Protecting you against inflation
Indexation is an automatic increase to the amount of insurance cover you have, to make sure the value of your cover is not eroded by the impacts of inflation. The reason indexation is offered at every policy anniversary is so that you’ll always have the same financial freedom in the event of a claim.
How the increase works
Not all insurance policies offer indexation. But for those that do, it works by offering you an increase to the sum insured in your policy at each policy anniversary. This increase is designed to help your insurance benefit keep up with the rising cost of living.
For our OneCare product, the amount of your increase is calculated in the following way:
For lump sum policies
Such as life cover, TPD cover and trauma cover:
- The ‘indexation factor’ which we determine each year based on the percentage increase in the Consumer Price Index (CPI)
- A percentage amount we choose to offer, if no CPI amount is released by the government
- A fixed percentage of 5%
For income protection policies
- Indexation increases are related only to CPI
One thing that’s important to know is that as your cover increases, the premium you pay generally will also increase.
In the end, you’re in control
Indexation is optional and whether you accept it is up to you. If you’d like to decline it in any given year, simply let us know within 30 days of your policy anniversary. You can even tell us to stop indexation permanently, but you may need to be re-underwritten if you wish to turn it back on.
To get advice on whether indexation is right for your personal circumstances, we recommend speaking with your financial adviser.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.