What is increasing term life insurance?

Increasing term life insurance allows your sum assured (cover amount) to increase each year to protect your pay out amount from inflation.

But how does this type of policy work and will your premiums increase too?

At Reassured we can compare policies from a range of UK insurers, including those who provide increasing term life insurance.

We can also secure you a policy with the guaranteed insurability option which allows you to increase your sum assured if your circumstances change.

Keep reading to find out everything you need to know about increasing your life insurance cover...

How does increasing term life insurance work?

With an increasing term life insurance policy, your cover amount will increase by a certain percentage each year, (in line with the Retail Prices Index).

For example, with Legal & General Increasing Cover your sum assured can have a maximum increase of 15% each year.

Whereas with Aviva, the maximum amount your cover can increase by is 10%.

To reflect your new cover amount, your premiums will also increase each year, (up to 15%).

If you choose to not accept the increase, your premiums and cover amount will remain the same.

As with any term life insurance policy, you’ll be covered for a specified period of time and a pay out will only be made to your loved ones if you pass away during this time.

How can I increase my life insurance?

It’s hard to know what life has in store for you and you may need more cover than you originally planned.

You may need to increase your cover due to a change in circumstances, these can include:

Thankfully there are a few options that will allow you to increase your sum assured, including:

  1. Increasing term life insurance
  2. Guaranteed insurability option


By taking out increasing term life insurance your pay out will be protected from inflation and will increase over time, (usually each year).

Guaranteed insurability is an option that lets you increase your sum assured during the term of your policy.

This is also known as the ‘life changes option’ as you can increase your cover to help meet new circumstances in life.

Increasing life insurance vs guaranteed insurability option

As discussed, increasing life insurance is a policy type that will allow your sum assured to increase over time, this is to help protect your pay out amount from inflation.

This can be a good option for those who need a minimal amount of cover at a young age but may need more cover as they go through life.

The guaranteed insurability option (GIO) is a benefit that can be included in a life insurance policy.

It allows you to increase your sum assured should your circumstances change and you require more cover.

Each insurer will have a list of life events where GIO can be used. This list can be found in the terms and conditions of your policy. Often it includes:

  • Birth of a child
  • Marriage or civil partnership
  • Increase in mortgage / rental increase
  • Change of employer


You won’t be required to provide any further medical information.

Increasing life insurance Guaranteed insurability option
A life insurance policy An option included with some life insurance policies
This policy option must be chosen from the start Can use this option anytime during the term of your policy (subject to one of the qualifying life events taking place)
Sum assured will automatically increase each year in line with RPI This option can be used to secur more cover without the need to provide new medical information
Premiums will also increase as a result Designed to ensure sum assured meets your needs
Designed to protect sum assured from inflation

Increasing vs decreasing term life insurance

Increasing and decreasing are both forms of term life insurance.

This means your cover will last for a specified period of time (the term) and a pay out will only be made if you pass away during this term.

However, with increasing term life insurance your sum assured will increase throughout the lifetime of your policy, (typically each year).

Whereas with decreasing term life insurance, your sum assured will reduce over time.

Increasing term Decreasing term
Sum assured increases throughout policy Sum assured decreases throughout policy
Premiums will increase each year Premiums remain the same
Increase in sum assured protects against inflation Sum assured not protected from inflation
Ideal for covering rising living costs Ideal for covering a mortgage
Terminal illness is included Terminal illness is included
Critical illness can be added Critical illness can be added
Can become costly depending on the length of your policy Ideal for those on a budget who want life cover in place


Which option is best for you will largely depend on what it is you want to protect.

For example, if you’re hoping to protect your loved ones from rising living costs and don’t want your pay out to be affected by inflation you may choose increasing term life insurance.

If you’re looking to protect a repayment mortgage, decreasing term life insurance is an ideal option.

At Reassured we can compare quotes on your behalf from some of the UK's leading insurance companies to find you the right policy at the right price.

Increasing vs level term life insurance

With level term life insurance, your sum assured remains fixed throughout your policy.

This means no matter when you pass away (during the term) your loved ones will always receive the same amount.

Increasing term life insurance allows your sum assured to increase each year - meaning that the later you pass away into the term, the more your loved ones would receive.

Increasing term Level term
Sum assured increases each year Sum assured remains the same
Premiums also increase each year Premiums remain the same
Increase in sum assured protects pay out amount from inflation Pay out amount isn’t protected from inflation
Only pays out if you pass away during the term Only pays out if you pass away during the term
Ideal for protecting against rising living costs Ideal for protecting a mortgage, covering living costs, providing an inheritance etc.
Terminal illness is included Terminal illness is included
Critical illness can be added Critical illness can be added
Guaranteed insurability option can be added


Although you may be able to receive a large sum assured with increasing term life insurance, you’ll also need to pay increased premiums each year.

