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In the event of a currency collapse, would that make life insurance worthless?
I'm thinking about buying life insurance and am wondering that if there should ever be a collapse in our fiat currency...would that also render life insurance worthless, since it is basically to be paid out in currency?
Thanks. With everything as it is lately, and me being on a very limited income, I'm trying to decide whether to put a little bit of money into a very little bit of life insurance, (like $7 a month would provide $4,000 worth of coverage) or to just put the $7 into buying survival supplies in the event that anything should happen.
$84 a year seems like a lot of money for $4,000 worth of coverage...being that I am only 40, and in the event of no major happenings, I could end up paying out $1,700 or $2,400 or possibly even more of just $4,000 worth of coverage.
4 Answers
- MuttLv 71 decade agoFavorite Answer
If the value of our currency collapsed that bad, one of the last things I would be worried about is my life insurance.
But to answer your question, yes, it would drop in value, along with everything else. If you buy $50,000 in life insurance, it will still be worth $50,000, but not in today's dollars. In today's dollars it may only be worth $5000 if the currency collapsed.
- 1 decade ago
The short answer is yes. An insurance policy is essentially a contract based upon a condition subsequent. A life insurance policy, for example, may require payment to the beneficiary of $500,000 when that beneficiary's spouse dies. If the spouse dies 19 years later, the beneficiary gets $500,000. Of course, if, as the result of inflation, $500,000 in 19 years is only worth what $100,000 is now, the beneficiary still only gets that $500,000, not $2,500,000 or any other amount adjusted for inflation. So, if the currency in which the proceeds from a policy are to be denominated loses its value, that's essentially tough luck for the beneficiary.
- PfoLv 71 decade ago
It would be worth whatever they insure up to, but if the currency is worthless, then so is the policy, pretty much.
- Anonymous1 decade ago
Yeah, pretty much. If such a collapse happens then life insurance policies will be the least of your worries though. I wouldn't let it be a deciding factor.
