Increasing Term Insurance and its Benefits?

Monday, February 8, 2010

You don’t need to be a master in economics to know that inflation reduces the value of money. Many people can testify that they have frequently heard their grandparents say, “I remember when a chocolate bar only cost a penny.” Well obviously, that sadly is just not the case anymore. It seems as though that due to escalating inflation, we are simply getting less and less for our money these days.

It would seem that even the insurance companies have picked up on this now and have started offering products that seek to take the onus of government ineptitude off the policyholder. Even in one of the world’s top economies, that of the UK (which although is under duress is faring better than many), we have seen inflation spanning anywhere between 1.6 and 24.2 percent in approximately the last forty years. Why should your policy be worth the same when £100,000 just doesn’t buy what it used to?

With an increasing term product your policy will reflect this. These products will appreciate by a negotiated amount, usually between 5 and 10 percent over the period of your insurance policy. There is also an option for what is known as indexation. With this, increases will be directly linked to inflation. Given the nature of this sort of product, the sum payable could even be more than the amount of the outstanding mortgage. This allows the individual to increase the amount of the policy at specified intervals throughout the policy with further medicals.

It almost makes sense, doesn’t it?


Dennis Latham