Simple Interest and Inflation

Both of the reviewers who talk about simple interest have reasonable points.

However, one thing that Nationwide does mention with this rider is the potential to beat inflation.

To support the point of the reviewer who brought-up the whole simple interest issue, inflation works on a compound basis.

Crediting a simple level of interest in an attempt to offset the damaging impact of inflation will result in a mismatch.

Unless the inflation level is very high (many feel that this is a real possibility), the positive impact of the 7 percent simple interest will stay ahead of any damage caused by inflation.

Anyway, the overall point is that inflation compounds while simple interest does not, so using simple interest to guard against inflation may not make sense.