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I am thinking of buying a term insurance plan for myself in India and am 28 years old.

My premium per year to be paid for a period of 10 years and coverage till 99 years works out to be 111,213 INR. Sum assured at death is 3 crore INR (3,00,00,000 INR).

I'm interested to know how to calculate value of my premium paid for 10 years (1,11,2130 INR) 71 years from now, considering an average interest rate of 6% per annum and average inflation rate of 5% per annum. So that I can decide on whether to take the policy or save the same money in a fixed deposit scheme.

I also have received a quote for increasing life cover option (which accounts for the inflation) wherein the sum assured increased by 5% per year, until the original sum assured reaches a value of 6 crore INR (6,00,000,00 INR)after a certain period of time, which is the maximum sum assured that would be paid at death. The premium per year is 1,31,000 INR per year to be paid for 10 years for coverage till 99 years of my age.

Request suggestions from people on this forum, regarding the value of the premium paid in 71 years in both cases and which of the two cases would make sense.

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  • You don't need cover till 99 years. 60 years is generally good enough, the premium would reduce.
    – Dheer
    May 3, 2020 at 9:35

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Average interest of 6% and inflation of 5%. This means a positive return of 1% compounded for 71 years. This is a simple formula,

Which makes sense is a personal choice. Insurance is never one time, you have to review it periodically and adjust the cover required.

Also note that comparing a return of term insurance is incorrect. It's a risk premium and should be evaluated as such.

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