Legal and General offers pay as you go indexation
Wed, 30 Jun 2010
Legal and General (L&G) is introducing indexation on family and income protection products on a 'pay as you go' basis.

According to L&G, indexation ensures that a policyholder's sum assured keeps pace with inflation, which helps to maintain its value in real terms. With pay as you go, instead of covering the additional risk cost as an upfront initial charge, it is factored into any price increases that result from an annual indexation review.

The advantage of this method is that 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.

Bonnie Burns, product and technical director at L&G, said this was the first time the insurer had offered indexation on a pay as you go basis for life insurance, critical illness and income protection products. She 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."
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