Index-Linked Life Insurance is a relatively new type of life insurance policy that has been growing in popularity in recent years. It offers a unique combination of features that make it an attractive option for many people. In this guide, we will discuss how Index-Linked Life Insurance works and the benefits that it offers.
What Is Index-Linked Life Insurance?
Many insurance companies offer policies with face amounts that increase as inflation goes up. This way, you’ll have more coverage if prices go up. The face amounts of these policies are usually linked to the Consumer Price Index.
How Do Index-Linked Life Insurance Premiums Work?
There are two ways to provide this extra protection:
- The insurance company charges an increased amount each year to cover the cost of the increased insurance.
- The life insurance company expects the cost of living to go up over the years, so it charges policyholders more than the average policy owner when they first buy the policy. After the policy is active, the insurance company charges the same premium each year, no matter how much the cost of living has increased.
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