Why Inflation is Back? And How to Make Your Life Insurance Keep Pace
Inflation hasn’t disappeared. After the 2022 increase, it took a little breather. Now in 2025, it’s heading upward once more. While core inflation’s even higher, the CPI’s come in at 2.9% for the last year. What does this mean for you? Your money isn’t stretching as far anymore. That goes for day-to-day expenses, and the fixed death benefit your family gets, too.
Why is inflation up? Tariffs and the overall uncertainty about policy changes have affected the economy in a big way. Prices are going up on pretty much everything. The Fed claims multiple risk factors with no real ease in sight. Add in mortgage rates still in the low sixes, Social Security’s cost of living increase lagging behind at 2.5%, and you have some concerning things looming on the horizon.
It might not be time to panic, but all these things are clear signs you need to protect your future plans as much as possible before things get worse.
How Can You Protect Your Life Insurance from Inflation?
1 – Add COLA Riders
Cost-of living (COLA) riders are automatic tools that make death benefits increase every year depending on the CPI and policy rules. You’ll have to pay a bit more upfront, but the advantages really make a difference. Your family will end up with considerably higher purchasing power in the end instead of finding out that it shrank over the years.
2 – Review and Update Your Policy Coverage
Too many people get a policy and then never look at it again. Take the time every year to make sure it’s the right size and setup for you and your family. Look closely at the numbers. Everyday expenses like groceries, school tuition, and childcare have changed a lot, and they’ll continue to do so in the future. Make sure your coverage actually covers the expenses. Close the gaps before your premiums shift.
3 – Combine Permanent and Term Insurance
Big expenses like mortgage payments and income replacement need level term coverage. Permanent or whole-life coverage takes care of long-term needs and your legacy. It can also provide living benefits with cash value to help you out in rough times ahead. This prevents the need to tap into your retirement accounts in emergency situations.
4 – Schedule Annual Self-Audits
Inflation and other economic factors change all the time. If you don’t audit or review your policy, they won’t align with COL, debt, family needs, and financial goals for long. Your insurance doesn’t adjust automatically like Social Security does every year.
5 – Take a Breath and Don’t React
The headlines about inflation and borrowing costs can make you nervous, but you can’t react to every bit of news with policy changes. Instead of focusing on the fluctuations in the economy, focus on how much your coverage can actually help your family.
Key Takeaways
Inflation is still high, and fixed benefits will continue to decrease in value
COLA riders can protect your death benefit from higher expenses
Catch gaps due to rising costs with yearly policy reviews
Combine term and permanent coverage to add flexibility and keep costs down.