Increasing Term Life Insurance

Increasing term life insurance is available to those who are concerned about the eroding impact of inflation. Over a 25 term for example the impact of inflation over this period can be significant. If inflation was running on average at 2% pa over this period then that represent a 50% reduction in real terms of the sum assured at the end of the policy term. It is possible to take out life insurance where the sum assured is linked to retail price inflation. While premiums will increase to reflect this the advantage is that the underwriter will base cover on your health status at outset and so if your health declines during the policy term premiums will not be affected.

Advantages:

• Increasing the sum assured in line with RPI or a set amount every year reduces the need to take out cover later in life when the cost would be greater.

Disadvantage

• The policy has no surrender value or value at the term end.