Increasing Term

MR. WATSON: Now, inflation. Here is what inflation is. Maybe $100,000 will buy $100,000 worth of "goods" today. Inflation says $100,000 five years from now will only buy $70,000 worth of goods. You with me? So with increasing term, if inflation goes up by 2 percent, we bump your death benefit up by 2 percent. Make sense? Automatically keeps up with inflation.

MAN: Who determines that?

MR. WATSON: The increase? It's tied to

• the Consumer Price Index, or
• the increase can be specific amounts, or
• a percentage of the original amount

MAN: National average, something like that?

MR. WATSON: Yes, Consumer Price Index.

WOMAN: Then you can be mad if he died the wrong year.

MR. WATSON: Huh?

(Laughter.)

MR. WATSON: Once the death benefit goes up, a decrease in the C.P.I. will not cause the death benefit to go down.

WOMAN: Increasing would cost you more for the premiums, right? Increasing has the highest premiums. Decreasing the lowest premiums. And level term, that's kind of in the middle.

MR. WATSON: That's my girl. Everybody all right?

STUDENTS: Yes.

MR. WATSON: We have a couple problems we have to go over.

MR. WATSON: Let's see here. Time for a stupid story. A story about a man who had a term life insurance policy and got very sick. Once upon a time Lebanon and Jamie were married. Jamie owns a $500,000 policy on Lebanon. Five-year level-term policy. Y'all with me?

MR. WATSON: They've had it for four-and-a-half years. Jamie calls me up and says, "Big Dog, Lebanon, my husband, is deathly ill. He has a disease, a deathly disease. They call it "Political correctness disease". Death is imminent. He will probably die after the policy expires in six months. It's highly contagious.