What Is Indexation?

Let’s for a minute we will distract from a subject of insurance and imagine the person who postpones assets on deposit account. It is not a secret that in some time his assets can “fall in price” considerably as a result of inflation. Respectively, in order the purchasing cost of these notes remained at the former level, it is necessary to increase the size of the fee according to inflation coefficient value.

The accumulative insurance of life has the same effect. We create it for capital accumulation and we continue to do it for many years. Inflation often eats a big part of solvency of accumulated denominations. Of course, the insurance company foresaw this moment and, initially, the investment percent which increases the amount of your accumulations on your assets, is charged. Partly it compensates the amount of inflation.

But you have the right but not an obligation to increase the size of deposited assets on “principals” of your accumulative insurance.

How does it actually occurs in real life? At the end of the calendar year the insurance company approves an inflation index, and, the client receives the notification on an annual interest of indexation. You have the right to pay fee both on the level of last year and the increased percent. It is worth noticing that if you refuse for two times in in succession from indexation you lose the right for it.

According to my experience I want to note that you shouldn’t refuse this option. As inflation can take away the most part of purchasing value of your final savings. Besides, with increase of a fee on indexation size the company will also bear bigger responsibility that will give you guarantees of compensations in case of insurance event  in the adequate market to prices amount.

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