Life Insurance Indexation
Over time money loses its value. In 1971 a loaf of bread would of cost you 10p to buy but now will cost you £1.24. A life insurance indexation policy means your life cover keeps track of inflation, and doesn’t lose it’s buying power.
Index-linking your life policy increases the amount of cover you’re buying in line with inflation annually. Index-linking means the cover increases automatically with changes in cost. Life insurance indexation allows your cover to keep up with the cost of living when it’s needed to pay out. The only downside is index-linked cover goes up with inflation too.
People underestimate the power of inflation, but over years the effects are dramatic. 4% per year doesn’t sound too bad, but over the 25 years of a policy, it can reduce the pay out by two thirds. There are quite a few policies that are index-linked but there are a few that aren’t, so for the type of insurance products where indexation is available, you may want to choose life insurance indexation as an option.
Benefits of life insurance
There are many benefits when taking out a life insurance policy but here are a few reasons to why you should take out a new policy.
- Protects your family
- Receive a cash lump sum
- High acceptance rates
- Covers your mortgage
Life Insurance guide
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