Indexation on a Life insurance policy is an optional benefit designed to ensure you’ll always have the same financial freedom in the event of a claim. This also relates to Income Protection, Trauma and Total & Permanent Disability policies (TPD).
Not all insurance policies offer indexation but for those that do, it works by offering you an increase to your sum insured each year when the policy renews. This is designed to help your insured amount increased with CPI which means your benefit will keep up with the rising cost of living. It is important to note however that if you choose this option, your premium will increase given you are taking out more insurance cover.
How the increase works:
Each insurer is different but a general rule of thumb is that the insurer will increase your insured amount at the policy anniversary by either a fixed percentage or in line with CPI. Some insurers have limits on how much the insured amount can increase by regardless of what the CPI was. In the case of Onepath and several other insurers, the CPI amount is capped at 5% even CPI is higher than this amount.
In the end you’re in control
Indexation is optional and can be removed on request. Before removing it please speak to your adviser as you may not be able to add it back at a later date.
If you would like to know more please complete our contact form online or contact us on 1800 737 926
The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.
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