Legal & General is offering indexation on life insurance, critical illness and income protection products on a ‘pay as you go' basis, and giving advisers an up-lift in commission of 10% LIC for introducing business with an indexation option.
Indexation ensures that a policyholder's sum assured keeps pace with inflation, helping to maintain its value in real terms. This is primarily taken as an option on family protection policies, to ensure that monthly benefits allow a family to maintain a reasonable standard of living.
Instead of covering the additional risk cost as an upfront initial charge it will be factored into any price increases resulting from an annual indexation review.
Should a client 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.
This method is seen to be more TCF for those clients who decline indexation increases in the early years of their policy.
Bonnie Burns, Legal & General's Protection Product and Technical Director said: "Advisers told us that market pressure for competitive premiums means it is more difficult in today's market to justify an initial loading to a client so we've listened and taken that on board. We're sure it is going to be popular."
Pay as you go indexation is an optional product feature on term Family Protection Plans and Income Protection contracts and is also part of Legal & General's menu proposition (Multi Protection).
