CPI adjustment - Adviser FAQs.

Frequently Asked Questions.

• What is the Consumer Price Index?

  The Consumer Price Index (CPI) is a measure of inflation for New Zealand households. It records changes in the price of goods and services. 

• What is the new CPI rate announced by Stats NZ?

  On 16-October 2024, Stats NZ announced the new annual Consumer Price Index (CPI) rate for the September 2024 quarter as 2.2%, which will be applied to policies renewing from 1-January 2025. 

• Why is the cover amount (sum insured/monthly benefit) changing?

  For customers with policy terms that include a CPI option, the amount they are covered for will increase each year to help the value keep up with the cost of living. The cost of this additional cover is part of the annual premium increase. 

• What policies will the new CPI rate be applied to and when?

  The new CPI rate of 2.2% will apply to all retail policies that are eligible for CPI protection and is effective from 1-January 2025.

• Can customers decline the CPI option?

  Yes, the CPI option can be declined. 

  If a CPI option increase is declined for just this year, customers will still enjoy this option for subsequent renewals*. It’s important to note though, that future renewals will use the CPI option rate that we’re applying at that time. This process will be repeated for each renewal cycle, where customers can again decide if they want to accept or decline the annual CPI option increase until the CPI option ends.  

  This doesn’t apply to the Indexation option on level premium covers where the level premium has already taken account of future indexation increases at a fixed rate when setting the level premium.  

  *For some older policies, there’s a limitation on the number of times the CPI/Indexation option can be declined before the CPI option/Indexation option is permanently removed. Please refer to the wording which applies to that customer’s policy. It’s important the customer understands the impact where the CPI option is removed for one reason or another. 

• If a customer has permanently removed the CPI option, can they add it back?

  It depends on the customer’s circumstances. Before the CPI option can be reinstated, they’ll need to:   

  • provide medical and other information for each person insured requesting to reinstate CPI,  
  • go through an assessment process, and   
  • be accepted by Fidelity Life. 
• Can a customer ask for a reduced CPI option adjustment? (e.g. if the rate is 2.2%, can they ask for 2%.) 

  At the annual renewal of a policy, customers with a CPI option have 2 choices, they can:

  • accept the notified adjustment amount as a default, or 
  • contact us to decline it.  

  If declined, any CPI related increase will not be applied to the sum insured/monthly benefit. However, premiums may still increase for age rated policies or due to any changes made to the underlying rates. 

• When does a CPI option adjustment end?  

  The CPI option generally ends at age 65, however, to ensure the right end date is provided for a particular customer’s policy, you’ll need to refer to the policy wording that applies to that customer’s policy.