Thinking Long-Term: Is a ?1 Crore Term Plan Enough ?

For many, purchasing a ?1 crore term life insurance plan feels like a substantial safety net. After all, the thought of leaving loved ones a crore can provide peace of mind, knowing they’ll have financial support in case of an untimely loss. But if we look a bit deeper, the true value of that ?1 crore sum assured may not hold up over the years, especially when inflation is in play.

Understanding the Impact of Inflation on Future Value

Let’s take a closer look at inflation’s effect. With a 6% inflation rate, which is common in India’s economy, the value of ?1 crore gradually declines. While ?1 crore today might cover substantial costs like education, healthcare, and daily expenses, that amount shrinks in its purchasing power each year. In a decade, it might feel like ?55.84 lakh today, and two decades from now, it could feel like ?31.18 lakh.

What This Means for Your Family’s Future

Consider your family’s expenses today. Housing, schooling, medical expenses, and lifestyle costs continue to rise annually. If we account for inflation, the ?1 crore sum assured that feels significant today might not be enough to cover even half of these needs in 20-30 years.

How Much Coverage Do You Really Need?

With the effects of inflation, your ideal coverage amount might be much more than you initially thought. Instead of a ?1 crore plan, you may want to look at policies offering ?2 crore, ?3 crore, or even more. Some insurance providers also offer “inflation-adjusted” policies, which automatically increase your coverage over time to keep pace with rising costs.

The Bottom Line

A ?1 crore term plan is an excellent starting point, but consider future inflation’s impact on your family’s financial security. Planning for inflation not only ensures the longevity of your coverage but also ensures your loved ones have the support they need when it matters most.

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