As the Federal Reserve's zero-interest-rate policy enters its ninth year with no realistic end in sight (Lehman Brothers' bankruptcy occurred 8 years ago this week, and the Fed Funds target was officially cut to zero three months later), we are beginning to witness the cumulative impact of this seemingly perpetual "emergency policy." Yield spreads have been compressed, retirement withdrawal rates are being reconsidered, and the strain on pension funds and other investment collectives is becoming greater by the day.
Another insidious impact of the low-return environment has received decidedly less attention, however, perhaps because it usually doesn't reveal itself until the afflicted party has already passed away. I'm talking, of course, of life insurance, and the effect that decreased investment returns have had on required insurance amounts. Simply put, Fed policy has caused large portions of America to become suddenly underinsured, and there's not much that… Read More …