How to Automatically Increase Your Life Insurance

When buying new life insurance or changing existing policies, always consider two options: (a) the right to purchase additional paid-up life insurance with the dividends the policy generates, and (b) the right to automatically increase the face value of the life insurance based on an inflation index, e.g., the CPI.

Reasons: It adds more base life insurance coverage and it helps protect against uninsurability if you need to buy more life insurance in future years when your health may be poorer.

Cost considerations: There will be an added premium cost for the inflation index but there is no added cost for the dividend option; that’s an investment decision.