Say that a 30 year old buys a term insurance (up to 75 years one from Aegon Religare or Aviva) and the premium is set at Rs. 18,000 (for example). Does this premium change each year until you reach 75 or do you have to pay the same 18,000 per year for life until the age of 75 (assuming you don’t die)?
If the premium does not change, then should we not, ideally, depreciate the premium amount we are paying by the inflation rate per year? So, in our example, we would reduce the value of 18,000 per year by 7% (let’s assume inflation is going to average at 7%) and so the total amount you would pay till the age of 75 years would actually be not 18,000 * 45, but (I did this in excel) around Rs. 2,47,327. Right?
Thanks,
Ram.