Why Choose an Index-Linked Policy & The Risks Involved?Index-linked products can provide a way for individuals to protect against inflation and ensures they have a policy that keep pace with the cost of living, but they also come with some risks. The value of the policy or investment will rise and fall with the index, and if the index performs poorly, the policyholder may receive less than they expected. Most insurers now offer index-linking but not all, if you are looking for an index-linked policy and have a pre-existing medical condition its best to call the Insurance Surgery and we can search the whole of market for the best solution.
Recap, what do we know so far:
- Index-linked cover will adjust your monthly premium with inflation
- Your broker or insurer is obligated to inform you of the increase to your premium
- You will be given the choice to accept or decline the financial index change
Standard life Insurance in Comparison to Index-linked Cover.
- The main difference between the two is that standard life insurance provides a fixed total as agreed when the policy was taken out. The end benefit will not be linked to any external factors and the premium will be fixed. This can mean that over time the total does not align with inflation and may not cover as much as expected when the policy was taken out, due to the rise of inflation.
- Index-linked cover can provide a way for individuals to protect their beneficiaries against inflation, but it also comes with some risks. The value of the end benefit will rise and fall with the index, and if the index performs poorly, the death benefit may be less than what the policyholder expected.