How would inflation affect the cash value of Whole Life Insurance?

Let's say I need 100k CI (based on today purchasing power) after 70. So I purchase a WL with base coverage of 100k. However, looking at the benefit after 70, and discount back to today at 2% (inflation rate), then the present value would be less than 50k at 3.25% illustrated yield. It is better at 4.75% but still <100k. If I invest my self 3k/year at 2% return, I already have that 100k at 70, and the capital is < total premium paid. So my question is does it make sense to pay for insurance?

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Loh Tat Tian

20 Jan 2020

Founder at PolicyWoke (We Buy Insurance Policies)

The cash value of the whole life insurance should not be so drastically affected, UNLESS it is a multiplier (hybrid TERM + WHOLE LIFE) . The cash value (if you bought it early), should be reaching 4% at age 70. IF you bought it at 35, or later, it likely drops to 3%.

So the effect should not be so bad.

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Elijah Lee

09 Jan 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

Sorry, using desktop to view as I can reply more efficiently here.

I can't see your full question at the moment, but try editing your question and removing the "less than" and "more than" signs. Then I'll be able to provide an updated response.

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