An increasing pay out amount may seem tempting at a young age but it’s likely that the older you are, the less cover you require (meaning this cover option could become costly and unnecessary later on in life).

With level term cover everything remains the same, so this may be a more cost-effective option in the long run.

Most insurers also offer the guaranteed insurability option with their level term policies.

This option allows you to secure more cover without the need to provide any new medical information.

At Reassured we can compare multiple level term life insurance policies from some of the UK's leading providers to help you find your ideal policy.

Increasing life insurance premiums

As with other forms of term life insurance, premiums for an increasing term life insurance policy will be calculated using the following information:


These factors will allow insurers to assess the level of risk you pose to them and your premium will be calculated accordingly.

As your sum assured increases each year, your premium will also increase to account for the higher risk to the insurer.

Premiums will increase in line with the Retail Prices Index (RPI), there is typically a maximum increase of 15%.

However, you do have the option to not accept the changes and your premiums and sum assured will remain the same.

How much life insurance do you need?

Enter your financial commitments to understand the level of cover you require.

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£121,687 is the estimated average outstanding mortgage per household in the UK.

Our property is generally the largest financial commitment any of us will make.

Your life insurance should cover this significant debt should you no longer be around.

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According to Money Advice Service, full-time childcare in the UK now costs £242 a week.

The loss of a parent could result in the need for additional childcare whilst the surviving parent increases their hours to account for lost income.

Your life insurance cover should factor in this additional required outgoing.

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The average level of debt (minus a mortgage) in the UK is £15,385.

Factoring in any outstanding debts in your name when arranging life insurance ensures this burden is not passed to loved ones.

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You may wish to leave your loved ones an inheritance or lump sum gift upon your passing.

Factoring in the gift amount when arranging your cover will ensure the pay out amount will be sufficient to provide your loved ones with this selfless gesture.

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According to SunLife, the average cost of a UK funeral is now £4,417, whilst the total cost of dying is £9,493.

This is a 130% increase over the past 16 years and shows no signs of slowing down.

A significant cost which should be factored into the amount of life insurance you secure.

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If you are one of the 65% of the UK who are lucky enough to have savings, this could be used as protection if you were to pass away.

Any pay outs from existing life insurance policies and investments can also be used as financial protection for your loved ones if you were no longer around.

Factor this into your required cover amount.

£ -

Your total cover estimate

£ 0

Let us find your best quote.

How long should life insurance last?

How long you need your life insurance to last will depend on your own personal needs.

When thinking about your policy length you should consider:

  • The cost of your mortgage
  • How long until your mortgage is paid off
  • How long until you retire
  • Whether you have dependants
  • How long until your dependants are financially independent
  • Rising living costs
  • Rising funeral costs

These factors will give you a rough idea of how long your cover should last.

For example, if looking to protect your mortgage, the term of your policy will need to be at least as long as your mortgage term.

However, life can be unpredictable and it can be hard to plan for every life event.

If your circumstances change you may need more cover than you originally planned for.

This is where increasing life insurance could be useful as your sum assured increases each year.

Alternatively, most term or whole of life insurance policies include a ‘life changes’ (guaranteed insurability) option – meaning you only increase your cover amount when you need to.

At Reassured we can compare quotes from some of the UK's leading providers and inform you on which insurers offer the guaranteed insurability option.

Should I buy extra life insurance?

It’s completely possible to take out more than one life insurance policy.

If later on in life you decide you need extra coverage due to a change of circumstances, depending on your budget you can take out an extra life insurance policy.

Taking out an increasing life insurance policy may eliminate this need as your sum assured will increase each year, meaning the amount paid out becomes greater.

It’s also a good idea to speak with your insurer, as your policy may have a ‘life changes’ (guaranteed insurability) option which will allow you to take out a new policy to increase your level of cover (and you won’t have to provide additional medical information).

Secure the right life cover

Comparing quotes and looking at the different policy options available is essential to securing cover that best meets all of your needs.

At Reassured we can take you through the whole process of securing life insurance and compare quotes on your behalf - saving you time and money.

Whatsmore, policies arranged through Reassured include the guaranteed insurability option as standard, (for those eligible).

Our cover starts from just 20p-a-day so why not get in touch for your free quotes?

A member of our award-winning team will be happy to help.

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