Is life insurance a depreciating 'asset'?

[BarkyardBQ]

Was just talking to my wife about this, and now I'm curious about the mustachian opinion and whether it's mathematically sound, or if we're missing something important.

Life insurance is purchased for a fixed benefit payout.
The person dies after X (maybe 50) years while making monthly payments.
The value of the benefit has decreased over the years due to inflation.
The price of the monthly premium has increased while the insured ages.

So would a $100,000 policy purchased 50 years prior now be worth 21,800 in 3% inflation adjusted dollars?

[jackiechiles2]

I wouldn't recommend having a life insurance policy for 50 years.  You need life insurance to replace income for the expected remainder of your life.  As you get older, the amount you need to replace diminishes, so you don't need to buy as much.

[BarkyardBQ]

I wouldn't recommend having a life insurance policy for 50 years.  You need life insurance to replace income for the expected remainder of your life.  As you get older, the amount you need to replace diminishes, so you don't need to buy as much.

I'm not looking to buy one. I just want to discuss the theory. Most people aren't savers, so they think paying X monthly for Y is a great benefit. There are people who would purchase a policy and keep it for 30,40,50 years. Consider how many people buy them in their 20's, and hold them until death in in there 60's and 70's.

[La Bibliotecaria Feroz]

Are you talking about term life or whole life?

Whole life is an asset.. but not a very good one.

Term life insurance is an expense. While the value does not increase with inflation, neither do the payments over the term of the policy (Mr. FP and I have 20 year policies, enough to get the kids launched). Once you have enough other assets to support your family, you can ditch term life insurance.