Over 25 years, even a modest 5% inflation reduces the value of Rs 1 lakh to less than Rs 30,000 (see graphic). If inflation is higher at 7%, the value would drop to below Rs 20,000. So, while the amount may seem big today, the inflation-adjusted value of what you get back will not be substantial.
The features of some life insurance policies can take your breath away. The return of premium term plans gives back the entire premium paid if the policyholder survives the full term. Just think about it. You can get an insurance cover of Rs 2-3 crore for 20-30 years and if you survive the term, the company will give back every rupee you paid as premium. It’s truly a great offer. Or is it? The money you will get back after 20-30 years would have lost a lot of its value by then.
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