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I guess if they are never going to spend their capital, and intend to die with it, then a system higher inflation and interest rates might be good for them because they are technically eating their capital without knowing it, because they are spending the interest which is intended to offset the principle loss.

However, it is not an ideal situation to be in, no one should really be planing to die with money on the table, and you would be better to own assets that have a good chances of being hedges against inflation.

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dying with capital left in term deposits on the table is pretty silly for the following reasons.

1, by avoiding spending it you might be missing out on living your best life, and if you really don’t care about it’s capital value, would be better holding it in higher income thing like a share market index and earning 5% franked dividends, because you don’t care about is capital value the market ups and downs shouldn’t bother you

2, if you are leaving it there because you want your kids to inherit it, you are letting your kids inheritance erode in value, while also missing the chance to give them money that might be more valuable earlier in their life, eg giving them money when they are in their 60’s when you die at 90 is not going to help them as much.

3, if it’s insurance for something in the future, inflation eating the capital value might actually mean on the day you need it, the capital value no longer covers what you need.