Impact of Inflation on Life Insurance Policies

Life insurance is a popular saving instrument. However the public have a negative attitude towards its return. Public comment is that what would one get from life insurance policy, if the policy matures. This paper analyses the nominal return and real return of the life policies. Analysis revealed that life policies have a nominal return commensurate with savings bank account deposit. However the real return of the policies are negative. It ultimately will result in erosion of money of the investors. So the paper suggests that insurance policy should be adjusted with price level index.