Families urged to protect income benefit from inflation

With the inflation rate up to 3.3%, Legal & General is encouraging families that take out protection insurance to mitigate the affects of inflation on the value of their policy.

Legal & General offers an indexation option on many of its policies to ensure that the proceeds maintain their real value. This means that every year, the sum assured is increased in line with RPI (Retail Price Index), which is normally between 1-10%.

Family protection policies are available to provide a monthly income for a set term, should the policyholder die or suffer a critical illness. This is over and above traditional life insurance, typically taken out to cover a mortgage. Legal & General's Family Personal Income Plan would cost a woman aged 35 £9.87 (assuming she was in good health and a non-smoker) for a monthly benefit of £1000.

Bonnie Burns, Protection Product Marketing Director said: "If you were to take out a family protection policy for a benefit of £1000 a month, then it stands to reason that £1000 is not going to be worth the same amount in 20 years time than it is today. Indexation is the answer and we are encouraging as many people as possible to take this option. Finding out further down the line that your policy does not have the same purchasing power would be a real sting in the tail."

Customers that take out the indexation option will see their monthly premiums increase in line with their sum assured.