How does inflation impact the benefits of a VUL policy?

Inflation can significantly erode the purchasing power of both the death benefit and the cash value of a Variable Universal Life (VUL) policy over time. As inflation rises, the general cost of living increases, meaning that the amount of money needed to maintain a certain lifestyle also rises. If the death benefit and cash value of a VUL policy do not increase in line with inflation, their effectiveness in providing adequate financial coverage and support may diminish.

For instance, if a policyholder has a death benefit of $100,000 today, that amount may not provide the same level of financial security to their beneficiaries in 20 years due to rising prices. Therefore, it's vital for policyholders to consider inflation when planning their coverage and to explore options that might allow for the adjustment of these values over time, such as increasing the death benefit. This ensures that the benefits of the policy remain aligned with the economic environment and do not lose their intended value.