Income Protection Insurance and Indexation Benefits

Valuation of items or prices of goods constantly increase. That is why the concept of inflation is often regarded as an important one especially when it comes to setting prices and investments. The income protection insurance is also subject to various price changes.

This is particularly more observable if you buy a policy and you start claiming for payouts due to a disability. You would have to fully understand what the term ‘indexation benefit’ is.

In general, indexation is a basic technique in adjusting income payments through the guidance of a consumer price index. This is an attempt to keep the purchasing power even after higher inflation. The payouts or claims you could ask for and receive from an income protection insurance policy are often indexed in consideration with inflation in the country.

In the income protection insurance industry, indexation benefits are those benefits that are often stated when explaining and detailing payouts. They could vary in: the means on how indexation percentage is obtained; the number of offers that may be declined; and the age when indexation offers would stop. You should fully understand any indexation benefit that your income protection policy may have.

Lastly, be reminded that indexation benefit is different from indexation on claim benefit. The indexation benefits increase possible benefits prior to any payout while indexation on claim benefits increase actual benefits following any payout. Be aware that the latter is frequently an optional type of benefits in various income protection insurance products. You should know exactly how much you are possibly and actually entitled to in case you need to file for any claim because of any disability.

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