Legal & General said that it will now offer indexation on family and income protection products on a ‘pay as you go’ basis, which will ensure that a policyholder’s sum assured keeps pace with inflation, helping to maintain its value in real terms.

According to Legal & General, ‘pay as you go’ means that instead of covering the additional risk cost as an upfront initial charge it is factored into any price increases resulting from an annual indexation review. The advantage of this is that should a client decline the increase to their sum assured at review their premium is frozen and they then only pay an increased premium based on the additional risk and sum assured increase taken out to date.

‘Pay as you go indexation’ is an optional product feature on term family protection plans and income protection contracts and is also part of the company’s menu proposition. It offers multiple products and allows advisers to tailor a protection package to suit individual clients’ needs.

Bonnie Burns, technical director of protection product at Legal & General, said: “We’ve offered indexation as an option for some time, but this is the first time that we have done this on a pay as you go basis for life insurance, critical illness and income protection products.

“Advisers told us that market pressure for competitive premiums means it is more difficult in today’s market to justify an initial loading to a client so we’ve listened and taken that on board. We’re sure it is going to be popular.”