Protection expert Alan Richardson evaluates how using indexation can help consumers receive greater value from their protection policies and guard against future economic shocks, although the issue is not always as straightforward as it seems.
As I write, news outlets are reporting that UK inflation is at a 40-year high. My £100 savings will be worth £91 next year assuming (fingers crossed) inflation doesn't rise further. If I want to make sure my £100 pot has more buying power next year than it does now, I need to increase it by a rate quicker than inflation. Simple. Following this logic, many in the protection industry argue that clients should be index-linking their cover. By including indexation, we can make sure one's £1,500 monthly income protection policy is still going to cover their essential outgoings in 20 years. It...
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