Frequently Asked Questions.
The Consumer Price Index (CPI) is a measure of inflation for New Zealand households. It records changes in the price of goods and services.
On 22-January 2024, Stats NZ announced the new annual Consumer Price Index (CPI) rate for December 2023 quarter of 4.7%.
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.
The new CPI rate of 4.7% will apply to policies of Life 360, Business 360 and other ex-TOWER products that are eligible for CPI protection and renew between 1-April 2024 and 30 June 2024.
In November 2023, we advised the CPI rate was 5.6% for applicable policies renewing from 1-January 2024. This rate will continue to apply to the following products renewing from 1- January to the 31-December 2024, in accordance with the policy wordings:
- Platinum Plus
- Mortgage Protector
- Protection Plan
- Other Fidelity Life legacy policies not mentioned above.
The CPI option applies an annual CPI rate for the full year from the annual renewal, but which CPI rate announced by Stats NZ that we use depends on the product. For some products, the CPI option rate is reviewed and updated once per year, meaning that all eligible policies that renew in the year use that rate for their annual increase. For other products, the CPI option rate is reviewed and updated quarterly, meaning that all eligible policies that renew in the quarter use that rate for their annual CPI increase. Please note: some policies/products are not eligible for CPI increases.
For policies with level premiums (for example Platinum Plus Level Term), which have the indexation option selected, the sum insured /monthly benefit annual increase is set at either 2% or 3% depending on policy terms.
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.
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.
It’s important for customers to understand the implications of removing the CPI option permanently, and if there are any limitations on the number of times a CPI option can be declined before the CPI Option is permanently removed.
Can a customer ask for a reduced CPI option adjustment? (E.g., if the rate is 4.7%, 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
- They can contact us to decline it.
If declined, any CPI related increase will not be applied to the sum insured. However, premiums may still increase for age rated policies or due to any changes made to the underlying rates.
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.