What a Level Benefit Is Worth in Year Fifteen

A benefit is chosen once, at a moment when the numbers feel large, and then it stays exactly where it was put while everything around it moves. Nobody sends a letter about it. The contract does not change. What changes is what the number buys, and the national statistical agency publishes exactly how much.

The arithmetic, and you can check it

The agency publishes the annual average change in the consumer price index, year by year. For 2011 through 2025 the figures are, in order: two point nine, one point five, zero point nine, two point zero, one point one, one point four, one point six, two point three, one point nine, zero point seven, three point four, six point eight, three point nine, two point four, and two point one.

Multiply those fifteen together, as one plus each rate, and the factor is about one point four one. Prices rose about two fifths over the fifteen years.

Turn it round and you have the sentence that matters for a contract. An amount fixed at the start of that period buys about seven tenths of what it bought then. To match what a thousand dollars bought in 2010 took about one thousand four hundred and ten dollars by 2025.

Here is the check, and it is worth doing because it proves the method rather than the conclusion. Run the same calculation over the last five years alone and it gives twenty per cent. The agency publishes nineteen point nine per cent for that period. The difference is rounding in the annual rates, nothing else.

So nothing on this page is an estimate or a projection. It is the agency’s own published rates, multiplied.

It did not arrive steadily, and that matters more than the average

The average over those fifteen years is unremarkable. The experience was not.

Four of the years came in under one per cent, and one of them at zero point seven. Then one year arrived at six point eight, and the next at three point nine.

A household that budgeted on the long run average was comfortable for a decade and then lost ground quickly, in two years, at the moment it had least reason to expect it.

That pattern is the reason a level benefit is riskier than the average suggests. The erosion does not arrive as a gentle slope that somebody notices and adjusts for. It arrives in a couple of years, usually while the household is dealing with the same prices in every other part of its life, and a review of the coverage is not what anybody is thinking about.

Two per cent is a target, not a promise, and it still halves things

The central bank aims to keep inflation at the two per cent midpoint of a one to three per cent control range, measured by the year over year increase in the total consumer price index. It has targeted inflation since 1991.

Two things follow, and they point in opposite directions.

The reassuring one: the framework has held for more than thirty years, and the six point eight year was followed by a return toward the range rather than a permanent shift.

The other one: two per cent is not nothing. At two per cent compounding, a fixed amount loses about a fifth of its purchasing power in ten years and roughly a third in twenty. Somebody who buys a thirty year term contract at a level amount, in a world where the target is met perfectly every single year, still arrives at the end holding a promise worth substantially less than the one they bought.

The target working as designed is not the same as a benefit holding its value. Those are two different things and they are frequently confused.

What this actually means for a contract

Be careful here, because this is the point at which a page like this usually becomes a sales argument, and the honest position is more measured.

A level benefit is not a mistake. It is the cheapest way to hold a given amount, and for a great many purposes a declining real value is exactly right: a mortgage balance falls, children grow up and leave, and the obligation being covered shrinks faster than the benefit does. A level amount against a falling need can be more than adequate throughout.

The cases where it goes wrong are the ones where the need does NOT fall. Income replacement for a household that will always need to eat. A final expense amount chosen decades before it is used. A buy and sell arrangement on a business that is growing. An estate liability that rises with the value of what is being taxed.

So the useful question is not whether a benefit is level. It is whether the thing it was bought to cover is going up or down.

And the practical point, which costs nothing: whatever amount was chosen, it was chosen against prices in the year it was chosen. Anybody holding a contract from before the six point eight year is holding a number set in a different world.

What can actually be done, and what cannot

What cannot be done is to change a contract already issued. The amount is the amount.

What can be done is to read what is already held, and there is usually more room than people expect. Many contracts carry options that were paid for at the outset and never used: a right to increase without new evidence of health at certain life events, a right to convert, a right to add. Those rights have deadlines and ages attached to them, and they expire quietly.

What can also be done is arithmetic, once, on the amount that matters most. Take the benefit that would be doing the heaviest work, and ask what it will buy at the point it is most likely to be needed rather than today.

That is a free exercise, it takes an evening, and it is the only honest version of this conversation, because it can equally conclude that nothing needs doing.

Where to read this at the source

The annual average change in the consumer price index for 2010 through 2024 is published by Statistics Canada in the chart accompanying its release of January 2025. The 2025 figure, the annual average index of one hundred and sixty four point two, and the statement that prices rose nineteen point nine per cent over five years are in its release of January 2026. The inflation control target, the one to three per cent range, the use of the total index and the 1991 start are published by the Bank of Canada, as is the formula used by its inflation calculator.

Read on 30 September 2026, all free to consult. The compounding in this article is arithmetic performed on those published rates and is not itself an official figure, which is why the five year cross check against the agency’s own published figure appears above: so a reader can see that the method reproduces what the agency publishes before trusting it over fifteen years.

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Where the same erosion meets a household already short at the end of the month, see two hundred dollars from the edge. The choice between a term and a permanent amount is in term or permanent, and the right to convert in the conversion privilege.