Indexation

Life insurance can be invaluable in protecting you and your family’s future, safeguarding your income if something goes wrong – so it’s important to make sure your cover keeps up with the cost of living. Otherwise, depending on your circumstances, you could risk not having enough cover.
One way to make sure your cover keeps up with inflation is through indexation, which means choosing to increase your sum insured by a small percentage each year. This way, if you need to claim on your life insurance, the payment you receive will align with the current cost of living as measured by the Consumer Price Index (CPI).
It’s a good idea to speak to your financial adviser about how inflation may impact your personal circumstances, so you can decide whether indexation is right for you.

How is indexation measured?
Indexation is worked out using the Consumer Price Index (CPI), which measures the cost of living against the prices of this basket of goods:

• Food
• Alcoholic beverages and tobacco
• Clothing and footwear
• Housing and household utilities
• Household contents and services
• Health
• Transport
• Communication
• Recreation and culture
• Education
• Miscellaneous goods and services

The CPI is published by the Statistics New Zealand once a quarter.
Whenever the average price of these goods and services goes up or down, the CPI is adjusted.

How indexation works
With Resolution Life insurance policies, indexation is an optional feature. So, depending on the product, you can choose to switch it on and off at any time. It won’t affect what you’re covered for, just the amount you’ll be paid as a benefit.
It’s important to note that if your sum insured is indexed, your premiums will increase every year. But this means you’ll also receive a larger benefit if you make a claim.
If you choose indexation, we’ll apply it at every policy anniversary. The way it’s applied depends on the life insurance product.
Refer to your policy document for details as to how your selected CPI option is applied.