diff --git a/src/nvim/fold.c b/src/nvim/fold.c
index 13329040e1..bdf2e26ac6 100644
--- a/src/nvim/fold.c
+++ b/src/nvim/fold.c
@@ -771,7 +771,7 @@ void clearFolding(win_T *win)
 /// The changes in lines from top to bot (inclusive).
 void foldUpdate(win_T *wp, linenr_T top, linenr_T bot)
 {
-  if (disable_fold_update || State & MODE_INSERT) {
+  if (disable_fold_update || (State & MODE_INSERT && !foldmethodIsIndent(wp))) {
     return;
   }
 
diff --git a/test/functional/editor/fold_spec.lua b/test/functional/editor/fold_spec.lua
index 0ed9d1ba80..424ce839a2 100644
--- a/test/functional/editor/fold_spec.lua
+++ b/test/functional/editor/fold_spec.lua
@@ -7,6 +7,7 @@ local expect = helpers.expect
 local command = helpers.command
 local funcs = helpers.funcs
 local eq = helpers.eq
+local neq = helpers.neq
 
 describe('Folds', function()
   local tempfname = 'Xtest-fold.txt'
@@ -417,4 +418,31 @@ a]], '13m7')
     eq(1, funcs.foldlevel(1))
     eq(1, funcs.foldlevel(2))
   end)
+
+  it("doesn't open folds with indent method when inserting lower foldlevel line", function()
+    insert([[
+      insert an unindented line under this line
+      keep the lines under this line folded
+        keep this line folded 1
+        keep this line folded 2
+    ]])
+    command('set foldmethod=indent shiftwidth=2 noautoindent')
+    eq(1, funcs.foldlevel(1))
+    eq(1, funcs.foldlevel(2))
+    eq(2, funcs.foldlevel(3))
+    eq(2, funcs.foldlevel(4))
+
+    feed('zo') -- open the outer fold
+    neq(-1, funcs.foldclosed(3)) -- make sure the inner fold is not open
+
+    feed('gg0oa<Esc>') -- insert unindented line
+
+    eq(1, funcs.foldlevel(1)) --|  insert an unindented line under this line
+    eq(0, funcs.foldlevel(2)) --|a
+    eq(1, funcs.foldlevel(3)) --|  keep the lines under this line folded
+    eq(2, funcs.foldlevel(4)) --|    keep this line folded 1
+    eq(2, funcs.foldlevel(5)) --|    keep this line folded 2
+
+    neq(-1, funcs.foldclosed(4)) -- make sure the inner fold is still not open
+  end)
 end)