Reverse Inflation Calculator (Purchasing Power)

Why "Return of Premium" (ROP) might be a bad idea?

Many insurance plans promise to return your entire premium amount after 20 or 25 years. While it sounds good to get your money back, inflation (price rise) silently destroys the value of that money.

Example:
If you receive ₹5 Lakhs after 25 years, and inflation is 6%, the purchasing power (real value) of that ₹5 Lakhs will be equal to just ₹1.16 Lakhs in today’s terms.

Smart Alternative:
Instead of paying extra for ROP, buy a Pure Term Plan (which is cheaper) and invest the saved money in a Mutual Fund SIP. This combination usually provides a much larger corpus than the returned premium.

Frequently Asked Questions (FAQs)

Q1. What is Purchasing Power?
Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Inflation decreases purchasing power over time.

Q2. Should I cancel my ROP plan?
If you have already paid for many years, consult us before cancelling. But if you are planning to buy a new one, compare the numbers using this calculator first.

Q3. Does this apply to Fixed Deposits too?
Yes. If an FD gives 6% return and inflation is also 6%, your real return is effectively zero. To beat inflation, you need investments like Equity Mutual Funds that have historically generated 12-15% returns.