Term insurance is straightforward: you pick a sum assured, say ₹1 crore, and if something happens to you, your family gets this amount. You pay premiums every year until the policy ends or the claim happens. But here’s the catch—what about inflation?
A cover that looks good today might feel small in 15 or 20 years because the cost of living keeps rising. That’s why many people choose a higher sum insured from the start, assuming inflation will keep going up.
But there’s another option—term insurance with an increasing cover. With these plans, your cover increases by a fixed percentage every year, like 5% or 10%. It helps your protection keep pace with inflation automatically, so you don’t have to worry about choosing the right cover upfront.
This convenience does come at a price though—premiums for these inflation-adjusted plans can be 50-60% higher than regular term insurance. So, it’s a trade-off: pay more now, or plan carefully and pick a larger cover at the start.
Ultimately, you can beat inflation by either choosing a bigger sum insured initially or opting for a plan with an increasing cover. The choice depends on your comfort with paying higher premiums versus managing your cover yourself. Either way, planning for inflation helps your family stay financially secure, no matter when the unexpected happens.