Alan Lakey, founder, CIExpert explains how indexation can be a critical tool for advisers when determining the best value for a customer
Cover Magazine
Consumer Duty imposed a clear requirement on advisers to search out value. This does not necessarily mean the cheapest or the ‘best' plan, although, of course, it might be.
One area that is often overlooked is how insurers deal with premium increases for indexation. Apart from protecting a mortgage, where there is a specific level of decreasing debt, there is a powerful argument that all other forms of personal and family protection should be shielded from the erosive effects of inflation.
All insurers offer indexation options – some are linked to the retail price index (RPI) with others also offering fixed rates such as 3% or 5%. What many advisers remain blissfully ignorant of is how insurers charge for the indexation option.
