Indexation with PruProtect
What is indexation?
Indexation allows you to increase your cover (and premium) each year, without underwriting. This protects against rises in the cost of living, making sure you have cover you need now and in the future.
Why you should consider indexation?
It’s important to consider indexation, as with time things become more expensive.
– For example, if the price of a three bedroom semi-detached house 30 years ago was £67,000. The same house now would cost £290,000 at 5% inflation.
– Or take you weekly grocery shopping as an example. If your weekly grocery shopping costs £100 and inflation is 4% p.a. it could cost over £350 a week in 30 years time!
• This feature becomes increasingly beneficial as you get older and your needs or the likelihood of suffering a serious illness increases – new policies would require underwriting and premiums may have risen.
• If you were to fall ill and had to make a claim, indexation ensures that your benefits have the same value in real terms as opposed to value being eroded
• Indexation can be added at no extra cost at the outset – so there’s no downside.
• You have the flexibility to decline an invitation to increase your cover without losing the right to further indexation. In fact, we will only remove future indexation once you have declined three consecutive increases.
• The value of your cover is maintained. The graph below helps to demonstrate how over time the impact of inflation creates a ‘value gap’ if cover is not indexed.
The ‘value’ gap
If you had £100,000 worth of Serious Illness Cover, without an indexed policy the value of cover in real terms in 20 years time would be £45,638.69 – this is half the amount of cover you originally started with. With an indexed policy, your cover would retain its real value.