably. They can use the money for food, rent, education, and other important things.
Term insurance is also budget-friendly. You only need to pay a little every year, and in return, your nominee gets a sum assured if you are not there.
Using your surplus funds in term insurance gives you peace of mind. You know that your loved ones will not struggle without you. It’s simple, helpful, and a loving step for your family’s safety. So, if you have surplus money after meeting all your needs, think about protecting your family first with a term insurance plan.
Following are a few important factors to be considered at the time of purchasing a term insurance plan
Before you prefer to buy a term insurance plan, there are some simple but important things to check. These will help you choose the right plan for your family’s safety.
- Your age: Young people usually pay lower premiums. So, it’s better to start early. If you are young and healthy, you get a cheaper plan with more benefits.
- Sum assured: This is the amount paid to your nominee in case of your death during the policy term. Choose a sum assured that’s sufficient to cover essential expenses like rent, education, , daily living costs etc.
- Policy term: Choose the number of years you want the plan to financially protect you. It should financial secure your family during important years like when your kids grow up tec.
- Health conditions: Some insurance companies may ask for medical tests. Healthy people get better rates.
- Income level: If you earn more, you may need a higher cover. This will help your family maintain their lifestyle.
Checking these points can help you make the right choice and keep your family safe.
Take a timely decision:
It is always better to make decisions at the right time, especially when it comes to your family's financial safety. If you have some surplus funds left after covering your expenses, don’t wait too long.
The earlier you buy, the better it is. Why? Because when you are younger, your health is usually good, and insurance companies give you cheaper premiums. For example, a 25-year-old will pay much less for the same coverage than someone who is 45.
Also, when you take a term plan early, your family gets financial security during the most important years—like when your kids are studying or when you are still paying loans etc.
If you wait too long, your health might change, or the insurance cost might go up. Sometimes, you may even get rejected if your health is not good.
So, don’t delay purchasing a term plan. Taking a timely decision means you care for your family and want them to stay safe even when you are not there. If you have surplus money, use it now to build a safe future for the ones you love.
Take CSR into account:
When choosing a term insurance plan, one of the most important things to look at is CSR. CSR stands for Claim Settlement Ratio. It tells you the percentage of claims an insurance company has paid out successfully over total claims received in a given financial year.
For example, if a company has a CSR of 98%, it means they paid 98 out of 100 claims. A high CSR means your family has a better chance of getting the claim settled efficiently. Here’s why CSR matters:
- Trust: A high CSR means the company is reliable and trustworthy.
- Less stress: If anything happens to you, your family can get the money easily.
- Quick help: Companies with high CSR often settle claims efficiently .
Before you buy a plan using your surplus funds investment, check the company’s CSR on the insurer’s website. You can choose a company with a CSR above 95%. While there is no set minimum benchmark, a CSR of 95% or higher is generally regarded as an indicator of reliability.
When your family needs support, you want to be sure they will receive it. That’s why checking the CSR before buying is a very important step in keeping your loved ones safe and worry-free.
Consider inflation:
Inflation means the cost of things goes up. Today, Rs. 10,000 may be enough. But after 10 or 20 years, it may not be. So, when you use your surplus funds to purchase a term plan, keep inflation in mind.
Here’s how:
- Choose a bigger cover: So that your family can meet rising costs.
- Review every few years: You can buy another plan or increase your cover through increasing term plan or opt for riders if needed.
- Think about long-term needs: Like school fees, weddings, medical costs etc.
Always plan with future costs in mind.
FAQs
How to manage surplus funds?
Managing surplus funds means using your extra money in a smart and careful way. First, write down how much you spend every month on food, rent, bills, and other needs. Then, list your goals like saving for school, buying a house, or taking care of your parents. After that, keep some money aside in case of emergencies like a hospital visit or job loss. Use the leftover money wisely. You can prefer to buy a term insurance plan, open a savings account, or choose health cover. These steps will help keep you and your family safe in the future.
Where can the surplus funds be invested?
You can use your surplus funds in many useful ways. One simple choice is to consider buying a term insurance plan to protect your family’s future. You can also keep money in a fixed deposit or a recurring deposit at the bank to grow your savings safely. Other good ideas include buying health insurance or choosing savings plans that match your goals. Always choose options that are safe and helpful. These choices should support your family and help you prepare for the future. Don’t let the extra money sit idle—use it to make life easier and better later.
What is an example of surplus funds?
Let’s say you earn Rs. 50,000 every month. You spend Rs. 35,000 on food, rent, school, and bills. You also save Rs. 5,000 for your dreams like buying a bike or going on a trip. That means you have Rs. 10,000 left. This is your surplus fund. It is extra money you don’t need right away. You can use this Rs. 10,000 to purchase term insurance or put it into a bank deposit etc. This extra money should not be wasted as it is useful for your future and your family’s safety. This simple planning keeps you stress-free and happy.
What is the meaning of surplus funds available?
Extra funds available means the extra money you have left after spending on the important needs of life. It is the amount of money left after you spend on food, school, traveling, bills, and the other needs of your family. There is also probably some savings for your goals. The amount of money that is left over is called the surplus. Using your surplus money in the right manner goes a long way in financially protecting your family.
Conclusion
Using your surplus funds to buy term insurance is a thoughtful and caring step. It shows that you are planning ahead to financially protect your loved ones. When your big responsibilities are already taken care of, using the extra money to buy a term plan adds more strength to your family’s future.
Term insurance is simple, affordable, and useful. It gives peace of mind and financial security to your family. Always buy from a trusted insurer with high CSR. Think about inflation and the right term and sum while planning. Keep things easy, check your needs, and choose what works best.
And finally, remember – money left unused may get spent on unwanted things. But money used in the right place, like term insurance, becomes a shield for the people you care about the most.
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