Definitions for "Index-linked"
The need for an investment directly linked to the rate of inflation was first recognised in the UK during the high inflation period of the mid-1970s. Then the government introduced 'granny bonds', which were the first issue of National Savings Certificates (Retirement Issue). The certificates were a runaway success since they offered the only guarantee of maintaining the real purchasing power of money by being liked to the Retail Prices Index (RPI). Since then successive governments have issued a series of index-linked National Savings Certificates which grow in line with the RPI. There are also now a number of index-linked gifts in issue, which provide an inflation-proofed return. Some unit trusts, offshore funds and life assurance funds invest exclusively in index-linked gilts, and these therefore offer inflation protection.
Insurance where the amount of cover changes automatically in line with an index. Examples are the cost of rebuilding a house or replacing its contents.
Changes in line with inflation.