How will a client’s premium be affected by index-linked benefit increases?

1 Comment

1. 

   Warren Robins on 13th January 2023 at 2:37 pm

   Hi Rob,
   Good article but there is an error in the table showing how indexation increases are applied, for Cirencester FS. The information is correct for their age costed premiums but for the guaranteed level premium option, the annual increases are greater than CPI, as they are applied based on age, so get more expensive over time compared to just CPI.
   I was told on a Cirencester FS stand by to of their sales force that it was CPI only, so I asked them to check, as this disagreed with their literature and they later confirmed it is CPI amount rated by increasing age, so a higher figure
   My primary product is income protection, so I’m a real nerd on indexation.
   Also worth mentioning, Vitality round up the RPI figure they increase cover by, to the nearest 0.25%, so if RPI is 2.1%, cover increases by 2.25%, which I don’t think was mentioned.
   Cheers,
   Warren

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