If you haven’t reviewed your Life Insurance coverage recently, there’s no better time than now.
Inflation has been fairly low these past few years, and we tend to forget how much of an impact it has on our purchasing power. Our money really does buy less and less each year. You see it whether you are buying groceries, household goods, lattes, or ... life insurance. Life insurance, you ask? Yes, while the premium on your life insurance policy remains the same, the purchasing power of the dollars underlying that coverage has declined over the years. In other words, the life insurance policy that you purchased a few years ago to protect your family now may be woefully inadequate.
According to the U.S. Bureau of Labor Statistics’ Consumer Price Index-All Urban Consumers (CPI-U), the average annual inflation rate for the ten years from December 2006 through December 2016 has been 1.82%. That means that if you bought a $300,000 life insurance policy in January 2007 to protect your family in case something happened to you, you need an ADDITIONAL $76,599 of life insurance coverage today just to maintain the original purchasing power of that policy and put your family back to where it was financially when you purchased the original policy! If you last purchased life insurance more than ten years ago, inflation has had an even bigger impact on your coverage.
A life insurance policy is not something that should be purchased and then stuck in a drawer, never to be seen again. Like any other financial instrument, it needs to be reviewed every few years and tweaked, if necessary. Think of how your life has changed in the past ten years–you may have more dependents now, a higher standard of living, more financial obligations, and, perhaps, a higher level of income. All of those items factor into how much life insurance you should have. If you haven’t reviewed your coverage recently, there’s no better time than now.
Talk to your professional insurance agent today to learn more about the impact of inflation on your life insurance coverage and how you can easily update it to keep pace with your needs. You owe it to your family to make sure you are fully protected.