Legal and General now offers indexation on family and income protection products on a pay as you go basis. Indexation helps ensure that the sum assured keeps pace with inflation, to maintain its value in real terms. This is an option on family protection policies, to ensure that monthly benefits allow a family to maintain a reasonable standard of living.
Pay as you go means that instead of covering the additional risk cost as an upfront initial charge it is factored into any price increases resulting from an annual indexation review. The advantage of this is that should a customer decline the increase to their sum assured at review their premium is frozen and they then only pay an increased premium based on the additional risk and sum assured increase taken out to date.
Bonnie Burns of Legal and General says, "This is the first time that we have done this on a pay as you go basis for life insurance, critical illness and income protection products."
Pay as you go indexation is an optional product feature on term Family Protection Plans and Income Protection policies.
Income protection insurance: News update: 5 July 2010