Many TPD insurance policies include automatic CPI indexation that increases your sum insured each year in line with the Consumer Price Index, protecting the purchasing power of your cover against inflation. This is particularly relevant for TPD because you may hold the same cover for decades, and a $500,000 sum insured today buys substantially less in 25 years' time without indexation. Indexation typically applies on the policy anniversary; some policies let you opt out of indexation in any given year if you want to keep the premium flat. Premiums increase in line with the higher sum insured. You should confirm during application whether your chosen policy includes CPI indexation as standard or as an option, and what happens if you decline an indexation increase (some policies stop offering future increases if you decline three or more in a row). Indexation does not generally apply once you are on claim — the lump sum payable at claim is fixed at your sum insured at the time the disability occurred, not the indexed amount that would have applied in subsequent years. For long-dated cover, indexation makes a meaningful difference over time and is one of the features worth comparing across insurers in the PDS.