Which type of life insurance policy adjusts its death benefit according to inflation rates?

Indexed whole life insurance policies are designed to adjust their death benefits based on inflation rates, providing a safeguard against the eroding purchasing power of money over time. The value of the death benefit is linked to a specified stock market index, allowing it to grow in accordance with market performance while also ensuring a minimum guaranteed return. This feature enables policyholders to maintain adequate financial protection for their beneficiaries, as it adjusts for changes in the economy and cost of living.

In contrast, universal life insurance offers flexible premiums and death benefits but does not automatically adjust the death benefit in relation to inflation. Term life insurance provides coverage for a specific period and typically has a fixed death benefit that does not increase with inflation. Variable life insurance allows policyholders to allocate their cash value to various investment options, but the death benefit is not directly tied to inflation rates like indexed whole life.