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Financial Stability in Florida: Rising Costs Signal Need for More Life Insurance

Aug. 17, 2015
Life Insurance
Financial Stability in Florida Rising Costs Signal the Need for More Life Insurance
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Preparing for the future should be a priority for most families. However, changes in Florida’s economic landscape mean preparations that families have already undertaken might not be enough.

NerdWallet found that, after adjusting for inflation, Florida families are earning less and experiencing rising costs of living. According to the Bureau of Labor Statistics, the national cumulative rate of inflation from 2000 to 2013 was 35.3%, while the median household income in Florida grew more slowly. Add to that the rising costs of homeownership and rampant college tuition increases, and Florida families need to save more on already-tight budgets.

Preparing for this might call for smarter financial planning and investing. For existing life insurance policyholders who planned to cover education and housing costs, among other expenses, it might also involve re-evaluating coverage.

Decrease in household income across Florida

Household income is growing more slowly than inflation across Florida, a major hurdle for many families’ financial plans. Of the 201 places we examined in the state, only 13 — including Miami Beach and Homestead — had a median household income that outgrew inflation from 1999 to 2013. After adjusting for inflation, Florida households experienced a 14.1% decrease in income, on average, in those years. The impact varies by location. Households in Hunters Creek saw a 37.9% decrease in household income, while those in Valrico enjoyed a 28.5% increase.

Highest increases and decreases in annual household income (1999-2013)

All percentages calculated with 2013 inflation-adjusted dollars

Rising homeownership costs

Owning a home is becoming less affordable in Florida. From 2000 to 2013, homeownership costs — which include real estate taxes, homeowners insurance and utilities — increased 11.6%, after adjusting for inflation. Some homeowners suffered even more: Inflation-adjusted prices show a 49.3% increase in homeownership costs in in Winter Garden. Only 12.4% of Florida locations we examined had homeownership costs decrease over the 13-year period. Notably, Sunny Isles Beach experienced a 52.6% decrease.

Mortgage balances are an important part of life insurance calculations that many families make when deciding if they need life insurance, but homeownership costs should also be a factor, especially if they’ve gone up more than expected.

Highest increases and decreases in annual homeownership costs for those with mortgages (2000-2013)

All percentages calculated with 2013 inflation-adjusted dollars

Skyrocketing higher education costs

Across the U.S., higher education has a significantly larger price tag than it did a decade ago. According to the College Board, 2013 tuition and fees at four-year public colleges cost 87.4% more than in 2000, accounting for inflation. Inflation-adjusted costs in Florida’s state university system increased by 98.8% over this time period.

A number of factors have been blamed for tuition increases, including less funding for public universities, higher demand for admission and increased spending on administration per student. Whatever the cause, Florida families sending kids to college need to save more.

What this means for those who bought life insurance over 15 years ago

Choosing the right amount of coverage is an important task for all life insurance buyers. There are a few life rules of thumb that can help you choose the right coverage amount, but no one can predict exactly how rising costs will impact the amount of insurance you’ll need far down the road.

Florida residents affected by the state’s economic woes may need to add life insurance coverage. If you’re buying a new life insurance policy, consider a cost-of-living rider, which authorizes your insurance company to increase your death benefit based on increases in the Consumer Price Index.

Some insurers also offer a policy purchase option rider, which allows you to buy more coverage in the future, regardless of your health and without taking another life insurance medical exam. Check the rider details for specific purchase windows and age limits.

Compare quotes side-by-side using NerdWallet’s life insurance tool

The full breakdown


NerdWallet analyzed 201 places in Florida with populations over 15,000. We found the 1999-2013 inflation-adjusted change in median household income (2013 dollars) and 2000-2013 inflation-adjusted change in median homeownership costs (2013 dollars), among those with mortgages, using data from the U.S. Census Bureau’s American Community Survey. We calculated the 2000-2013 change in public four-year tuition and fees with data from the College Board. 

Jeffrey Chu is an analyst covering insurance for NerdWallet.

Jacksonville, Florida, image via iStock.