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  • How life insurance helps family immediately after death
  • July 1, 2015
  • Also, before purchasing a life insurance policy, you might want to think about inflation. While inflation may not affect a term life policy to the same extent (term life policies are often short-term) as a whole life policy, inflation can eat into the amount of death benefit your family receives.  Because whole life policies are generally purchased for 20-plus years, which is a long stretch of time before beneficiaries will cash in the policy, inflation is more of a concern.  Insurance experts suggest when deciding upon the amount of death benefit to purchase, you should account for inflation of 3 to 5 percent annually for daily living expenses and an additional 8 to 10 percent annually for healthcare and education costs.

    The good news is most individual and some group life insurance policies provide inflation protection. Protection against inflation can include an automatic five percent contribution increase or a cost of living adjustment after the policy has been in force for five years. In the group life insurance market, this can include a “buy-up” feature that allows employees who re-enroll to gradually increase the amount of insurance coverage each year (depending on the amount of coverage) without having to submit to a paramedical examination.

    In either case, it is best to discuss your immediate and future needs with an insurance agent.

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