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Income earning capacity of any person is the most valuable asset in times of inflation. Inflation which has to do with value of rupees and how it decreases in value. It is the purchasing power whicch keeps decreases as days goes by.                                                                                                                    

30 years ago, you could buy rice, sugar for less then 10 rupees per kg. Every couple of years, the price of it would go up. Now price of rice and sugar is around 30 kg. Why does prices of goods and services keeps going up? It is the inflation and the value of rupee.

Inflation has an obvious result on the prices we pay for food, housing, transportation and even a movie ticket. We can see that our rupees buy fewer of these consumer items how they once did. Similarly it affects the Life Insurance also. 

Let say you own Rs 1 lac of insurance today but after 10 yrs the value of this 1 lac comes down to Rs 60000 in terms of its purchasing power. As inflation increases people pay more for goods and services and as their income and salary rises. But they often do not increase their life insurance protection which should increase along with rising inflation. 

You must have seen TV advertisement of Aegon Religare where Irrfan Khan comes and says ‘Kam Insurance Yane ke No Insurance’; which is very correct. As an insured you should always see that how much money you will need in your future. 

For those with pension plans without a cost of living rider the problem of inflation will be felt mostly at retirement. People buy children plan to meet child’s educational cost but at time of actual payment they find it is not enough. 

It is very important that you update your life insurance protection so that you can able meet with rising cost. Calculate how much money you will need in future with this rising inflation. Always go for adequate insurance protection which will provide you enough protection to meet up with the rising cost.  

Know more about life insurance policies in India.